“When the going gets tough, the tough gets going.”
(When the situation becomes difficult, the strong will work harder to meet the challenge.)
Today’s most vehemently conversed and the discussed subject is global ‘Economic Slowdown’; right from the security guard to the top bosses of an organization, all seem to have some opinion or other, on this growing crisis.
According to an article published in ‘The National Interest’, the year ahead (2020-21), the global economy will be facing challenges & uncertainties, coupled with disruption and financial vulnerabilities. Giving references to a report issued by the United Nations, ‘The Guardian’ quoted that the weaker growth in both advanced and developing nations will result in the high probability of a global recession in 2020, as a present-day danger and the policy-makers must refocus on jobs, wages & investments. However, if reports are to be believed in the Indian context, then the slowdown in the economic growth seems to have bottomed out and is anticipated to pick-up in 2020-21.
The slump in the economy has direct bearing on the businesses as it will lead to lower demand for products and services, leading to idling capacity, bankruptcy, and massive job loss. As revenue and profit margins go down, the organisations tend to either shrink budgets on hiring or put hiring on hold completely. In pursuance of cut costs and enhance the bottom line, the organisations may cease their plans of procuring machines, restrain research and development ideas, and halt new product launches, expenditures assigned for marketing & advertisement may also be reduced.
In these economically depressed situation where business sentiments are down, HR plays a significant role by partnering with the business leaders to make sure that the organisation remains sustainable and at the same time ensure that apposite steps are taken to attract, retain, train and engage its employees. While the business may expect human resource specialist to work on reducing cost through retrenchment etc., HR will have to work diligently with management and assist on taking the right actions to ensure long-term sustenance of the organisation.
HR will have to enable in making the right balance between the short term goals of the organisation and the long term sustenance and development of the organization. HR will be expected to look at ways of improving or generating productivity while reducing the overall cost of the business.
Jim Collins once said that people are not the most important asset for a business but the right people are.
In the present context, as the economic slump continues to emerge, employees across the industries are concerned about the security of their jobs. In a situation, when ambiguity prevails, there are higher possibilities that employees will decide to move on to jobs with higher security and where they will be able to get greater assurance for a longer work tenure. The loss of talent can lead to an impact on business results and customer service and can further weaken the capability to build a leadership pipeline for the future. It’s a difficult situation for organizations during the times of economic slowdown when employees with the right kind of competencies decide to move out of the organization. During these difficult times, the need of the hour is to maintain higher productivity with economies of scale. Henceforward, in the context of economic slowdown, the most challenging objective for HR professionals is concerning to retention of their talent and keeping them engaged.
Going further, talent acquisition is not the only domain which is impacted. During these economic and business downturn, organisations either start restricting or dwindling the annual HR budget for purposes like training (especially external training), recruitment, Employee Engagement initiatives, and HR automation etc. From my personal experience, I suggest this is likely to be the situation irrespective of what the projected financial performance is in different organisations.
Despite such economic and business uncertainty, HR still has a very significant role to play in the businesses and impact the overall performances. The slowdown can be an opportunity for HR professionals to step-up and contribute purposefully towards the common agenda.
Opportunity for HR
Lean phases are the spells to unfold and recognize the need to relook the working ways and models followed to accomplish the given objectives. It’s time to step back and understand the actual requirements of employees and the employers, strike a balance, redesign and innovate the new HR policies and processes as per the need for objectives and industry trends. This is the time when HR can partner with the business to find ways and means to increase productivity through innovation and process improvement. The role of HR professionals is not to minimize the costs always, but also to build the organization sturdier and equipped for future growth.
HR will be expected to look at innovative and proactive ways to reduce HR costs. HR teams will be expected to cope with less headcount within the HR team, and continue to provide a high level of HR services and productivity to the business. HR will be expected to innovate in every aspect. For example, This is the time to use social media platforms to search the right talent for the organisation. Using platforms like LinkedIn, Glassdoor, job portals, etc. will ensure online visibility and create a stage for branding the organisation at the same time ensuring the optimum utilization of the limited resources. HR should also look at this downturn as an opportunity to attract good talent from outside since a lot of good talent from other organizations also becomes available to be hired.
Second, creating a platform for internal subject matter experts and giving them opportunity to share knowledge internally. The biggest benefit, as we all know is that they know the DNA of the organisation, the language used and understand the challenges other employees and teams are dealing with. The reductions in training budget can be an opportunity to build internal capabilities, rather than look for external interventions. This can help us as HR professionals to build a case study of creating an organisational repository of knowledge, function-specific findings, insights, lessons learned and takeaways. And eventually building the culture of knowledge sharing within the organisation.
Third, employee perspective can be disrupted during a slowdown since the foundation of this standpoint is grounded on satisfying the basic human needs in the workplace. Employee communication & engagement becomes a fundamental aspect of such a scenario. During such a difficult scenario, it is incumbent on HR to communicate frequently, openly and transparently with the employees, to dispel any apprehension that people may have. Lack of effective communication, creates a vacuum leading to rumor and miscommunications.
HR should also take leadership in reviewing and redrawing the internal processes and identify certain “non-value added processes” (NVA) which can lead to either cost reduction or process time reduction. This can be an organization-wide initiative.
Retention of the right employees during the uncertain time is always one of the most difficult challenges. Rumours & stories run rife may cause apprehension, cynicism and reduced performance ensuing in greater chances of good people leaving. It is important to enhance engagement with employees through training, communications, skip-level meetings, engagement activities, etc. Introducing innovative and cost-effective employee engagement initiatives will also contribute to the same agenda to a great extent. More the needs are met, the higher is the engagement level of the employee.
As the organization grows, many levels get added, making the structure unwieldy and bureaucratic. HR can also work on restructuring the organisation to be leaner and more effective in delivering the business result, and also ensure utilisation of all resources including people more efficiently. It is essential to focus on rightsizing, which is a much thoughtful and organized activity, with an inbuilt retention plan for high performers. This will ensure that the organization has optimized its employee strength in a manner that it can see it through the business slowdown.
In times of economic uncertainty, one of the propensity is to abandon talent management initiatives or put them on hold. But as an HR Professional, if we ignore encouraging and developing our high performing people, they will become dissatisfied and disengaged. An organization that continues to invest in its top talents during difficult times will not only withstand the turbulent times but will be future-ready to secure the benefits from the good times when they return. You can’t do that if your best people are no longer with you.
Businesses will go through the economic cycles of periodic upsides and downsides. This is the law of economics. However, the fundamentals of business and its core principle will never change.
While the economic sky maybe grey, but it is not falling. Organizations that have long term vision and strategy to overcome the downturn, will have a better chance to succeed and come out stronger out of the recession. The HR department will continue to play a pivotal role in managing the organization through the turbulent phase through the right HR strategy. Opportunities will prosper for corporates and for human resource professionals to grow their organization in a more focused, calculated way.
Staying alive through a slowdown is not a piece of cake but can be seen as a scope for enormous opportunity. Consider this as a chance to focus on your core capabilities and competencies, strengthen your talent programs, recognize weaknesses, and reinvent your organisation. HR professionals aligned with business leaders can use these tactics to help organization boom, even if times get tough.
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