How to step up in a downturn

by 31 Mar 2009

The current crisis provides an outstanding opportunity for HR to show real leadership, writes Les Pickett

Over the years I have been involved in many corpo rate downsizing and restructuring initiatives and cor porate mergers.

Perhaps the most challenging was the board decision of an Australian company to reduce their staff from just over 6000 to less than 4000 in under six months – without los ing customers or sales. This was not a negotiable decision. I had recently joined the company at a very senior level and found out a couple of weeks before the action date of the program that it was my job to make this happen. It was a really steep learning curve and an exposure to an aspect of HR that I had not encountered before.

On a more positive I have also led successful cost reduc tion and performance improvement projects that have min imised or eliminated the need for large scale redundancies.

Getting HR involved

From these experiences, it is very clear that the chances of success are significantly greater when there is full involve ment by competent HR people in the early planning and decision making. While it is the role of the board of direc tors and executive management to focus on financial and legal issues the implementation and longer-term success is all about people.

The current crisis brings the HR function into focus. It really is crunch time as corporate functions are criti cally reviewed in the context of adding value. Past per formance and contribution by the most senior HR executive and of the entire HR team is reflected in their level of involvement in any downsizing and retrenchment exercise. Credibility, capability, reliability, responsive ness, initiative and competence are taking on a very high level of visibility.

Far too often HR people are dragged into the discussion process well after the critical decisions have been made and the way ahead locked into the executive mindset. After the strategic planning people and the accounting and finance team have finished the figures probably look good, but potential disaster looms if the human factor is not addressed.

We have known for some time now that tough times were coming. An effective proactive HR function would have initiated action months ago to minimise possible neg ative action. All the usual things would have been consid ered – voluntary early retirement, hiring freeze, reduced working hours, job sharing, long service leave, restrict travel, salary freezes, and so on. Some may have looked at an extended leave without pay option.

Re-skilling and skills upgrading longer serving employ ees can be both difficult and rewarding. Then there is the opportunity to facilitate the acquisition of new skills. We frequently overlook the capability of people to learn, develop and use new capabilities. I have seen people who have become cynical bored employees – virtual deadwood – change into excited, turned on, highly motivated out standing performers. Their lives transformed as they dis covered and mastered new competencies and challenges.

Taking the lead

Effective HR teams will have shown a lead in the identifi cation of critical core competencies so if and when staff reductions are necessary people with the essential capabil ities are retained. They will also know which of the high potential people are important to retain and which roles can be eliminated or filled by outsourcing or by the use of interim professionals or managers.

The effective proactive HR team will have reviewed investment in training and development and will know which programs really add value and which ones are just being done because the training staff enjoy running them or because they look good in the annual HR report or com pany annual report.

HR will have worked with corporate affairs people and the top management team to develop and introduce an internal communication program that lacks the spin doc tor stigma and has real credibility – one that does keep people informed. They will have taken action to ensure that all operating line managers have developed their com munications skills so they can run departmental briefing sessions, handle questions and have learnt how to listen and to look for early warning signs of potential problems.

Effective HR teams will already be working on strate gies to address the post termination slump in morale and motivation, which are accompanied by high levels of anx iety and the departure of high performing key staff. The people left in employment after the redundancies are com pleted are too often the neglected people. This applies at all levels from the very senior, through middle management to frontline employees. This requires honesty in commu nication, understanding and a rebuilding of the trust. These people remember that the big boss keep telling them that they were the company’s most valuable asset. So why were so many sacked?

A realistic look at delegated authorities – the ability to enable people at all levels to be able to make decisions that impact work performance – can be very productive. The hidden costs of approval processes and associated docu mentation, time delays, frustrations related to not being able to do what is obviously beneficial nor to get any prompt response to suggested action is both demoralising and expensive.

The HR function continues to be in the firing line. The current crisis provides an outstanding opportunity to show real leadership. It is not too late. Even if the HR team has failed to recognise the early warning signals and take pre ventative action the can still redeem themselves. It is time for bold, innovative action that will help protect people and contribute to enterprise survival and future success.

Les Pickett is chief executive of the Pacific Rim Consulting Group and partner, Australia and South East Asia, for McBassi & Company