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FHRD MAY SEMINAR
PLEASE CLICK IMAGE FOR DETAILS.
Are Redundancies necessarily the answer?
By Joe Gerada Chief Executive Officer - Foundation for Human Resources Development.
The Foundation for Human Resources Development (FHRD) shall be holding an afternoon seminar about the impact of the current Global recession on the management of people. This is a seminar that you should not miss. It is not a training programme with set course content but a laboratory where each contribution from the panel and from the floor is valid and nothing is excluded. This seminar is one in a series of events organized by FHRD that will take the participants on a trip of discovery into the uncharted waters of the current extraordinary economic situation.
Over the last months the global economy has faced strains and pressures unprecedented before, demand plummeted, unemployment is rising and confidence is at a low record. For many companies the visible signs of deteriorating sales forecasts, clients taking longer to finalise contracts and revenue in decline are already too familiar. Time is already being taken up at Board levels with strategies for reduction in costs and reallocation of resources into possible revenue generating activities.
Pressure is mounting on managers and human resources professionals to move fast and take radical decisions which often are symptomatic of insecurity rather than a well thought out strategy. With such an approach, the first casualty is people despite the fact that the fortunes of many companies rest on them. Companies tend to cut employee hours, stop recruitment and training, and roll back company activities. These reactions drive morale to the ground and severe trust that would have taken years to build.
Redundancy is not necessarily the answer.
Research conducted by Wayne Cascio, world renowned management consultant revealed that those companies who in the last recession, laid off more than 10% of their staff have since, been associated with poorer long term share price performance. The Report by the Boston Consulting Group and the European Association for People Management say, that cutting experienced staff and new trainees risks creating a skills shortage that will affect the companies’ ability to recover well in the inevitable upswing .
Therefore in times of economic recession what is the role of the Human Resources professional and indeed managers and company directors who value their people capital? Should it be one that looks at survival as an exercise of choosing between the expendable and those less expendable? Or should it be a time where HR comes across as the strategic function that adds value, spearheads innovation and facilitates new ways of working?
John Philipott the Chartered Institute for Personnel and Development UK (CIPD) chief economist , urged world leaders to act in concert in order to avoid moving from a credit crunch into a skills crunch. Calls for caution and to learn from past mistakes are coming from many credible quarters while even difficult times as the ones that we are living through, may offer opportunities to review operations, shed outdated tasks, integrate services, trust and delegate more. Philip Krinks, managing director of the Boston Consulting Group signaled out that long term human resources planning remains important while training and development activities play a critical role in safeguarding the talent capital of the organization.
There is evidence that companies are resorting to measures that follow positive approaches by postponing recruitment, introducing periods of shutdowns, reducing temporary staff and cutting back on overtime while using this lean period to train and retrain their staff. This is understandable as indirect costs from lay-offs are considerable, apart from the fact that redundancies destroy employee loyalty. The latest survey by the UK Chartered Institute for Personnel Development shows that 7 out of 10 employers still consider staff training as a priority. Thomson Airways pilots have agreed to take a 5% cut to avoid compulsory redundancies. The CEO of FedEx took a 20% cut in salary to lead by example while other managing directors are implementing a communication strategy that keeps their staff informed about every development in the company. Consultation increased in most organizations.
Some stock analysts conscious of the sensitivity for retaining company loyalty and commitment, are increasingly asking companies that are laying off workers, whether they have taken into consider how this will affect their future plans for growth and profitability. A credible response from these companies would to be expected by the analysts unless the former wish to see a substantial markdown on their stock. This makes sense as one cannot expect to throw away what industry has been describing as the most important resource for the organization and expect to retain trust, employee commitment and the capacity to compete.
This is a defining time that will differentiate between the strategists from the opportunists, the leaders who will create a new social construct from those who, at best, will just manage the current situation. Some people will emerge as formidable leaders and will set the pace for many to follow.
Who will these leaders be? What are they thinking and doing differently today that will distinguish them above all others? What is it that they can do today that others cannot do just as effectively?
On the local level there are various companies that are managing to weather this crisis while making strategic changes that will enable them to reap the benefits at the right time in the future.
For this seminar, the Foundation has managed to draw up an impressive line-up, of experienced hands on professionals and business leaders who work and manage this situation on a daily basis. They are the ones who know what board room pressure to cut costs is all about and who search for the best and appropriate solutions in the face of harsh dilemmas.
This experience qualifies them as experts but really and truly everyone who operates in the economy is an expert in his or her own right as each and every experience is valid. Moreover no one has the magic wand for the solution but this rests entirely on learning from different experiences and having the abilities and skills to integrate them into a new successful paradigm for your organization.
Therefore this is a seminar that will offer, on one hand the sharing of daily concerns of people management and the dilemmas of downright harsh decisions, and on the other the pragmatic yet innovative manner that leaders of industry are managing and constructing a new way for success. The participants at the above mentioned seminar will discuss this scenario while panel members expect to be challenged but will also pose challenges. Those attending will also benefit from the contribution of Dr Johnny Sung an eminent academic and researcher in human resources management, from the Centre for Labour Market Studies, University of Leicester.
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