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The Economy is in Recession, HR is Not.

Recently, I was invited to present at an event tailored to a group of youthful enthusiasts. At the end of the talk, a new graduate who is struggling to find work asked me a question, “Do you folks in HR now spend more time letting people go than hiring them?”

As a rigorous thinker, I like challenging questions: they keep me on my feet and motivate me to learn something new. However, this question caught me a bit off guard. My instinctive reaction was, “Oh, that depends.” This sounds like a lawyer’s response, doesn’t it?

“Depends on what?” The inquisitive new graduate was very prompt with his follow-up questions.

“Well, that depends on the organization, the stage of the business, the industry, and so on.” I patted myself on the back for coming up with a quick response that still sounded reasonable. I felt sweat in my palms as I busily searched for a more concrete answer to give them.

Indeed, this person’s question has its legitimacy. Over the past few years, the economic recession has had a significant impact on businesses. Organizations suffer from losing out on projects, having a shrinking budget, and retaining employees. As Human Resources professionals, we often deal with the ripple effect of those circumstances - stay on top of managing various organizational changes, in addition to keeping up with the day-to-day operational duties and legislation changes.

Payroll is one of the most significant expenses of a business. This makes cutting down the workforce an obvious response to stop bleeding. However, work still needs to get done! This is the time when HR needs to become even more strategic than ever before to help businesses sustain themselves in tough times.

Strategic HR Thinking During the Economic Downturn

1. Resource prioritization –

Given the tight budget, human capital should focus on the core competencies of the business. By core competencies, I mean the functions the organization needs to perform to stay in business. For example, a client organization is in the e-commerce business; let’s call it company XYZ. They sell products over the internet to reach a wider audience at a faster speed and a cheaper rate. When fiscal times were good, XYZ divided up its people resources between online sales and offline stores. As consumers’ expendable income became less flexible, XYZ experienced reductions in their sales, from both the online and in-store operations. After careful operational and talent analysis, XYZ recognized that its core competency is delivering e-business. Therefore, instead of laying off the employees who supported the offline stores, the company reshuffled its resources to focus on the online operations solely. This change allowed the business to serve its online customers better. Besides, by targeting the online operations, employees can work from home for half of the workweek. XYZ then move to a smaller office with less overhead costs.

2. Time analysis -

One way I have been looking at HR’s cost is the cost of each stakeholder per activity hour. Below is a chart I compiled after tracking recruitment activities for XYZ over six months. This chart shows where the time was spent and where the shortcomings were. As we know, there are key stakeholders (i.e., hiring managers, direct supervisors, payroll staff, IT & Finance staff, etc.) involved in any given human resources activity. If we track the stakeholders and our hourly wages and the number of hours spent on each activity, then we can understand where we can enhance our performance and, ultimately, maximize savings.

Human Resources Time Spent Analysis Example
An Example of Time Spent Analysis

3. Staying agile –

“It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change.”

- Charles Darwin

In this day and age, the future of work will entail more changes that we may or may not be ready for. There may not be an entirely recession-proof business model, but If HR and business leaders respond with innovative solutions, it will help. At XYZ, HR put up a big bulletin board in the common room, with one question on it for employees to answer as they wish. The question read, “What can YOU do to save your job?” This simple gesture prompted a huge attitude change at the company. I saw the majority of the team working above and beyond the threshold they had reached before: actively following up with customers, and proactively collaborating with people on other teams to make sure all efforts were made to support more sales.

Although company XYZ is struggling due to lower revenue, as are many businesses, I see hope for its future. Yes, the economy is in recession in our province at this moment, but human resources is not. Now is the time for us to be both humane and resourceful to help organizations move forward.


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