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How HR can support an organization through – and out of – tougher times

By Melissa Campeau

There’s a volatile mix of elements at work for many organizations right now. Market and political uncertainty, record-breaking M&A activity and a nonstop onslaught of disruptive technologies combine, in many cases, to create some uncertain times.

It’s not all bad news: “For some organizations, that’s an exciting backdrop for change,” said Madeline Avedon, associate partner, Talent, Rewards and Performance with Aon Hewitt in Toronto. “For other organizations, it creates unease, and HR has a very significant role to play in managing all this uncertainty.”

Downturns usually mean a shifting of gears for HR.

“Typically, HR departments get a lot of pressure to find talent,” said Franco Girimonte, associate principal with the Hackett Group. “But when they’re going through an economic downtown, there’s a constant pressure on HR to reduce the overall talent cost.”

Badar Khan, a senior HR professional with BP in Pakistan, agrees.

“Generally, the people domain is the first area affected when things go wrong,” said Khan.

HR’s job in a downturn, of course, is much broader and more strategic than simply managing layoffs.

“HR’s role in these times is about helping companies achieve profitable growth during uncertainty,” said Avedon. “How do they ensure people remain in their roles and keep generating revenue for the organization? This is the question HR must answer. It’s not just about taking short-term actions, but about focusing on the longer term. Eventually, the external factors that organizations don’t have as much control over will change, and they will need to be in a position for growth.”

HR as a business partner

“If they’re not already, HR should be playing a pivotal role in organization strategy execution,” said Khan.

“HR as a business partner becomes invaluable at this point,” said Girimonte, who points out that business leaders make decisions based on information and insight, and that finance, marketing and other departments come to a strategy table with quantified data. “HR has always been challenged in that regard because their information capabilities around analytics have been very limited.”

Now, though, that’s beginning to change as HR makes increasing use of analytics and can answer questions about what’s being spent on employees, what the critical roles are, what potential impacts of cutbacks might be and more.

The value of training programs

Data can help HR quantify the value of many things, including training and development programs. That’s important in belt-tightening times, since they might be seen as an “extra” in need of trimming.

“There’s an opportunity to measure and assess whether what you’re dong will reap the results you’re looking for,” said Avedon. “You might be developing a business case for change or you might find the best course is to continue with the same programs HR currently provides.”

Either way, investing strategically can pay dividends.

“HR’s role in these times is about helping companies achieve profitable growth during uncertainty.”
    – Madeline Avedon

“We recently released a study that found investment in talent management and leadership capability can give you three times the payoff in terms of performance,” said Girimonte. “An HR leader needs to have that kind of information and insight so they can show executives that certain cuts can mean potentially losing out on financial benefits.”

Numbers should be crunched and reviewed with vigilance.

“HR needs to have comprehensive workforce analytics to justify their programs,” said Khan. “The bottom line is that everything HR does will be scrutinized during uncertain times, and HR needs to be vigilant in every hemisphere of their business and ensure all initiatives are supported by a cost-benefit analysis.”

Culture, engagement and productivity

While each organization will determine what training aligns best with its strategy, some programs have universal value.

“We’re seeing a lot of emphasis on leadership development training because organizations know they need to drive a certain culture,” said Avedon. “They are focused on creating the right behaviours within their leadership population to drive the right culture forward, in line with the business strategy. During times of change, that’s even more important because you want to ensure there’s a consistent employee experience across the organization. That’s difficult to do if leadership isn’t aligned.”

When an organization’s future is uncertain, culture and engagement can suffer – and it can happen quickly.

“It doesn’t take long for employees to become disengaged during times of uncertainty,” said Avedon. “Reengaging them can take months, even years, depending on the damage done.”

Rumour mills – quick to pop up when there’s a void of information – pull employees away from their work and impact the mood of an organization.

“HR is the primary communication channel for keeping employees informed and ensuring morale and productivity in the organization don’t go down,” said Khan. “It’s a daunting task and easier said than done. HR can start by providing honest, timely and accurate information. Never create any false expectations and reassure your top contributors, at the right time.”

“Among companies who remain successful in a downturn, the biggest common thread is a strong internal communications plan,” said Chelsea Newton, executive coach with Talent Formula, and an HR professional with a Calgary-based oil and gas company.

“At our company, we get our employees together regularly,” said Newton. “We talk about the market, we talk about the current price of crude oil and what our strategy is to survive in this type of market. We’re quite transparent about it. When companies don’t communicate well internally, employees wonder if there actually is a strategy to survive in this market, and that creates more anxiety and trepidation about their future.”

It’s important for HR to keep an ear to the ground and listen for any misinformation.

“Once you catch wind of rumours, you need to snuff them out as quickly as possible,” said Girimonte. The best remedy, he points out, is some fundamental information. “You need to know who is impacted and how they are impacted. Once you can answer those two key questions, you can then determine what you’re going to do about it as an HR professional: Are you going to give managers talking points about how to handle delicate situations? Devise a plan for improving morale and keeping employees focused? Those are all things HR can assist with, but they can’t do those things unless they know who’s impacted and how they’re impacted.”

Another question that comes up around communication is how to best deliver it.

“If more communication is paramount to employees during times of change – and it typically is – how do we actually make that happen?” asked Avedon. “Do they want to hear from their direct leaders, or are they looking to hear from senior leaders? We know during times of change, engagement is very closely linked to what senior leaders are talking about in the organization, in addition to any immediate change.”

Communication, of course, goes both ways. Avedon points out the importance of regular pulse checks to find out what’s really going on.

