Having been through several recessions in my business lifetime, it is a fact of life that human capital almost always takes a direct hit during a downturn. The global economic crash in 2009 was no different.
Many struggling companies found themselves with just weeks of existence remaining and some chose to let their top performing people go.
Others survived by being agile and innovative. Their strategies deserve examination by all companies, regardless of their state of health.
The key issue here is that, irrespective of the point in the economic cycle, companies will always need to maintain, recruit and develop their best talent.
Companies in crisis
Whether downsizing or rightsizing, human capital needs to be treated with caution, especially in a more interconnected environment. People not only make up the company but they (and their families, friends and extended networks) are also consumers, clients and brand advocates. Consideration needs to be given to how they think and will respond. An adverse reaction may well destroy a company’s reputation.
When companies are in crisis, they are in survival mode and the natural inclination is to cut costs. However, though this is often ostensibly easier, an emphasis on “quick fix” revenue improvement strategies, may yield solutions which would not have been contemplated in the “good times”, but which may yield long term, sustainable and advantageous changes in working practices. A recognition that there are other, non financial, ways to incentivise their staff can create a more cohesive and positive environment which will reduce staff attrition.
When management is busy focussing on either fires or the crush of new business, those who also bear the long term talent requirements in mind as well as dealing with the immediate crisis will create a more lasting success. In the fog of war, it is easy to forget that the people are often the company’s greatest asset. How these people think and respond will define the company’s reputation just as much as the reputation of its products and services.
Of course, in times of austerity, it is often difficult for companies to source the best talent, but those which survive and prosper have often had a disciplined strategy for talent management and a willingness to invest in talent during the bad times. The investment pays dividends in the long term, not only through staff loyalty but also because companies with a good reputation become employers of choice.
The best talent
Thriving companies appear to have fewer challenges and therefore even less of a justification for leaving weak managers in place or failing to nurture the best. However, because their problems are less pressing, inertia often sets in and these issues are not always addressed.
Ensuring the best possible people are in the high impact roles is something which should be undertaken regardless of the well-being of the company. Organisations are all too aware that frequently those people best suited to navigate a business through adverse conditions may not have the right sort of temperament to keep the growth going in more prosperous times. However, it is important to ensure that the talent pipeline is full with people who will be appropriate at each stage of the company’s journey through sickness and back to robust health.
With culture and opportunity taking centre stage for employees in what has become a “new world in which to work”, bold and innovative HR strategies are now required. Today, it is the opportunity to develop and use more of their skills and abilities that keeps people with the organisation, not simply an increase in their salary, especially now the labour market is freeing up, people are looking for stimulation and personal growth rather than merely a job. Personal development and fulfilment are at the forefront of peoples agenda.
Without doubt the best lessons an ailing company can offer are the need to adopt a holistic, and long-term, HR strategy. Even the best laid plans are no guarantee for every situation. As a consequence people strategies must be dynamic and adaptable to ensure success, whatever the economic climate.