Posted by: Professionals In Human Resources Association (PIHRA) | October 23, 2009

Unraveling the Recession: Strategic Human Resources Issues

 Unraveling the Recession: Strategic Human Resources Issues 
By Charles P. Leo, Ph.D., MBA and Jeffrey Schieberl, JD, MBA

Businesses Must Plan For Post-Recession Growth and Sustainability
It is widely reported that the current recession has lasted over 18 monthsand still counting as of this time.  Furthermore, it is evident that this current recession is hitting everyone.  While the authors believe that the recession hasn’t run its full course, it is imperative that business owners, executives, managers, and H.R. professionals pay close attention to and plan for a post-recession economic recovery.  If businesses want to be prepared for this inevitable post-recession time, we must go beyond current thinking about just cutting costs; implementing large-scale employee layoffs; and cancelling of employee benefit programs.

We must not lose sight of balancing short-term gains in a company’s financial performance, with the preparation for long-term financial performance capabilities.  E.g. In keeping with this theme, one of the ideas to consider in terms of keeping necessary talent in an organization, is to implement some temporary pay reductions among a company’s overall labor force, rather than immediately using the quick-fix strategy of extensive lay-offs, which include key and experienced employees. This article will present other recommendations pertaining to recruiting, training, management development, and leadership.

The Post-Recession Workplace:  Survival and Sustainability
There is no question but that the economic downturn over the past couple of years has caused companies to rethink their business strategies and Human Resource practices. While the authors of this article believe that many of the organizational changes that have been implemented will likely continue after the economy rebounds, new mind-sets, ways of thinking, and new approaches will also be essential.  The post-recessional workplace will require adequate talent management, competitive employee benefits; continuation of essential employee training programs; and continued leadership development.

Implementing Organizational Change: HR’s Critical Role
The pace and complexity of a company’s environmental, economic, competitive, and strategic planning changes will continue to increase.  With the HR role being a key component of this role, their guidance in preparing leadership to successfully meet these ongoing changes presents an extremely important challenge.

Re-Double Communication Efforts
Keep in mind that “perceptions” among employees play a very significant role in a weak economy. It is extremely important for leaders and HR professionals to maintain and encourage frequent, candid, and proactive communication.  Handling the “people side” of things, is more important than ever.  Furthermore, maintaining Esprit de Corp is also more important than ever.  This includes not only the employees in an organization, but also includes all appropriate stakeholders, and their perceptions as well.

The Role of HR Leaders: Stepping Up in the Recession
The current recession provides an excellent opportunity for HR professionals to be effectively proactive, and to step up and contribute to their organizations strategically. HR Managers and Directors in today’s business climate should be involved in every step of not only the strategic planning for their organization, , but also in every step of the actual strategic implementation process. 

 Specific Recommendations for HR Managers and Professionals:

•           It is essential to be in on all strategic planning meetings.

•          Assume an active role in facilitating full discussion.

•           Keep the conversations grounded and positive.

•           Balance short-term with long-term perspectives.  (i.e. scenario
            planning)

•           Be a driving force in shaping clear commitments to new strategic
            plans.

•           Give thorough attention not only to key planning strategies, but also
             specific implementation strategies throughout the organization.

•           Be proactive:  Take a significant and very active role in supporting all
             managers and leaders.

In addition, the current recession should spur HR professionals to closely monitor federal, state and local legislative agendas.  Almost a certainty, there will be pending legislation that will directly impact your new strategic plans.  For example, health care reform legislation currently being considered in Washington D.C. may directly impact the cost of doing business in the future and may necessitate a careful review of employee benefits. 

 Likewise HR professionals and managers should consider consulting with legal counsel relative to developing trends in litigation and business regulation. Specific areas of potential liability in the context of litigation that would have the potential for impacting the cost of doing business and your new strategic plans include products liability, employment law and tax law. Specific areas of business regulation that would have the potential for impacting the cost of doing business and your new strategic plans include wage and hour, workman’s compensation and environmental rules and regulations .

Lastly, in an effort to reduce costs the long term strategic planning should not overlook the need to review dispute resolution strategies.  Perhaps adopting alternative dispute resolution policies, e.g. arbitration, relative to employer / employee disputes as well as in standard form contracts could dramatically reduce the costs associated with the resolution of such disputes.

Think beyond merely being defensive and reactive…Lead
Through identifying and planning post-recession strategies and human resource specific programs, sustainable organizations are more likely to succeed and even prosper while others, only taking a short-term reactive perspective, are more likely to struggle or fail.  Sustainability demands a balance of short-term and long-term thinking.

In difficult times, sustainable businesses actually seek-out opportunities for the future. They utilize best practices to appropriately manage and guide current resources, and they also prudently invest in longer-term human and capital resources for the future.  Excessively conservative companies that do not embrace a longer-term and sustainability perspective as core values, are more likely to run the risk of surviving only in the short-run, and thereby, from a weakened position.

An appropriate role for leaders and HR professionals at this time is also to enhance the current organizational culture with a sub-culture of “looking for new opportunities.” Against the backdrop of our current business climate, enhancing “effective leadership in a recession” is absolutely critical for organizational survival and sustainability.

Concluding Remarks:  Survive and Thrive
Truly sustainable organizations do not overly fear the ups and downs of the economy. In fact, these are exactly the times that sustainable and progressive organizations prepare for. They realize that the current economic challenges, while of course very significant,, are nevertheless, temporary.  They view the economy as resilient in the long-run, and they make sure they are adequately positioned to prosper when the turnaround inevitably comes. By maintaining a longer-term focus on the organization’s critical factors for success, they are better positioned to survive and thrive.

 About the authors: See LSConsultancyGroup.com and refer to faculty listing directory in the Pepperdine University Graziadio School of Business & Management website.

 

 

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Responses

  1. […] View original here:  Unraveling the Recession: Strategic Human Resources Issues … […]

  2. […] 23, 2009 PIHRA Scope In an article for professionals in HR, Professors Charles Leo and Jeffrey Schieberl offer recommendations pertaining to recruiting, training, management development, and leadership […]


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