David Reyero – Hummanova – Diciembre 2011
We must consider alternative people management strategies to find a way out of the present crisis. I believe such alternative strategies are more effective than the solutions applied to date in that the economic context has substantially changed:
– Significant drop in sales and many companies have made losses or indeed have already ceased to operate.
– Strategy is questioned and also, occasionally, the leadership of managers.
– Our labour relations are unable to adapt quickly and decisively to the new environment and staff members feel uncertain about their future.
– There is also some mistrust as to macroeconomic predictions (the difficulty to predict when the crisis will end, how our business will evolve and how our customers will behave).
– A high risk that our employees will cease to be committed (with a detrimental impact on productivity and higher voluntary turnover, especially in terms of our best talents)
– And, finally, the current paradox: a high level of unemployment and, at the same time, a shortage of talent in emerging profiles which are fundamental for the future of a number of different sectors.
But, what are the most common people management policies being used to overcome the crisis and what should they be?
The four axes to act upon
Generally speaking, in most countries, and at both public and private levels, there are four types of decisions that are being taken which do not address structural aspects and are applied with scarce social dialogue with the different groups of interest:
– Salary freezing or cuts (wages and investment in people development)
– Short-term decisions relating to the reduction of other expenses in order to meet the budget.
– Focusing on our core business (doing more with fewer resources) in an attempt to “weather the storm”.
– Promoting exports and internationalisation (in both mature and emerging countries).
Organizations are therefore generating insufficient debate of a more strategic nature as to the structure required for the future, our competitive advantages and differential capabilities or management support to deal successfully with the current situation.
There is a growing consensus, with the perspective of over 3 years of crisis, that such policies have reduced management costs (an aspect which, in many cases, was indeed necessary), but, in isolation, have not been effective in finding a way out of the crisis.
And, in addition, they have given rise to social conflict that has generated a greater mistrust in society, negatively affecting consumption, investment, productivity and, ultimately, innovation.
Six new formulas to act upon
It is therefore necessary to explore other options, which should be adapted to each specific case and will, on occasions, be difficult to implement, but which I believe will be more effective in the long run. Here is a non-exhaustive list of the focus areas:
1. Innovation and change management
The crisis as an opportunity to think and act differently, listening to ideas from all levels of the organization. The environment is favourable in terms of challenging the status quo and applying change-based management plans in line with new revenue or cost-cutting strategies.
2. Evaluation of the company and analysis of human resource policies in a context of austerity
It is now time to imagine the future of the company, analyzing the added value of each position in the new context and whether all the expenditure and policies are really necessary. This exercise should be carried out on a blank piece of paper and, if we do it properly, it will help us to be more effective: with new contracts, job cuts or changes in policy. It will depend on what each particular company requires.
3. Talent management
To talk about continuing to invest money wisely in people management may, at the present moment, be somewhat untactful or unrealistic, but I think that it does make a difference for individuals who wish to be winners in the context of the current crisis. Despite the situation we are experiencing, good professionals want to keep growing and, if we do not support them, other companies will. For the best professionals, there is always an attractive job offer on the horizon.
We will however have to work in a different and more realistic way:
(a) with more limited budgets, but with a good return if they are focused on areas and people with a promising future who should be retained.
b) making the most of the opportunity to attract talent in a selective and flexible manner, whether working in-house or as freelance employees on specific projects (there are many well-trained young people and a great deal of experienced and available professionals, either unemployed or working, but who are unmotivated).
Good workers should not be lost to us on account of money: despite pressure relating to expenditure, we must remain committed to a competitive total compensation and selectively offer attractive packages to our key employees. The concept of ‘coffee for everyone” should no longer be applied. We must make distinctions.
5. Responsible restructuring
It is essential to preserve the internal and external image, by responsibly carrying out restructuring plans and previously analyzing, when unfeasible, alternative ways of achieving cost reductions.
In such cases, it is essential to negotiate appropriate conditions, by applying professional criteria in the selection of affected individuals (avoiding the tendency to cut costs predominantly at lower professional levels) and envisaging such plans as an investment which will minimize potential damage to the company’s credibility.
6. Leadership assessment
And, finally, let’s talk about one of the aspects which will always make a difference: inspiring leadership. We should have the courage to analyze in depth whether our managers and leaders are up to making difficult decisions, managing uncertainty with long-term vision and helping our teams to prosper.
To make our company successful, we need leaders who are exemplary in their attitudes and values. In such turbulent times, these factors will be the key to success, predominating over technical skills, business vision or solid experience.
In this sense, good managers who have been successful in the past may not necessarily have the right profile for the future. If this is indeed the conclusion, we will have to assess the possibility of making difficult decisions to strengthen internal credibility between what is said and done at all hierarchical levels.
And, in conclusion, here is a reflection for professionals interested in people management: we should go beyond the current confusion and know how to see the real opportunities provided by the present crisis..
We should value the importance of bold people management, and occasionally go against the tide, with a view to clearly showing, by means of quantitative and qualitative data, the contribution of such “modern” personnel management policies to business.