HR must be prepared to push back on redundancies

by 11 May 2009

HR leaders must be prepared to push back against redundancies if the emphasis on financial outcomes goes against future organisational readiness, according to John Boudreau, professor of management at the Marshall School of Business.

Traditionally, he said HR has been best at delivering on requests to make minor headcount cuts across the board in the most humanistic and legally safe way.

However, HR has been less adept at pushing back and saying: “A 10 per cent cut across the board leaves us ill-prepared for the future. We must be more judicious and distinguish more strategically where we cut and where we do not,” Boudreau said.

“Thus, opportunities for HR leadership are higher with the downturn. HR leaders have a real choice about how they will respond. Will the profession grow in stature because we showcase the strategic value of HR in improving organisational readiness and decisions? Or, will the profession react to the financial pressures by simply delivering requested employment actions as requested?”

Boudreau, who also serves as organisation and research director the Center for Effective Organisations, said the paradigm that motivates the HR’s approach may be very different depending on the sophistication of the CEO or CFO.

In some organisations, he said it is based on a compliance mindset, where leaders want HR to keep them out of trouble, follow the rules and often cut back programs or headcount to save as much cash as possible while not violating laws or social norms.

At the other end of the scale are organisations that approach HR with better decision-making in mind. Boudreau said the leaders of such companies were more likely to approach HR and say: “We know that across-the-board layoffs are not optimal; how can you help us optimise our need to restructure, with the need to prepare for the future and take advantage of what may be an unprecedented buyers’ market for talent?”

As such, he said HR leaders are more in the spotlight in almost all organisations as a result of the downturn.

Boudreau also predicted that HR will have a stronger brand in the future, in that it will come to the table with consistent and well-grounded points of view on vital human capital issues.

“There will be more partnership, a clearer understanding of how the professional elements fit together, and an external perception of more synergy,” he said.

“Think of how seamlessly accounting and finance fit together, or how sales and marketing fit together.”

For the full story, see this issue’s cover story, All hail the HR leader of the future


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