Strategic HR Moves in Difficult Economic Times

Chuck Williams

By: Chuck Williams - Dean, Butler University College of Business

Categories: Economy, Human Resources

Today William O’Donnell is director of graduate programs at Butler University’s College of Business. But on Sept. 10, 2001, he became head of HR for ATA Airlines. Thanks to the dramatic fall-off in air travel after the terrorist attacks the next day, ATA had to let 25 percent of its workforce go during Bill’s first week on the job. During that difficult time, ATA management communicated honestly with employees about what was happening to the company.

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By contrast, when ATA abruptly shut down operations in 2008 and entered bankruptcy for the second time, most employees were just as surprised as the thousands of travelers stranded by the company’s move. “They showed up for work and were told ‘Go home —it’s over,’” according to Bill. “Security guards were outside the doors.”

These stories illustrate some the tough decisions that HR departments face in rough economic times. This recession is no different; companies that once trimmed operational costs with a scalpel are now using saws and jackhammers.

But when the economy recovers, companies are going to need new workers. The HR departments of Indiana companies need to be proactive now in preparing for the future. Otherwise, their companies will be left behind in the scramble for a new workforce.

Here are four strategic moves HR departments should take in this economy:

Decide what jobs your company will need when the recession ends, and start looking now. Unemployment is always a lagging indicator of economic recovery. In May, Federal Reserve Chairman Ben Bernanke said while the economy was beginning to perk up, unemployment would not peak until the first quarter of 2010. With that in mind, companies should start looking for new employees before the recession is over. You’re going to have to roll the dice a little bit on the timing. Don’t wait until the economy fully recovers and you have to compete against everyone else for these people.

Work with management to determine your company’s manpower needs in the coming months. The new jobs may not be the same as those you lost. Instead of recalling an employee who can turn a nut a certain way, for example, you might need someone capable of running a machine that turns the nut a certain way.

If your company has downsized its workforce, provide some level of assurance to the survivors. Often company managers don’t realize how much layoffs affect the people who keep their jobs. The survivors spend the next few weeks looking over their shoulder, waiting for the ax to fall. You can never promise employees that you will never lay them off. But you can ease the pain by investing time and money in training. The psyche says, “If they’re sending me to learn something new, they value me.”

Give existing employees training in small, bite-sized pieces, and then put them back to work, applying what they’ve learned. Sending somebody off for two weeks for training is the worst approach. You have a reduction in productivity, and typically people forget half of what they learned by the time they return.

A better approach is to teach employees a short, bite-sized piece of a new skill or competency in, say, an afternoon. Then they come back to work. You see how they apply what they learned, and you tweak their performance until they’re comfortable with the new skill and running at full speed again. Then you move them on to the next bite-sized piece of training.

Communicate. Let workers know what’s happening. Tell them that your business is in a difficult time and you’ll keep them updated on the company’s progress toward its goals. Never set deadlines or threaten. If you say, “We have to increase our sales by 20 percent by the first quarter, or someone’s gotta go,” people shut down as that deadline approaches and you lose productivity. Your best bet is to run the business as normally as possible while being open about your situation.

To repeat: HR departments should institute these strategic moves now. The businesses doing so will have the best opportunity to remake their workforce and end up in a good position when the recession ends.

William O’Donnell, director of graduate programs for Butler University’s College of Business, contributed to this article.

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