HR and Organization in Tough Times

Author: Dave Crisp

10 Jan

The economic downturn is challenging human resources (HR) departments in a number of ways. Useful and not so useful ideas are arriving from many directions. Strategically the challenge should be clear – save your company (reduce costs is the only fast way since building revenue is a longer process) AND ALSO position it for the future upturn (and staff shortage) that are sure to follow.

Doing either of these alone misses the point.

A great example is quoted in a McKinsey Quarterly article (a summary – full article requires free registration). Cisco reduced 8500 positions by using the change to improve their structure, making jobs more interesting and rewarding and thus boosting productivity and engagement of staff. Such combined solutions should always be HR’s goal.

Sounds easy, doesn’t it? Unfortunately it’s rare that both goals can be accomplished in the same time frame, but Cisco is big enough, agile enough and likely had enough redundancy as a result of continuing success to be able to achieve this sort of change. One of the most frustrating arguments I lost as an HR VP was with a division head who intended just such a move, but in the interests of financial goals decided to lay off 200 people now… but only implement the new systems to make the work possible for the remainder about 8 to 12 months down the road. The ultimate cost was a stressed out survivor group who were extremely angry and unhappy. They couldn’t do their jobs effectively and felt like failures constantly. The new systems really never caught up and the company floundered.

The challenge most companies face is they don’t have the spare room in resources or headcount to begin with. They’ve been cutting even during the boom to make profits appear to increase continually as the market always demands. If their profit drive wasn’t based on a balanced strategy – increasing revenues, reducing costs, balancing workload simultaneously all along, it’s unlikely they can suddenly see ways to do it now.

Even Toyota, who have continuously achieved the dual goals is caught short and has had to reduce… but at least they’ve always used contract positions they could eliminate temporarily. That still means people out of work, but at least they are those who understood the precarious nature of their employment, so that trust is not so disrupted as it is in companies who hired full time, permanent staff and now are laying off. When the latter attempt to rehire, many will be suspicious of hollow promises and will be cynical about implied “security.”

Chances are good that organizations like Toyota will be able to cope when there isn’t sufficient work temporarily for their full time team by reducing hours and overtime, holding off on new costs, accepting lower results without feeling the need to strip investments that will affect the future potential for growth and using ’spare’ time of full time staff who aren’t as busy for training and other future-oriented activities, which could well include the sort of organizational and job restructuring that Cisco managed.

The message is these ideas don’t come easily, nor overnight. A single CEO isn’t likely to envision nor be able to order specific changes that “fix” all their problems. It takes good will, many people’s ideas and considerable trial and error to come up with such creative, positive solutions in crises. Those factors don’t come into existence by command in a short time.

Bookmark and share this post