PEOPLE FOCUS - CIPD

RECESSION
PEOPLE FOCUS
A New HR Agenda
Ten Suggestions for managing through the downturn
Since the onset of the downturn Watson Wyatt have been undertaking extensive
research, both in Ireland and globally, to monitor how organisations are
approaching their HR and Reward priorities for 2009.
According to Kevin Empey, Watson
Wyatt’s Head of HR & Reward
consulting in Ireland, it is clear that
organisations are trying to balance the
need to reduce people and other costs
with the equally critical business need to
reorganise, engage and retain the key
talent who will lead them out of the
current crisis and into the upturn. Many
of the current business and financial
challenges are unprecedented but lessons
can also be learned from the past.
Whilst the changes we are going through
are very painful, for some it is the time to
re-engage the workforce, make changes
which may be long overdue and
ultimately regain competiveness. This will
help the company not only to survive in
the short term but also to prosper again
as opportunities for growth emerge into
the future.
More than ever before, traditional
“sacred cows” such as pay cuts and
pension reform are on the table.
Employers are also looking at individually
tailored and innovative solutions for work
force organisation, reward and benefits
reform rather than being restricted by the
traditional design approaches and norms
of the past.
While the urgency, issues and
opportunities are different for each
company, below are 10 clear messages
and lessons coming from the most
successful organisations when managing
through the downturn:
1
Tackle costs but be
careful about where
you cut and how
Cost structures must be
confronted but the question is where,
how much and how should it be done.
Beware of making harmful, short-term
cuts or salary reductions that might create
more damage than savings. Salary freezes,
cuts and headcount reductions may well
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be part of the answer. However such
actions must be considered in the context
of effective workforce planning for the
future as well as cost analysis which will
help to establish your optimum talent and
resourcing model for now and the future.
It will also ensure that your business has
the necessary work practices, resources
and skills for the upturn. For example,
such analysis could identify that flexible,
part time highly skilled talent is needed
more than full time salaried roles. Rather
than lose critical talent, re-deploy skills
and introduce flexible work practices
that will help deal with the current
business priorities and also embed a
flexible working culture and
resourcing approach for when
conditions change again.
2
Focus on key talent
Focus limited reward resources
on keeping and rewarding
your key talent. These are the
people you need most now to stay
focused on what is required to get you
through the difficult times and later when
the economy recovers. Others take their
lead from them, so having them on
board, taking ownership of challenges
and performing is more critical than ever.
If financial rewards are simply not an
option, use non financial “rewards” to
recognise and engage e.g. give them
leading roles in helping to manage the
crisis or stretch assignments that give
them new skills and heightened profile.
Perhaps compliment this extra
contribution with creative incentives
(financial or non financial) to stay and
perform. Avoid drowning in harsh
messages; organisations should not be
afraid to make top contributors feel
important and valued right now.
3
Ensure performance
management is
understood
Ensure your performance
management process is simple, valued by
employees and delivered well by line
management. More than ever, it should
be used as a major communications and
planning tool to drive home the key
business priorities and enhance
performance and clarity throughout the
organisation. There has never been a
better time to tackle the shortcomings
in the performance management
process and to clearly make the link to
both organisational success and individual
performance and reward.
4
Do not abandon
variable pay
Don’t abandon performance
pay and bonuses but instead
target, what may be more limited funds,
to your top performers. Use reward to
refocus them on realistic but stretching
targets that will promote the right
behaviours and results in this new
environment. Funding rules and
performance metrics will all need review
and alignment with what good
performance now looks like. Explore
cuts to base pay rather than
variable pay.
5
Realign sales
performance &
reward plans
Review sales targets and
territory strategies to focus your sales
force on the most impactful opportunities
and most critical business retention
measures. The definition of sales force
performance and how this is to be
rewarded most likely needs significant
change. Relative performance (versus
internal and external norms) may be
required as well as, or instead of, absolute
measures. For many businesses, now is
not the time to reduce investment in sales
– a recent Watson Wyatt survey found
that 85 per cent of companies are
looking to maintain or increase their
total sales compensation investment in
2009 to help drive the right behaviours
and maximise performance.