Article (October-2019)


Utilize the time to sharpen your axes in downturn

Raj Kamal Chauhan

Designation : -   Senior HR Professional

Organization : -  NCR


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The economic crisis has again knocking the door of many businesses. This is not a new phenomenon, we have witnessed it past as well, including 2008. When there is a recession, organisations react in different ways. Well-managed corporates take a proactive approach when they see the first signs of an economic downturn. Many of these firms adopt a strategy to cut costs and generate cash. On the contrary, corporates that adopt an "as usual" approach towards business, are the worst sufferers in case the economic downturn continues for a long period. This kind of situation drains out the mental energy & increases stress. Many start-ups are being experimental, whereas, other matured corporates take actions, based on experience, or mix of both.

In such situations, HR leaders are under tremendous pressure and stress to strike a balance between employees and organisation's interest. At times, there are directives from top management to reduce human capital in line with business reduction, some organisations demand robust action plan without reducing human capital. First part of previous statement is quite easier, but for a HR leader task may not be so easy. Second part of above statement is quite challenging and meeting the expectations of both the stake holders.

Various kinds of damages happen during recession, if we see from the lenses of HR leader. These will include squeezed top line and bottom line of balance sheet, low employee morale which may trigger attrition, increase insecurities and disengaged employees, loss of confidence amongst employees (across verticals), gloomy environment, etc. to name few.

Developing a game plan in such situation is a most critical task for HR Leader. There is no single strategy that will serve to help an organisation survive an economic crisis. Each HR Leader will have to arrive at its own set of measures to allow it to pull through. For some HR Leaders, drastic cost reduction steps may be enough. Others may need to use more innovative strategies that could include adopting newer ways and means. HR Leaders who bury their heads in the sand and take no steps to combat the recession are the most likely not to survive. HR Leaders who are more proactive sail the boat across the tides.

There can be various measures taken by an organisation to handle economic crisis and keep their employees in confidence that we are one and on same boat. Therefore, both the stakeholders, employers & employees, need to understand the criticality and challenges lies in such economic crisis.

There are few common practices during such tough period, wherein layoff is the most common practice in our country, followed by internal transfers, cost cutting activities, completely stopping CAPEX or fresh investments. Even if layoffs aren't imminent in a workplace, employees are likely to be worried about how the economy may affect their lives.

There is very less where organisations can influence the economy at large. Certainly, there are actions which can help organisation and its employees. Best way for management is to hedge against any disaster is by engaging with employees. Social Contract definition either strengthens or weakens between employer and employee, during such conditions. An emotional attachment between an employee and the workplace, will remain the master-key to maintain confidence in the employees. But this will also decide the company's survival, in long-term and short-term. Uncertainty breeds fear…

There are no set rules to improve employer-employee relationship during economic crisis. History has witnessed that many organisations succeeded during economic crisis. There can be numerous solutions to this problem depending on the nature of organisation, culture of organisation, hierarchy, geographical factors, socio-economic conditions. The crux is to create an environment where employees genuinely feel engaged and involved, where there is a sense of collective responsibility and employees believe they have a degree of control over their destiny. HR Leaders need to play a pivotal role to become catalyst and employee engagement can inoculate organisations lost profitability. The onus of creating that engagement is on HR Leaders and line managers, who are the epicentre of the work environment. For management, keeping employees engaged despite the economic turmoil is key because engagement is directly proportionate to the performance metrics, that matter most to the organisations.

Following are few suggestions, which can work well along with conventional solutions to channelize employees' energy in positive energy, which will bounce back as spring when the market/demand is on peak.
  • Get the team together : During the planning phase only, identify employees who will make up the crisis management team, the people who will know what to do when disaster strikes. Handpick these catalyst and brand ambassador amongst employees very carefully, understanding the sensitivity of the local and global environment.
  • Promote creativity & innovation : Give employees the opportunity to come-up with innovative idea for various projects, products, and services. One of the most effective ways to get the most out of employees is to give them the chance to do what they do best every day, promote idea generation culture. Foster an environment of creativity, where organisation can reach to next level of technology. Managers should assess whether their employees have an opportunity to maximize their strengths and greatest talents in their current roles, and if not, make changes. It's a quick and inexpensive tactic that can deliver immediate results in improved attitudes and productivity.
  • Efficiency improvement teams/projects : This must be a quite common activity which takes place in most of the organisations, during economic downturn. But the moot question is how we are taking up such activities. This action should have a robust process, wherein, top management will review it on regular intervals. If these projects are taken in right spirit, it works well than other cost cutting measures.
  • Alternate business models : If management is open to diversify their products or services, then this is the accurate time to involve employees to generate ideas for alternate products or services.
  • Cannibalization & Cartelization : In wake of time and demand at times organisations need to cannibalize their product and services. Where the organisation is spread across various geographies and low demand hit the business outflow, then organisation can think of cartelization of product/services. With ample available time, management can involve employees to either cannibalize, or cartelize their products and services.
  • Development of employees : Developing employees may be the last thing on most managers' minds during this time. But talking to employees about how they can grow professionally shows that managers care and reassures employees that they and the organisation have a future. Investing in employees' development now will help them and the company when good times return.
  • Optimization of R&D : Experimenting with new things will make a way out. Employees with creative mindset will try their hands-on new experiments. Facilitate employees with space and resources to do so. HR Leaders and managers must utilize time and labs in experimentations to bring positive changes in system and connect employees with organisation.
  • Breaks from work : Let organisations promote breaks from work in a planned manner. During good times, few employees don't even take leaves to accomplish their targets. This time being the lean time, HR Leaders may promote employees take leaves to spend time with their families. HR Leaders can also plan to give leaves/breaks to teams, to go on a self-sponsored trip. This will help employees to release stress, rejuvenate and better understanding of team members.
  • Knowledge transfer programmes : Economic downturn results in less work with organisations and employees. Let organisation utilize the opportunity to transfer the knowledge by specialist employees to other employees. In this way, HR leaders would be re-shaping the succession planning for their employees.
  • Speed of decision making : Act fast, but only say what you know to be true. Speed is of the essence when it comes to crisis communications, but it shouldn't come at the price of accuracy. Don't go silent. If your organization is not yet ready to respond to an emergency, HR Leaders should at least let employees know that the organization is gathering information and will follow up, as soon as it can.

Despite any economic crisis or challenge, HR Leaders and Line-Managers can promote a feeling of stability from day to day, that creates a sense of security and engagement. Let your employees know you care about them. Employees may be dealing with negative emotions that can undermine their work, and it's a mistake for HR Leaders to make assumptions about what employees may be thinking or feeling. Taking the time to understand what's going on with everyone on their team will make it easier for HR Leaders to help and guide employees. It also creates a personal connection, which is a requisite of engagement.

These sharpened axes will cut deeper in the market when it comes to the good times or full-fledged competition.
(The views of the author are personal)