The ability to tide over a crisis is the mark of a robust organisation. And the HR can play a seminal role in turning threats into opportunities.
The last major slowdown was a decade ago during the global financial crisis. We learnt several lessons then. All stakeholders of a business, right from the owners, management team, employees, and customers to suppliers, partners, and government are impacted by it. Some businesses fail to deal with the slowdown and die, while some thrive very well and get stronger. The management team, including the HR leader of the organisation, play a huge role in dealing with a downturn.
Spotting the trend and figuring out a way ahead
The automobile sector in India is facing a downturn. Consumer demand is not picking up in spite of promotional pricing and many new products coming in. Business leaders are figuring out how they can boost sales, optimise costs, change the technology in use, improve processes, diversify into new products or categories, and explore all possibilities.
It is important for leaders to communicate transparently within their organisations so that the people [within] know the reality, contribute in terms of ideas, and do not waste their energy on watercooler conversations. Two-way communication within the organisation helps in spotting trends in the external environment and evolving solutions. HR teams have to facilitate this conversation between the senior executive team and the rest of the organisation.
Evolving solutions and deploying them
Business leaders sit together to discuss potential alternatives. The HR leader must have the stature to sit at the same table and contribute meaningfully. It calls for good understanding of the external as well as the internal environment.
In many organisations, HR is expected to merely deploy the solution and not contribute to designing it. The reasons are plenty, but the perspectives of HR would serve as critical inputs in designing the solution. The HR leader must be seen as someone with knowledge of the business and the ability to provide valuable perspectives.
When HR is fully involved in designing the solution, they understand and appreciate the context of the organisation better. They get a holistic view of the reasons behind the solution and can accordingly communicate to employees and make changes in the HR programmes. For example, they might suggest a freeze on hiring of certain roles, or make changes in the candidate assessment process to hire people with specific qualities or competencies.
Measuring the success of each role
A slowdown is the time to maximise the performance of everyone in the organisation. It starts from setting the right KPIs for each role. Employees must have a clear role in the organisation.
It is not rare to see employees having unclarity in their roles. Hence, an organisation-wide initiative must be taken to see that everyone in the company has a specific role and the KPIs for the role are clearly understood by the employee and the reporting manager.
Secondly, appropriate targets must be set for each KPI of the role. Often, there are a large number of employees in the organisation who think that they have multiple responsibilities, they deliver results along multiple dimensions, and hence, it is not easy to define KPIs for them, let alone measuring them. This is a situation where the role is not clearly understood by the employee and the targets against the KPIs are not clear. In this case, we cannot expect the employee to deliver optimum results. HR has to play an important role in removing this bump on the road.
Setting the right targets
Given the ground reality of a slowdown, the KPIs and targets might have to be reset at the highest level of the organisation. Management teams have to identify what is crucial for them and accordingly cascade those down to the juniormost person in the company.
Sometimes, leaders remain fixated on the annual budgets set and hence the targets for each individual. This approach does not consider the changes in environment which impact the outcomes in a big way, positively or negatively.
When a slowdown hits the company, it does not make sense to keep the targets unchanged. We have to always keep them realistic so that the employees make an attempt to achieve the targets against each KPI. So, HR has to play a role in getting the targets reviewed and aligned across the ranks. Further, they have to make sure that the employees view the revised targets as realistic and commit themselves to achieving them.
Tracking everyone’s performance
I recall that, during the last global financial crisis, organisations who survived well were rigorous in tracking the performance of each employee and taking swift action based on the results. They deployed IT systems to manage the performance of each employee on a daily, weekly, and monthly basis.
Rewards and recognition were immediate. Consistent achievers were showcased within the organisation and given the status of heroes. Similarly, the laggards were identified quickly and asked to take urgent action to improve the outcome. The environment within the company has to be that of a lean machine. HR drives this through supervisors, across levels.
Transitioning employees effectively
While dealing with a slowdown, some organisations restructure themselves in order to address the new priorities. As a result, some roles could become redundant, a few new roles could emerge, or some reporting relationships could change. In any of these cases, there is a need for employee transition—either leaving the company or a movement within the company. HR has to make sure that the transition is carried out with minimum disruption of the image of the company’s employer brand and the life of the employees impacted.
Outsourcing all non-core activities
When the going is good, companies do not disturb the status quo. A slowdown throws a spanner at the works and gives an opportunity to restructure costs and readjust the focus. Managers need to introspect if they have aligned themselves with organisational priorities and are not distracting themselves with administrative or repetitive tasks that can be performed by experts at a competitive cost.
When the going gets tough, managers have to spend most of their time on activities that have the highest impact on business results. Thus, they need to be freed from administrative and repetitive activities so that they have the wherewithal to address the organisation’s strategic priorities.
This is a good time for HR to outsource the routine tasks of talent acquisition, development and engagement in their own team, and encourage all other teams to do so.
Innovating the best
As the old adage goes, ‘Necessity is the mother of all inventions’. A slowdown situation pushes everyone out of their respective comfort zones and think out of the box. The best ideas need not be in the heads and minds of the senior leaders. The HR team must enthuse the ranks in the company to speak their mind, be creative, and challenge the established norms in the company.
These ideas need to be collected, curated, reviewed, and prioritised so that the senior leaders in the company can sponsor pilots for each of the priority ideas. This is a good time for innovation culture to blossom in the company and the HR team has to drive this.
The threats posed by a slowdown can be turned on their head to be made into opportunities for the business. And HRM plays the enabler in this transformation.
Ref: Article authored by Aditya Mishra published by Indian Management, November 2019, Page 32-35: https://www.aima.in/media-centre/publications/indian-management-november-2019.html