Published by PricewaterhouseCoopers in Hourglass, September 2008. Click here to see the typeset article as PDF.
What viable alternatives to mass redundancies can HR teams consider to help their employers re-use, recycle or simply retain key talent – and avoid crippling post-downturn skill shortages?
During the downturn of 2001-2002, organisations rushed to make mass redundancies and drastically cut graduate recruitment, only to regret skill shortages and damage to ‘employer brand’ when things picked up again. Today, HR managers face similar challenges through the eyes of experience; and while banks have sounded alarms, the story elsewhere appears to be one of steadying tactics. An understanding of the evolving workplace – characterised by a heightened focus on long-term individual needs and brand pitches to the iPod generation – calls for more thoughtful approaches.
HR directors must continue addressing retention issues – but without over-populating workforces with people who have little to do. Gerwyn Davies, public policy advisor at the Chartered Institute of Personnel & Development, says, ‘Were not seeing the large-scale redundancies across the economy that have so far been announced in financial services and construction; in fact, job figures are bearing up remarkably well, considering its almost a year into the credit crunch. That reflects lessons learned from the past – companies are holding onto labour.’
Some employers are offering reduced working hours instead of making redundancies; others are curbing pay rises or imposing recruitment freezes. Iain Manson, head of Korn/Ferry's industrial practice, says, ‘Despite downturns, large firms will still want to preserve talent in key areas – keeping people on the bench for future demand.’
Retraining or redeploying have become more popular alternatives to redundancy, although not everyone is receptive to imposed career changes. ‘You need to take into account each employees approach to change,’ says Lindsey Myerscough of recruiters Ortus. ‘For instance, they might regard it as a temporary measure as they have no other option – but leave as soon as possible. It’s important to consider what redeployment offers the individual. Similarly, reducing working hours needs to be positioned positively; highlighting a potentially better quality of life is more convincing than saying: we can’t afford to pay you to work full-time anymore.’
More creative alternatives to the slash-and-burn tactics of the past are being adopted. Matthew Thorogood, a partner in PricewaterhouseCoopers HR services team, says, ‘Many companies are using their spare capacity to enhance community relations projects – for instance, to help local schools or small businesses. Employers are stopping to consider their choices; those who don’t respond innovatively are the ones who’ll suffer when we come through the downturn.’
Letting people go in droves may ultimately mean having to hire again further down the line, at great expense and effort. But employers need to find ways to keep talented people busy and motivated. ‘Some companies have set up project boards to re-ignite plans that were put on the shelf while they dealt with business in the good times,’ says Bruce Morton, director of E3 Unlimited, a talent management consultancy. One of his clients is about to relocate and has assembled an internal team (operating at under-capacity in their ‘day jobs’) to organise the moves design and logistics, instead of appointing an external consultancy.
‘Their people have all been highly receptive,’ he says. ‘It’s an opportunity for them to widen their skills, in terms of teamwork, project management and commercial acumen – as well as raising their profile. Everyone wins.’
Headcount freezes may be less painful than making redundancies. But they can create frustration amongst those who still have to struggle with their workload and who may continue to feel just as busy, if not busier, than ever – particularly if temporary staff have been shipped out along with the recruitment budget. Some employers are therefore inviting their workforce to join them in a frank dialogue.
‘It’s a great opportunity to stand back and say: yes, we know you’re busy but we just can’t bring new people in – so why don’t you tell us what you’d do to improve things around here in the long term?’ says Morton. ‘We’ve run workshops where people who are flat out are encouraged to ask themselves, given the appropriate support and technology, what their ideal workplace would look like – what they’d like to achieve and how they’d achieve it. Its amazing what comes out as a result.’
Provided the ideas generated are properly considered, Morton says these sessions make great retention exercises for ailing companies – and motivate people who might otherwise feel overwhelmed by excessive workloads in an uncertain environment. ‘After all,’ he says, ‘if you’ve helped to shape your organisation, you’re less likely to go out and look for a new job.’
In previous hard times, it’s often been the case that employers focus on talking up the situation to maintain morale. But painting a false picture has its drawbacks – not least when job cuts are announced out of the blue. Workers made redundant walk away with their misery compounded by a sense of betrayal, while those who are kept on may feel embittered on behalf of their ex-colleagues, not to mention jittery about their own situation – just at the time when their loyalty and commitment is most needed.
So perhaps they don’t need soft-soaping. ‘This time round, employers are trying to be open and honest with their people about the challenges ahead,’ says Heidi Waddington, managing director of Hays HR. ‘That can help to create a sense of everyone being in it together, along with a belief that it doesn’t have to be doom and gloom; that better times lie ahead if people ride out the storm as a team.’
And where its inevitable that skilled workers are laid off, they needn’t be lost forever, if the employer brand – the holy grail of HR – is brought into play with appropriate sensitivity: ‘Creating a tracking system – where you keep in touch with people, reinforcing how much you value them and would like them to consider returning in the future – can be an important tool,’ suggests Thorogood. ‘Many science and technology companies have been investing in similar initiatives to attract maternity leavers back into the workplace; those approaches can equally be adapted for people who have been made redundant.’
With brand-obsessed Generation Y in mind, organisations worry that pulling the plug on recruitment marketing will result in the rapid disappearance of their brand – and its carefully cultivated values – from university campuses and beyond. But if there are no vacancies to fill, then, for employers who want to remain visible to the talent out there, the challenge that poses is this: if you put out an attraction message, wont people apply, only to end up disappointed or even resentful?
‘The candidate experience is crucial,’ says Morton. ‘In a slower market, with less recruitment activity, it’s even more important to treat potential recruits well – by being open and honest with them in your communication.’
Many employers – such as Accenture, which sends monthly e-newsletters to registered jobseekers – have set up relationship management programmes to keep candidates warm by giving them general news about what the company is doing, often around community or corporate responsibility initiatives. ‘By staying in touch in a positive way, when the employer is once again ready to approach people to discuss employment, candidates will still feel good about them,’ says Morton. ‘The worst thing you can do is to send out a message that encourages applications, only to reply curtly saying you’re not hiring. That turns people right off.’
And its those Generation Y workers – born between 1978 and 1998, and brought up by their baby boomer parents to (its said) expect the world to fall into their lap – who continue to represent an HR conundrum in boardrooms. Many senior management teams are concerned that certain strategies to deal with a downturn – such as amending job duties or full-scale redeployment – will meet with resistance from their precious young charges.
Yet they’re the perfect generation to present with the need for flexibility, says Morton: ‘The important thing for Gen Y is to be given meaningful work; as long as they can see the context within the bigger picture, they accept that change is normal. For them, the only that isn’t normal is maintaining the status quo.’
Older generations may also be more receptive to change: ‘They may not have to make wholescale career changes but instead re-hone their skills in response to shifts in emphasis in the market,’ says Thorogood. ‘Most will see it as a way of gaining broader experience.’
Perhaps if management identified more closely with individual concerns, they’d be better placed to meet the HR demands of the current climate – avoiding ultimately futile redundancies but getting more from existing staff. ‘It’s the responsibility of HR teams to get into boardrooms and ensure that CEOs understand Generation Y,’ insists Morton. ‘And instead of complaining about how arrogant and short-termist young people are today, managers need to get under their skin and exploit the great skills and potential they offer.’
Its the duty of employers, he says, to recognise whets going on in the new world of work to ride out the economic uncertainty: ‘Thankfully, there are increasing numbers of wiser and smarter bosses out there who don’t need to be told that – and its those guys who’ll pull through the downturn most successfully.’
