People Strategies For Difficult Times

K. Michael Janas

A PEOPLE STRATEGY FOR DIFFICULT TIMES

--by K. Michael Janas
[If] there was ever a time to underscore the importance of HR, it has arrived. And sadly, if there was ever a time to see how few companies get HR right, it has arrived too...HR matters enormously in the good times. It defines you in the bad. --Jack Welch, CEO of the Century

INTRODUCTION
During distressing economic times, companies look for ways to reduce costs. Departments are put under a magnifying glass. The critical top performers are expected to identify those costs that can be reduced or eliminated. Human Resources is held accountable for proposing and implementing creative cost reductions. This recessionary period can be viewed as an opportunity to build employee loyalty and cohesiveness. It is imperative that the companys key executives support workforce stability during times of uncertainty so that during more prosperous times the environment can emerge to be an Employer of Choice. Any organization that is not focused on the retention of necessary staff and high potential employees risks coming out of the difficult times without the employees to help the company prosper. Retention and employee development are key to moving the company forward during good times, it is especially crucial in a recession. Losing critical staff during this time will not only jeopardize your emergence strategy, but will leave you unprepared to fully realize post-recession strategies. Why? Because during economic hard times your high potential employees are more apt to leave. Actions focusing on retention are therefore paramount to the companys long term success.

THE CHALLENGE TO HR
Cost restraints will challenge HR to provide the necessary human capital strategies, but a coherent and focused human capital strategy can address retention. A study of executive priorities conducted in Dec 2008--Jan 2009 by Personnel Decisions International (PDI), a leadership solutions consultancy, ranked financial pressure to cut costs and rapid market decline as their challenges. This is in comparison to 6 months prior, when retention was the top priority. To further challenge HR is the fact that one in four companies will layoff and freeze hiring in 2009, based on a Watson Wyatt Worldwide survey of 248 companies polled in Oct 2008. The Society of Human Resource Management envisions as much as one in three companies laying off employees in 2009. The bottom line: Failure in retention results in a brain drain, lost productivity, and declining morale.This is an opportunity for HR to mentor, assist, and build a service strategy to be viewed as an active business partner.

STRATEGY ELEMENTS
Managers Behavior Tthe prime reason for employees leaving is either their manager or their compensation. Susan Heathfield, HR expert, said about retention, The quality of the supervision an employee receives is critical to employee retention. People leave managers and supervisors more often than they leave companies or jobs. A manager knows that the quality of supervision is the key factor in employee retention, as well as competitive benefits and compensation. Your managers must be well trained, show respect for their employees, and be a superior communicator. An employees relationship with their manager is the strongest of all engagement drivers as determined by 2006 Conference Board study (e.g. Employee Engagement, A Review of Current Research and Its Implications). Managers must treat their employees as they would treat their clients with respect, warmth, politeness, and consideration. After all, they help to keep the companys clients. During tough times the type of manager required to build a cohesive team is someone who thinks outside the box: (1) such as utilizing employees other skills, thereby making them more productive; (2) who practices management by walking around (MBWA), (3) communicates extensively and daily with their employees, and (4) helps to grow and develop their team members. Couple this with respect for the employees and you have a manager that is building employee loyalty a rare finding today. Anecdotal information (2003 Godson HR Group client study) shows that providing training, building relationships with peers and management as well as solving issues in the work environment has helped companies to build strong loyalty across their workforces. Compensation The second most frequently talked about retention element is compensation. During difficult times a positive strategy is required and involves ensuring a competitive pay structure where top performers are properly compensated and mechanisms are in place to retain critical players. To ensure a competitive pay structure you must benchmark salary and wage levels against competition, especially where there are numerous employers in the area that could poach your talent. Then it is critical that you communicate the fact that your compensation is comparable to industry competitors. For example, a town hall meeting could be held to provide this information and to answer questions. Because A players are always in demand by competitors, especially during financially tough times, it is most important to have a mechanism in place that will retain them. One such device is a retention bonus. Given the many ways such a bonus can be structured, it is imperative that a policy be adopted by HR regarding its payment--that it will either be paid over time (e.g., over the next 6 mos.) or paid in a lump sum at the end of X weeks. During tough times a comprehensive and effective compensation strategy must cover the retention of mission critical players. Such employees may be IT gurus, operations wizards, or world class customer service representatives. Management must determine which skills are critical to the stability of business currently as well as those skills most needed as you emerge from difficult times. According to the 2006 Culpepper Pay Trends Survey, many organizations pay such employees a skill bonus. In effect it is a lump sum payment for their expertise. And per the Culpepper study, 54% of employers annually review what those critical skills are.

