Cultivating the habit can help HR build sound long-term and short-term strategies – especially during a crisis
HR leaders should always understand and keep watch of their company’s financial health and the economy periodically to see “when affordability starts to become an issue”.
While the habit will come in handy during a recession or economic slowdown – an expected impact of the COVID-19 pandemic – Wendy Foong, CHRO at Sembcorp believes it can help leaders better design short- and long-term strategies all year round.
“Having the correct line of sight and good data is very important to help us understand what’s [happening] around us,” Foong told HRD. “[In the] short term, HR should always [be] watching the financials, looking at productivity, looking at the forecasts, understanding whether there’s funding.”
She understands that it’s “beyond HR”. However, using COVID-19 as an example, she said her broad understanding of how the economy impacts business performance will help her prepare ahead for any people-related issues.
Sembcorp is an engineering organisation serving energy and water needs globally. She said that from experience and extensive efforts reading up about the industry, there’s typically a correlation between energy demand and GDP, or the country’s overall economic performance.
“Will we see a reduction in demand as quickly as the tourism industry? Maybe not as fast,” she said. “Therefore, I think it’s important that we start to see the trends coming and whether we need to take any extra measures to [prepare the business].”
She pointed out examples of ‘short-term’ measures taken by companies in the current downturn: company-wide salary freeze and bonus cuts for senior leaders.
“HR should watch [the market] to see if there’s a need to take such measures should affordability start to decline,” she said.
“Short-term issues might give the business a temporary setback and I think the number one response during a setback is – do you sit in your lane or is a change in course needed? To help the business, all leaders have to ask those questions.”