HR Paradoxes Stand Out in Tough Times

Author: Dave Crisp

18 Jan

Prepping for several presentations this week reminded me again of some of the painful paradoxes we routinely witness in human resources (HR) areas that are specifically highlighted in tough times. Here are some in no particular order.

The first knee-jerk reaction in many companies is serious lay-offs. In good times these would generally please stock analysts because they seem to cut the cost base and therefore should increase profits, but when they’re done in tough times, they’re more of a last grasp at survival and won’t have that positive effect. Moreover, they cost a lot – a sudden cash outflow for severance and notice pay… and you inevitably lose a number of excellent people. You can’t identify, nor can you automatically be sure you’re removing, the so-called ‘deadwood’ (lovely way to refer to staff), right?

So you end up short staffed in some areas and still over-staffed for the moment in others. You can’t simply shuffle the extras into the gaps. It never quite works out as you want or anticipate. Even before the inevitable upturn comes you have to madly try to hire great replacements just when everyone else is trying, too. Cost savings haven’t even begun by this time because you’re still paying for terminations and now you’ve got to pay more to hire. Especially this time we’re going to come out into a very tight hiring market due to boomer retirements and the massively growing need for better leadership for flatter, more dispersed organizations. And by the way, no one will trust you due to massive layoff hangover.

So what should you do? I’m all for biting the bullet in a number of ways. Beef up performance discussions and use them as a basis for carefully chosen lay-offs on a much smaller scale. Two or three months of performance focus usually identifies and justifies focused departures. Don’t be so sure a big across-the-board cut now is the answer. Focus more on performance and positioning people for better performance when things start to turn so you’re early out of the gate with better leaders and better teams revved up to succeed against weakened competitors. Spend some money on training the right people. Use the time you should have ’spare’ from lesser workloads. Don’t fill everyone’s time with scurrying to find cuts or justify not cutting in their areas. You’ll just stress them and tire them out for when you need them at full speed in the upturn.

When things start to pick up, don’t automatically start hiring. Use your improved skills to absorb the work through increased productivity – gaps that weaker companies have to fill by rapid hiring and the mistakes that they will inevitably make as a result. You can always hire when the burst of panic hiring is waning and people who took the first job that came along are becoming dissatisfied.

Does this paint a picture? Those companies that don’t react with panic either in the down- or the upturns have a much greater chance of doing things better than the competition. A recession can be a golden opportunity to position yourselves for a far more secure future. But, of course, most companies argue that this is all very logical, they just can’t. Sadly, for some that’s true, but for others, they just aren’t looking at the logical time frames that such relatively slow HR processes inevitably take. If layoffs today meant cost-savings tomorrow morning, panic might work. But in the months these things take to roll out, times will start to change. Don’t get caught like so many rolling with exactly the wrong waves at the wrong moments.

Does this sound familiar? Successful organizations don’t manage today, they manage tomorrow. A little planning and courage go a long way toward making better leadership.

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