Reward & Recognition Human Resources needs to create an R&R program that says, Thank you, the Company recognizes and appreciates your efforts. But during difficult times management may push back at spending money on such a program and ask why it is needed. The rationale again addresses retention. First, the program only rewards those that go above and beyond--those employees that are keepers. Second, based on a survey by Salary.com, 34.2% of employees feel there is insufficient recognition or appreciation of their work, talents, and capabilities and give this lack as the reason for leaving their jobs. Third, an R & R program does not have to cost much. Many such programs use Certificates of Appreciation signed by the executive in charge of that function, a personal note to the employee from their manager or someone more senior, or $5 gift certificates to a local fast food establishment. Fourth, compared to the cost of turnover (which is covered later), especially of key team members, the cost of such an R&R program is insignificant. Another item that can be included in an R & R program is peer teaching. This may present an opportunity to teach the award winner new skills thereby increasing their value to the organization or preparing them for future movement within the organization. It can also be used to enhance skills already in place. This type of award has been found to have great value to employees since it indicates that the Company recognizes and rewards good work and does want to enhance the capabilities of its employees. Employees appreciate an employer who honors long service. As part of an R&R program such recognition can go far to prove to employees how much you value their service to the company. Many of the Fortune 100 and the Big 4 firms have such programs. They report that their programs have proven to be critical in keeping top performers. For the Company to get the most value out of an R&R program, regular and public communication of these R&R awards is critical. Each and every award needs to be publicized throughout the organization. An example of such communication could be creating an Announcement section on the Company web page where winners would be congratulated or giving the Certificate to the employee in a Town Hall meeting. Public recognition costs very little when compared to the goodwill, morale boosts, and cultural reinforcement gained. One comment is warranted here. You could have a world class R&R program and still be sending a conflicting message. If you recognize your star performers, then you must eliminate your bottom performers, especially in tough times. You cannot afford to keep such employees in their position nor send the wrong message to the workforce. Human Resources must make sure that their Performance Management System is working. If it is not, then it must be fixed prior to announcing the R&R program. Training Not only is training a major driver of employee engagement (As defined by the Corporate Executive Board, employee engagement is a heightened emotional and intellectual connection that an employee has for his/her job, organization, manager, or co-workers that, in turn, influences him/her to apply additional discretionary effort to his/her work.) but critical to success during times of downsizing. In tough times you want employees fully engaged, especially as you reduce staff. Training is one way to ensure full engagement. Based on a recent Towers Perrin global study on engagement, 83%of employees "look for opportunities to develop new knowledge or skills," and 84% "enjoy challenging work that will allow them to learn new skills.

Given the pressure to reduce costs during these times, it is imperative that employees are trained to avoid making costly mistakes (e.g., on mission critical processes). Also, since employee development leads to better retention, training not only addresses holding on to critical employees but also reduces operational costs. Every staff member needs to have a Personal Development Plan (PDP), addressing critical gaps in skills, knowledge or experience (SKEs), and be the result of a meeting with their manager. Follow-up meetings need to be held at regular intervals (e.g., monthly) to review progress with any revisions being integrated at that time. As one training tool, job rotation works well to get employees cross-trained on critical processes, prepared for promotion, or ready to take on more and different responsibilities. Use of this technique requires operations to work with HR to ensure success and compliance with company policy and any applicable laws or regulations. Going hand-in-hand with a Personal Development Plan (PDP), senior management ensures their managers are held accountable for employees development. This action helps to build a culture of interdependence and teamwork, a necessity during lean times. Another element of training is giving employees more responsibility across their skills, knowledge, and experience, thereby facilitating doing more with less. It is an opportunity to reframe work harder to we believe in employee development a win-win. To reduce training costs, avoid additional training cost, speed up training, and make it available 24x7, the training needs to be delivered via online technology available to all employees. Work/Life Balance Per a Coopers & Lybrand survey, Generation Xers arent impressed with money but rather a balanced lifestyle. Increasingly, employees want flexibility in their jobs and will remain with an employer who guarantees it. In tough times this is especially critical. So the message to call center management is: (1) staff adequately so as to minimize overtime thereby impacting employees work/life balance and to avoid wearing employees out, and (2) acknowledge non-work priorities (e.g., taking Mom to the doctors). It has been found that employees become loyal to companies that practice this rule because it shows respect for them as individuals, not just employees While these points may be easier said than done during the difficult times, they have their upside: (1) Retention--you will still have your key employees when you emerge from the situation and start to grow; (2) Loyalty--it will be harder for the competition to lure key people away; and (3) Engagement--improved employee engagement resulting in greater customer satisfaction. It also leads to greater retention per The Conference Boards 2006 study (Employee Engagement, A Review of Current Research and Its Implications). Organizational Changes During such economic upheaval, it is important that the organization as a whole envisions those enterprise-wide changes necessary to survive. A few of those changes include (1) flattening the chains of command, (2) training for first line managers as mentioned above, and (3) improving internal communications very critical in labor intensive industries such as call centers and shared service operations. While there are many more areas for change, these three rank high in urgency and overall business impact.

