How to grin when the forecast is grim –
Weathering the Economic Storm with your
It's a recession when your neighbour loses his job; it's a depression when
you lose your own.
Harry S Truman
While economists speculate whether Australia will officially experience a
recession in 2009, HR managers are less concerned with semantics, and more concerned with how to maintain
staffing and the bottom line in the challenging times ahead.
With recent media attention on mass redundancies, there is a climate of doom and
gloom around the water coolers of the nation, with speculation rife as to who will be next to go. Without downplaying the obvious and considerable impact on the livelihoods
of those in industries and organisations affected by job cuts, there are alternative human resource
management strategies that a number of companies are adopting to enable them to weather the storm and
keep their staff.
Some of these strategies include:
reviewing recruitment needs – reconsidering the need for new positions, or not replacing staff who
strategic (and sometimes, temporary) redeployment or restructuring – moving staff
or teams from roles that are no longer or not currently required to other areas of the business where
staffing needs continue to exist;
encouraging increased productivity, and focusing performance appraisal and
management processes around achieving this;
reducing training and development costs by reviewing the need for and value of
such programs, moving them in-house, or seeking local providers, instead of supporting the more
budget-intensive interstate courses and conferences more prevalent in boom times;
reviewing bonus levels and salary increases for the greater good, and/or
replacing rewards for high performers with non-financial benefits;
supporting work/life balance initiatives that are budget-friendly, such as
job-sharing, part-time employment options, unpaid leave/sabbaticals, etc.
In some industries and organisations, cutting staffing costs as outlined above
will be critical to the survival of the business. However,
employers should implement more extreme cost-cutting measures cautiously and only as a last
resort. Organisations in business for the long haul will
appreciate that, in almost all cases, staff are their single most valuable resource. To deliberately retrench, or lose through inadequate retention strategies,
their best and brightest, or even their trusty workhorses, could be foolhardy indeed for a company hoping to
bounce back post-recession.
The cost of recruiting, selecting, inducting, training, developing and retaining
new staff, assuming you can find the right people when the time comes, can be considerably higher than the
cost of retaining the right people in the first place. The loss
of corporate knowledge and expertise of an employee with five or ten years’ experience can have a significant
impact on the productivity of that role, team, department, and even (depending on the role) company for
months or even years after their successor has been appointed.
The impact on morale of job losses within an organisation may also be considerable and long-lasting,
including lack of trust in management, who may be suspected of treating staff as
Another argument that may be made is that it is easier, in practical terms, to
downsize a company than it is to grow (or re-grow) one. Looking
back over Australia’s recent history, recessions of varying degrees were experienced in 1974, 1982 and
1990. Businesses with plans for a long future of trading would
struggle if they chose to shed staff each time there was a recession, only to hire again when the market
rebounds, as markets always do.
Perhaps the most convincing argument against job cuts as a strategy for
weathering recession, however, is that periods of recession are associated with a cycle of: reduced spending
– decreased demand for goods and services – decreased profits – increased unemployment – decreased income –
decreased demand for goods and services/investment in research and development, etc, ultimately leading to
business failure. If unemployment can be minimised, the cycle
can be interrupted, and the serious, long term impact on business reduced. If the human cost and the economic cost of recession can both be
lessened, everyone wins, and an earlier end to the recession is more likely.
By Trevor Neville, Principal, and Kirsten Ferguson (Human Resource Management Consultant and Life Coach),
TranZition Professional and Executive Recruitment, Level 3 Waterfront Place, 1 Eagle Street, Brisbane Qld 4000.
Email: email@example.com Web: www.tranzition.com.au