November 24, 2009

There’s no question that the environment in which we operate as human resources (HR) professionals has changed dramatically in this economic downturn. Human Resources staff, as part of overhead, is among the first to be cut in a downturn. But don’t neglect the HR activities, which if done wisely, will lay the foundation for future success.

In this article, we’ll explore ways that HR professionals can manage through these difficult times and be better prepared for economic recovery.

Survival vs. Recovery
As a company struggles to maintain profitability, corporate strategy often changes quickly in order to survive. For example:
• Investments and long-term programs may be abruptly curtailed
• “Adverse employment actions” such as layoffs may abound
• Overriding emphasis on cash management

In a period of recovery, corporate strategy may be less clear as the management team struggles to determine how quickly to return to a growth mode: investing in growth too soon is risky and cash is tight, yet there is also a risk of being passed by the competition. Think of it as a traffic jam on the freeway. In the Survival mode, drivers slam on the brakes. In Recovery, people start up tentatively and keep their foot close to the brake, making false starts and stops before traffic starts to smooth out.

Integrating HR strategy and Corporate Strategy
There are several key actions you can take now to improve ability your HR programs to react to changes in the economy and corporate strategy, and to ready to support your organization’s recovery strategy. As soon as possible, you need to learn what your corporate strategy is for recovery or re-emergence: New products? Different markets or market position? Revenues from new sources? Emphasis on growing market share vs. profit? Understanding the key factors of the corporate strategy will help you develop a successful HR strategy.

Current Strategy: Survival
Cost-cutting has left many organizations with weakened HR infrastructures. For example, training programs have been eliminated, recruiting functions have been cut, and compliance may be given a low priority. Meanwhile, many jobs have been expanded to cover for eliminated positions, and succession plans are out-dated. Low morale caused by on-going uncertainty plagues most organizations in difficult economic times, leading to diminished commitment to corporate priorities – employees are in their own personal “survival” modes. Compensation and benefits issues are increasingly challenging as salary compression stemming from the boom days of recruiting starts to haunt us, incentive plans have become irrelevant, and group insurance costs are skyrocketing. All told, while we are in survival mode, we’re typically not well equipped to respond to change. If we allow current conditions to persist as management tries to implement a recovery strategy, these problems will hold the organization back from achieving its strategic goals. Instead, HR needs to be prepared to provide the people and programs to support and achieve the new strategies.

Moving From Survival to Recovery
Here are some key actions you can take now to prepare your organization for recovery:

• Recruiting and Workforce Planning:
• Identify key positions required to drive and support new strategies
• For new positions, start preliminary recruiting activities well in advance. For example, do exploratory interviews.
• Update job descriptions which many have changed due to layoffs or reorganizations, and adjust compensation to retain key staff where possible
• Implement performance improvement plans where needed
• Consider temps, contractors or consultants to contain costs in case future cuts are needed
• Review your Succession Plan and update components that are key to new strategy
• Employee Relations/Legal Issues:
• Identify key communications messages to support new corporate strategies
• Assure understanding of priorities by all employees – critical to foster employee commitment
• Facilitate effective communication by senior management using a variety of communication methods – company-wide meetings, newsletters, small group meetings, posters, e-mails, etc.
• Assure that management is visible - walk around!
• Share the news – both good and bad
• Conduct an audit of HR Policies/Practices - are you doing what you need to do?
• Determine critical management training needs to assure compliance – training is always less expensive than an employment claim or lawsuit
• Consider outsourcing HR audit and training to maximize resources
• Compensation & Benefits:
• Be prepared with survey data – participate in surveys to get inexpensive data.
• Communicate Total Compensation to employees – many do not know the real value of their benefits
• Be consistent
• Refit your Incentive Plan(s) to assure rewards for achieving the new strategies
• Training & Development:
• Identify training needs for key positions required to drive and support new strategies
• Review major job changes necessitated by layoffs – do they make sense?
• Modify job descriptions as a medium priority item, using employee input
• Identify specific development needs to improve likelihood of success (training is cheaper than recruiting)
• Renew commitment to employee success, on a reasonable timeline and budget. Make a visible re-commitment to training and career development, even if on a long timeline and short budget

Are You Ready?
When the economy and your corporate strategy heads into recovery, your HR function needs to be fully prepared, so it’s time to get a head start. If you’re short on resources, it’s time to prioritize key actions from the list above and plan now. Be creative; use temporary resources (e.g., temporary staff or consultants) to kick-start key activities and contain costs. But don’t delay in preparing your HR function to support your organization’s successful recovery.

By: Catherine B. Poliak, SPHR, CBPoliak HR Solutions

Cathy Poliak is passionate about helping business leaders successfully navigate human resources challenges and develop winning organizations. As a consultant with extensive experience in human resources and strategic management, Cathy helps clients develop and implement effective employment practices to meet business objectives. Cathy is the principal of http://www.CBPoliakHRSolutions.com, serving wineries and other small to midsize businesses in the Napa Valley area. Visit Cathy’s HR Blog at http://cbpoliakhr.wordpress.com. 

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