A change that is mandatory during these times is how management thinks of employees. This impacts retention, loyalty, and engagement as well as customer service levels. Management must think of employees as assets not expenses a radical change in managements approach, which results in asking different questions of employees and different actions. For example, instead of saying, Well implement mandatory overtime to cover backlog, management would ask, Are we acting with disregard in implementing mandatory overtime as it could burn out our people (assets) and negatively impact attrition and customer service metrics? Metrics In order for HR or Operations to show the value of all the actions taken to address the difficult times, metrics must be set, especially those showing incremental revenue saved or customer service levels achieved. For management, the metrics should include percentage of employees on track with PDP completion, and other training metrics. Given the ongoing changes organizationally, project timelines and milestones need to be tracked as does each managers progress with their communications. The most important part of metrics is aggressively reporting them to both management and employees. Weekly discussion forums should be scheduled where employees can be informed as to progress, ask questions, and provide input regarding any necessary changes given the change in how management looks at its employees, their input is critical and must be a welcomed part of the process. Communication There is nothing more important, influential, and informative to employees than regularly scheduled, expectation-setting communications. Management Thought Leaders, Ferdinand Fournies (Why Employees Dont Do What Theyre Supposed to Do and What to Do About It) and Marcus Buckingham and Curt Coffman (First Break All the Rules) agree that a satisfied employee knows clearly what is expected from them every day at work. To achieve this, communications need to be clear, frequent, and offer a framework where employees know they can succeed. If you believe that attitude is everything, and understand that you cannot force someone to have a positive attitude, then know that clear and frequent communication (or lack thereof) shapes all employees attitudes. While you can have the best of intentions organizationally with your communications, if your managers dont embrace it walk the talk then not only are they risking poor quality work and productivity, but also creating a possible retention problem per the aforementioned Conference Board 2006 Study.

The Communications Process Rule #1 is that employee communications should be face to face since it is the most effective of all venues. The process of communication is just as important as the message you deliver. Employees want to feel in on things, according to Don Grimmes of GHR Training Solutions, whose studies dating from 1997 through 2001 confirm this. This motivation has been found to be the #2 item that employees want from their job. This study points up how critical it is to set the proper emotional tone. Take the leadership role in the communications process Acknowledge the elephant in the room. Why? Your employees arent stupid. Remember that people are taking your emotional temperature, says Helen Berman, president of The Helen Berman Corp, and the grapevine immediately puts it out. Must maintain a confident and calm attitude be open, honest and reassuring. Why? Employees are afraid of losing their jobs. Balance is critical its neither the sky is falling nor is it all roses. Remember you are an employee too so be real Give them autonomy to make necessary changes

Communication Techniques That Work Regardless of how the business unit is structured or operates, the following communication venues have been found to be effective during tough times

Communication Techniques
Technique
Town Hall Meetings

Description
Applicable employee population physically together in a meeting Small groups of employees who provide feedback on one or two topics,. Used to deliver a short message, updates, answer questions. Employees are asked for their written input on an initiative, A group of hand-picked employees that work to address an issue A phone line or instant message system, can be 24x7 or active during work hours only A scientifically designed questionnaire that employees fill out and return to HR for analysis and action plan development

