Steer your business through the downturn

Citation

Shapiro, A. (2009), "Steer your business through the downturn", Strategic HR Review, Vol. 8 No. 3. https://doi.org/10.1108/shr.2009.37208cab.003

Steer your business through the downturn

Article Type: How to ... From: Strategic HR Review, Volume 8, Issue 3

Practical advice for HR professionals

Every downturn has an upturn, and during tough economic times businesses should be planning their strategy with a view to emerging on top when things improve. HR’s role is absolutely pivotal to the success of businesses navigating a recession and the following steps should help HR professionals ensure that their employees remain upbeat, productive and innovative through hard times.

Step 1. Find alternatives to job cuts

Laying off large numbers of staff is short-sighted and damages productivity. Remind senior management that your business needs talent. Large-scale redundancies lead to a loss in the knowledge, experience and manpower necessary to maintain and grow an organization. Companies making across-the-board job cuts may experience a short-term cost saving, but often fail to meet their profit and production goals.

Those left behind will feel worried and upset for those who have gone, frustrated about their increased workload and fearful that they will be next for the chop. These negative feelings lead to de-motivation and further staff attrition.

Alternatives to job cuts include cutting management bonuses, freezing salaries and reducing compensation packages. It is critical to explain management’s rationale to employees.

Step 2. Implement plans to retain top talent

As well as guarding against sweeping redundancies, HR professionals should work to actively retain top talent. It is a mistake to assume that in a downturn employees will be unwilling or unable to find jobs elsewhere. In fact, low morale can cause job dissatisfaction, and many companies see a downturn as a chance to poach high-achievers from rival businesses.

HR should develop a list of top targets – those individuals who the business most needs to keep – and focus on retaining those employees through initiatives such as development experiences, rotational assignments and imaginative reward schemes. Remember that the employees a business most values during a downturn may not be the same ones it favored when the economy was plain sailing.

Step 3. Recognize the opportunity to recruit

Consider becoming one of those companies that attracts top talent from elsewhere during a downturn. Un-enlightened businesses will be shedding good people. So look around your organization. Is there any department that could do with more manpower? Are there skill areas that are lacking?

Taking on new people from outside can plug gaps and bring a much-needed fresh perspective. When competitors are damaging their market reputation by making job cuts, recruiting can single out a business as a people-focused employer and a good place to gravitate towards.

Be absolutely clear about what sort of people the business is looking for before you start to advertise and you will maximize your chance of picking up a gem.

Step 4. Step up your communications

HR professionals are typically very good at communication. This is fortunate as when times are tough, businesses need more than ever to establish effective, clear and consistent internal dialogue, from the roots of an organization right to the top.

The most successful companies are those in which senior management is straight with employees in acknowledging the difficult times ahead. Encourage senior management to call a general meeting and let people know exactly what is going on, and why. Provide clear information about how the downturn will affect your business, and what you plan to do.

It is crucial that every employee understands how they fit into the company strategy. Work proactively with managers to map out each individual’s contribution. Set key goals for each employee that reflect this.

Step 5. Encourage questions and new ideas

Try to create an environment in which employees feel they can voice their concerns – which will inevitably arise when the company is facing challenging times – and also their ideas on how to overcome problems. Do not shy away from disagreements; constructive conflict will further a debate and thus lead to stronger solutions.

Forum’s research shows that leaders in high-growth businesses are more likely to identify “challenging the status quo” as an attribute of their success. Bill George, former CEO of Medtronic, a specialist in medical technology and therapies, says: “If you want good decision making, contention is essential. You must acknowledge and thank those who disagree by telling them that they made the discussion – and hence the ultimate decision – much better. You try to create the tension inside because the outside challenge is so great.”

It is HR’s responsibility to convince senior management that they cannot always reach the right decisions in a vacuum and to establish and reinforce a working climate where open discussion is nurtured.

Andrew Shapiro

About the author

Andrew Shapiro is an executive consultant at The Forum Corporation. Forum helps organizations achieve the results of their growth strategies faster, more effectively and more completely. It focuses on the essential driver of growth strategies: people. Andrew Shapiro can be contacted at: andrew.shapiro@forum.com