For most job functions, the global economic slump signals doom as retrenchments and pay cuts plague employees. Companies see a long list of challenges ahead and many career advancement paths prove wobbly at best. But if there are exceptions, HR may be one of them. Experts believe the downturn is providing HR with unexpected opportunities, and now is a better time than ever fir it to prove its mettle at the crucial C-suite level.Aditya Kohli, Head of HR Country Operations, Standard Chartered Bank, observes that changes to the economic climate usually result in a shift in priorities for some HR functions. Until recently, HR was focusing efforts on helping business become more scalable, and deploying more people in a faster manner. Now the sentiments have changed; quality, not quantity, seems to be of greater value, meaning that the number of people working is less important than the overall relevance of their work contributions. “A large-scale dislocation is a great opportunity,” he tells HRM. “Managers who figure out how to use HR well will be using them significantly better in this period.”
And what exactly is good usage of HR? Tim Bonnet, HR Director, Cisco Systems, says when resources are constrained, there is a need to reprioritise business activity for a rebound. “HR plays a leadership role in helping businesses align with new organisational goals,” he says. In terms of operational efficiency, for example, this means taking a look at the company’s own operational functions and focusing on the right investments. “Because everybody is contributing more, HR has to do its part as well,” Bonnet says. “It has to work on driving cost savings, increase its focus and eliminate redundancies.”
Kohli reminds employers to display value to shareholders and customers. Given that HR’s primary focus is people, and that the majority of business costs are people-related, HR can look at design, increase administrative efficiency, use more automation, and work toward reducing risk and developing leaders in this uncertain period, he says.
New functions, new roles?
In times of crisis, HR should be engaging in dialogues with leaders and employees about driving the key areas of engagement, performance, leadership and talent. It needs to focus on maintaining the organisation’s culture so it can withstand the storm and emerge stronger afterwards.
Preserving the culture is often overlooked because it seems permanent but changes from a downturn can cause an unwelcome impact. Large-scale changes often threaten to shake the core of an organisation, so HR should never rule out that possibility. As HR is essentially a profession about people, this is an excellent time to centre tasks on the organisation’s people. It may be the surest way to ensure the company’s culture remains true to itself.
HR also needs to look at optimising costs. Or it could look into performance management strategies to raise the bar while staying within budget. Kohli says the task is also about “the softer side”. HR should consider creating an infrastructure to help employees and families cope with the downturn. “I see this as a big opportunity,” he says.
There are also a number of ways that HR can influence the way it is viewed in the organisation, and perhaps gain recognition at the C-suite level. HR can, for example, look at its organisational design and take measures to make itself more efficient in the way it functions. Kohli and Bonnet both agree that the time is right for streamlining processes and practices to save costs. Recognition comes from CEOs when they are assured that HR is doing its part to support the organisation. “Where CEOs have seen the value derived from HR, you see a lot more engagement,” says Kohli.
All of this isn’t to say, however, that the fundamental role of HR will change. Kohli makes this distinction clear. “Am I a believer that HR creates strategy for the business,” he asks. “No. But HR is an intrinsic part of the team which helps execute strategy just like other functions.” He says HR professionals must remember that their role is as pronounced today as it was during the boom years.
Kohli says previous market dislocations have given HR professionals a big chance to “repaint the canvas” without changing their actual role. “The role of HR still retains core areas. These factors remain the same irrespective of which market you’re in. But some parts have been re-emphasised and others are de-emphasised,” he says. “It’s about having discussions in the right places.”
Making that connection
Rearrangements present great opportunities for HR to step up and come through on the organisation’s promises, says Bonnet. “HR can help drive the notion of transparency.” In the short term, this allows HR to better assess employees’ needs. In a downturn, many job functions are forced to narrow their perspective. Transparency will ensure HR does not lose sight of the human side of cost management, or any other issue in the organisation.
Together, HR and the CEO should plan a path for the organisation’s future. “HR has a number of tricks in its bag at this time which could definitely drive business forward in these market conditions, be it rewards or staffing strategies, design, performance management, leadership and talent development and its own functions,” Kohli says. Efficiency is paramount in turbulent times, and the combination of HR and the company’s top leader could prove to be a winning one.
Bonnet says Cisco’s leaders are not actually taught to lead. Rather, they are given opportunities to familiarise themselves with the companies culture and then customise their work against its context. This allows for greater engagement between HR and the employees. Bonnet says HR is now seeing a high degree of connectivity among its staff, something that is reminiscent of the collaboration that occurred during the technology crisis a few years ago.
Kohli also believes that HR’s actions at this time can yield high results. “HR can make the organisation more efficient and bring about sustainability in the long term. From a financial point of view, you could give your organisation an edge over competitors. Right now it’s a good opportunity to engage managers with another set of dialogues,” he says.
In the long run, Bonnet believes HR can utilise the current situation to prepare organisations for the upturn. Those who manage to re-align priorities will do well and satisfy customers. They will also be better prepared for tough times in the future.
HR’s evolution
It’s easy to forget just how much the definition of the HR function has changed over the years. It has been a long journey from being a process and administrative function becoming an integral part of any business.
“Over time, we have seen HR move up the value chain,” says Aditya Kohli, Head of HR Country Operations, Standard Chartered Bank. “HR has found multiple ways of dealing with the lower levels in the value chain. There’s more automation, more technology, more outsourcing, all of which are the results of HR’s efforts.”
That said, HR would not be where it is today without its simplest functions working. He describes HR’s wide-spanning journey as a stack with a base level which has been built upon. “You can’t have an HR department which is engaging on the C-suite level but not paying people on time or managing leaves and promotions,” he explains.
The current economic situation should give ample room for HR to grow even further. “Things go up and down during an economic crisis,” says Tim Bonnet, HR Director, Cisco Systems. “There is a focus on transformations and operational excellence, as well as an increase in the demand for good work.”
In hindsight, examples of HR in highs and lows can be derived from the dot-com bubble, when some companies were conscientious about ensuring that the right talent and rewards strategies were available. This gave them better preparation to manage expectations in the face of the dot-com crash.
Similarly, in the financial services industry, the last eight or nine years have provided significant growth. HR played a key role in scaling up organisations and building sustainability from within. Now HR has to re-prioritise in order to assess its costs.