Details
Face-to-face; Used where emphasis on message is critical Technique identifies the real unbiased feelings, perceptions, fears of the employees Share facts in a relaxed, casual forum while everyone eats their lunch Can help to determine where changes are necessary or can be made Can help to streamline processes; address difficult or sensitive areas Where employees can get realtime factual answers to their burning questions During stressful times it is a good time to start inquiring of your workforce. This method brings comfort and reduces stress in difficult times

Comments
Can use video conference; Q&As are effective in this venue can take electronic format as well Critical that third party facilitate groups to yield valid, actionable facts Generally 20-30 mins max. Major earth shattering messages are not delivered in this venue. This tool can have a significant ROI Should have only one objective, not multiple ones. Also it needs to have a definite life span Generally used for mission critical topics, e.g., ethics Indicates to the employees that you genuinely care about them. When analyzed the results & actions need to be shared with your employee population. One caution: only ask questions on topics or issues that you are ready, willing and able to take quick action on.

Focus Groups

Lunch n Learns

Suggestion Systems

Employee Task Forces or Committees Hotlines

Employee Surveys

THE HR MANDATE
When companies face difficult times, Human Resources is given both a golden opportunity as well as a mandate an opportunity to prove their worth and a mandate to step up to the plate and show hard savings. HR must be decisive. They must do away with quick fixes and adopt an attitude of cost effectiveness, i.e., doing more with less. The challenge includes facilitating changes in manager behavior and attitude (i.e., insuring mangers are trained), using 360 degree manager assessment focused on retention/engagement, and where necessary, placing them where they can be successful--or terminating them. It is during high-stress times that HR must become more interactive with managers and employees (e.g., Exit Interviews, practice MBWA, suggestion systems, employee meetings). Employees must feel rewarded, recognized and appreciated, while managers must be recognized for retention/engagement, especially your top performers. It is only through Human Resources becoming more proactive, highly focused, and diligent that they will prove their worth during economically tough times.

SUMMARY
The table below outlines the elements for consideration in your People Strategy targeted to stressful and financially hard times. The versatility of the elements provides ideas and actions to address retention, labor shortages, and they are a good start on an Employer-of-Choice program. Regardless, these strategic HR elements have been shown to improve employee loyalty and engagement--Highly engaged employees outperform their disengaged counterparts by a whopping 2028 percentage points! per The Conference Boards findings. And that is exactly what is necessary during economically trying times. Strategic Elements vs. Areas of Impact HR Strategy Elements Retention Impact Areas: Psychological Issues Engagement & Loyalty Employee Development Prep for Emergence

Managers Behavior Compensation Reward & Recognition Peer Teaching Training Work/Life Balance Orgl Changes Metrics Communications Psychological Issues Employee Relations = critical impact = major impact

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Bibliography:
Works Cited: 1. 2. 3. 4. Gibbons, John, Employee Engagement, A Review of Current Research and Its Implications, The Conference Board, 2006. Report #E-0010-06-RR 2003 Godson HR Group Study, proprietary Nasscom-Hewitt Associates survey: <http://www.scribd.com/doc/6965525/HR-PLANNING-STAFFING> 2006 Culpepper Pay Trends Survey: <http://www.culpepper.com/eBulletin/2006/DecemberPayTrends.asp >

5. Global Workforce Study, Towers Perrin, 2007. Study surveying 90,000 employees in 18 countries, focusing on what drives attraction, retention and engagement. 6. December 2008--Jan 2009 Personnel Decisions International (PDI) study on executive priorities:
<http://www.personneldecisions.com/uploadedFiles/RELEASE_Pulse%20on%20Leaders_Economic %20Downturn_2-19-09_Final.pdf>

7. Watson Wyatt Worldwide survey of 248 companies polled in Oct 2008:

<http://www.washingtonpost.com/wp-dyn/content/graphic/2008/10/24/GR2008102400243.html>

8. Mulvey, Janemarie,, The Cost and Characteristics of Family and Medical Leave Employment Policy
Foundation, 2005

ABOUT THE AUTHOR:

Michael Janas is a global HR executive and consultant with Fortune 100 and Big 4 experience, to include Johnson & Johnson, Eaton Corporation, Coopers & Lybrand, and PricewaterhouseCoopers. Most recently he was VP, HR for a global BPO company. His background includes operational and sales roles in addition to HR responsibilities. He can be contacted at kmjanas@gmail.com 2009, WorldAtWork. All rights reserved.