“Find out how employees are feeling, what their needs are, how their expectations are hanging, and how things are shifting for them,” said Avedon. “In times of uncertainty, we need to be able to do what we call ‘continuous listening.’ This is not necessarily asking questions about engagement, but asking questions around change readiness, and getting a sense of how employees are feeling, and whether they have the information they need.”

It’s a chance for HR to see what they’re doing right, and what might be getting in the way of better engagement.

“HR is the primary communication channel for keeping employees informed and ensuring morale and productivity in the organization don’t go down.”
    – Badar Khan

Retention is the best defense

Better communication and better engagement are linked to improved retention, and retention is a key concern during a downturn.

“It’s not the low performers you tend to lose in a bad market,” said Newton. “It’s your top talent – the ones you rely most heavily upon.”

They’re more marketable, says Newton, and better networked. While losing them is always damaging, in tough times it’s even worse.

“What often happens is that when a company downsizes, for example, it may take an engineering department with two or three employees down to one or two,” said Newton. “They need high-potential candidates in those roles because you’re going to be relying on them more than ever. To lose one is really meaningful to your business because they’ve been pulling the weight of more than one person.”

Layoffs, company ambassadors and social media

Tough economic times often mean downsizing becomes inevitable. In today’s social media era, and with the popularity of sites like Glassdoor.com, how an organization handles layoffs can become a critical make-or-break moment for the brand.

Today, potential candidates, clients and partners can spend five minutes online and gather all sorts of insider intelligence from current and former employees.

“There’s a whole host of perception issues and risks that evolve from sites like Glassdoor.com,” said Girimonte. “Layoff decisions and actions handled poorly can leak to these sites and then to who-knows-where, and that can impact business. HR needs to make sure management is aware of those risks, and to ensure they’re following an orderly sequence of steps so they’re not making major mistakes and causing more damage.”

Downsized employees will be – one way or another – spokespeople for the business. They might wind up working for competitors or partners, or down the road they might become employees again.

“Stick to your company’s core values when you’re going through downsizing,” said Girimonte. “Treat people how you’d want to be treated. If you follow that guideline, then you should be in good shape.”

Having a thorough game plan that supports the outgoing employees can help smooth out the transition.

“I had the unfortunate experience of managing the effect of the 2008 downturn for a very large organization,” said Khan, who set up a thorough change management plan that included details for managers identifying what to say and how to behave, as well as comprehensive outplacement services for downsized employees.

Strategic upside of layoffs

Having to trim a workforce’s numbers, while never an easy thing, can present an opportunity for recalibration.

“In an economic downturn, I think there really is an opportunity to reevaluate,” said Newton. “In the oil and gas industry here in Alberta, a lot of organizations found they were a bit ‘fat’ in terms of having extra employees they didn’t need or employees who weren’t pulling their weight and were allowed to slide. The downturn really caused organizations to look hard at their people and only keep the very best.”

“Even for organizations with slow or flat growth, recruiting for key critical roles never stops,” said Girimonte. Thoughtful and careful reorganization can help better define pivotal roles within the organization and help narrow down exactly the strengths needed from any new hires. “We’re really seeing a focus on critical roles and those that are going to drive the brand forward during times of need but also during times of growth.”

Seizing opportunities

It may sound counter-intuitive, but some organizations turn up the heat on recruiting during times of economic uncertainty.

“If you’re really bold, a downturn is an opportunity to hire critical talent,” said Girimonte. “Toyota was famous for that. In bad times, they would try to expand and gain market share because that would give them better economies of scale when times were good again.”

Newton has experienced this strategy firsthand.

“When I worked at Mosaic Sales Solutions – a large marketing company out of Toronto – during the economic downturn of 2008, we heavily invested in our campus recruitment that year, more than any other year,” said Newton. “By investing when others were pulling away, we managed to create a huge differential between us and our competitors. If you can make it work, it’s an excellent time to be focusing on high potentials.” She points out that, in the oil and gas industry, compensation is heavily weighted on long-term incentives like stock options. “Because of that, some organizations are finding that now is a really good time to hire people because they’re resetting at a low share price.”

Even if an organization isn’t in a position to expand during tough times, recruiting channels need to be kept open, with an eye to the future.

“You don’t want to walk away from having a very strong acquisition strategy with schools and other partners within the market during times of need,” said Avedon. “Those take a while to establish and you want to keep them up. Thinking long-term, you want to make sure you have that funnel.”

Strategy underpins every move

In a tough economy, an organization relies on its best performers more heavily than ever. Having a strategy to find them, train them, keep them and help them lead others is the best way through the downturn and out the other side.

“It’s really about having a strong alignment between business strategy and people strategy and making sure that clear connection is understood by the C-suite,” said Avedon. “This is what’s going to continue to drive results – and possibly growth – during a time of uncertainty.” 

featurebHR and stress in tough times

During economic downturns, HR comes under tremendous pressure.

“HR is put under the knife in terms of reducing costs, but it’s also the time when their workload increases considerably,” said Girimonte. “The pressure on the HR function is immense because you’ve got to redirect people from recruiting to managing layoffs.” That could mean shifting roles, extra training and a host of other changes. “Sometimes, there’s some reskilling necessary, some change in emphasis, and just generally a lot of stress on HR team members.”

Teamwork, he says, is at the core of managing all that stress.

“I would always advise HR professionals that this is the time when you need to work more as a team than ever before,” said Girimonte. “You need to share information and best practices, and increase communication both horizontally and vertically.”

Finding ways to stay on top of all the change can help keep a better sense of control, and that, says Girimonte, can keep HR not just reactive, but also proactive in supporting the organization’s strategy.