How can HR help during an economic crisis?

by 14 Oct 2008

This issues executive panel speak to Sarah OCarroll about what HR should be doing to help their organisation if times are tough

Chris Luxford, CEO, 3D Networks

Human Resources is an essential part of the business transformation process. In today’s increasingly challenging world the number-one challenge for all executive management teams is managing, retaining and growing talent. Moreover – doing more with less.

No longer can one element of the business operate in isolation; all parts must work cohesively on these and other business problems. In the past we have lived by the mantra of “people, process and technology”. That no longer works. People ... are but one of the elements. It really needs to be a focus on “Culture, Process and technology”. Why culture? With the generational expectations, skills shortages, technology adoption and work / life principles, it is critically important that to drive innovation, productivity and organisational growth the focus must be on culture.

With technology advancements we are seeing a dramatic shift from hierarchal “command and control” to very loose team-based collaborative business models. These business-to-business models conflict greatly and today’s companies have generations who prefer one over the other or, in fact, refuse to operate under one or the other. Yet innovation is the result of people’s ability to work flexibly and creatively within a given structure. So how does an organisation create a culture that allows both business models to work cohesively while we are in the midst of the greatest shift in organisational management we have seen in the last 100 years?

Innovation drives competitive advantage

Innovation is created through change – both complimentary and radical. Change requires an organisational culture willing to proactively embrace change. Knowing that organisational success is about “culture, process and technology” then it goes without saying that Human Resources is one of the most important functions of any company’s future achievements. The question is: Do HR professionals understand and embrace this leading role?

The benefits of focus on culture that seeks to use process and technology as enablers are: lower costs through “greener” ways to collaborate; greater employee satisfaction through “work is something you do, not somewhere you go” capability; greater satisfaction with employees and customers through far more effective process completion; and greater ability to attract and retain talented employees through a differentiated culture that focuses on growth and employee needs.

There is no better way to contribute in hard economic times than assisting with lowering costs and improving business outcomes. Through a focus on culture, with process and technology, HR can deliver real benefit to any organisation.

Bob Barbour, director of people and culture, Lion Nathan

The first thing to do is figure out what your core business attributes are. A time of crisis just means that things have got a lot tougher – and when things get tougher you often forget to do the basics, you forget to do the things that are core to your business.

In our business, one of the things we focus on over many years is the kind of behaviours that really build strong relationships and engage customers, consumers and people within the business. And, often, when people are under a bit of pressure these are some of the first things to go, but ironically enough they are more important in times of crisis than maybe at other times.

So from a HR perspective, how HR can help their organisation is that when the chips are down it’s about helping leaders to really step up and role model those behaviours. It’s just about behaving constructively and reasonably at the end of the day.

In our business we believe in a model called “behaviour times results” and you need to do both sides. If you just focus on results and don’t think about how you’re doing it you often get results that are not sustainable.

Many organisations have fallen into that trap – such as in the last economic crisis of 2001: when Enron collapsed they didn’t think about how they were doing things at all, they just focussed on the short-term results.

The key is really to keep doing what all good HR functions should be doing anyway – things such as helping the business to articulate what is important and get everyone aligned behind that. That is HR 101 stuff. But in doing that you might find in a particularly tough environment you have to make some tough decisions.

Although you have to make sure you do this in a disciplined way, you must make sure you do it in a way that it is the right thing to do to add value in the longer term. You have to make sure you do right by your people and keep them engaged. Even if you’re moving some people on, hopefully you’ll be keeping the bulk of your people and how you handle those who leave sends a very important message to those who stay.

Tough decisions should be implemented in a very compassionate, people-considered way. It’s a lot about balance between making the right business decisions and how you do it

Values is a part of this as well – articulate a clear set of values. Again, it’s about behaving reasonably at the end of the day. Company values act as a guide at all times, but particularly when you’re facing complex decisions. All the values and visions and core purpose that have built up over the years, they should be revisited and used to act as a sound guide as to what kind of decisions you make.

Ron Urwin, chairman, Drake International

I consider HR in a service industry to have a key responsibility for both the recruitment and maintenance of high-performing personnel.

This being the case, I would ensure the management team conducted a “willing and able”assessment of all employees. This is a term given to a type of assessment used within a company when the time comes to assess your workforce and look at each employee on an individual basis. This will indicate those who could be potential redundancies and those the organisation should retain.

Obviously anyone considered “not able” would need an assessment to see if training would make them able and those who are considered “unwilling”would need one-on-one discussions to see if this could be changed.

HR should also send out a report to the company employees on the current standing of the organisation and what needs to be focused on to ensure its success during this period.

These economic times bring a high degree of uncertainty to individuals and to their families and communicating to the staff on how the company is coping with the current circumstances and what management needs from all employees to weather this storm will give comfort to those who are “willing and able”.

Employees need to know their performance is directly related to the company’s results and, in turn, the ongoing viability of their employer.

As the “willing and able” assessment progresses there may be some who will be nominated for redundancy, therefore communication within the company needs to be clear, concise and immediate.

This will help to neutralise any gossip that can occur and also to minimise uncertainty that always exists when redundancies or lay-offs occur.

I would have HR review the absenteeism records of all personnel – not for the number of days taken off but for the pattern of when days were taken.

I would have HR review the company structure to ensure that any non-performing area is reviewed from the management down. I would have them review the span of control for each manager to make certain this was appropriate – taking into account the performance, depth of experience of the manager and those reporting to them.

I would hope HR would suggest a cost control review be initiated to identify any excessive cost that can be eliminated.