If you haven’t heard, the sky is falling.
Well, that’s what some finance commentators will have you believe.
If you have turned on TV in the past week or so, you have inevitably heard the doom and gloom predictions about how our economy, and stock market is plummeting, and how this is going to be as bad if not worse than the 2008 Global Financial Crisis: $60 billion wiped from the ASX in 24 hours is scary stuff!
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Whilst I am far from a financial advisor, so I can’t tell you how true this is, there is one thing I have learnt about financial crises – a commercial and strategic HR function can be one of your biggest allies. Before you faint from horror, let me tell you the five reasons HR will get you through a financial crisis:
1. Sharp cost cutting
Unfortunately a common theme of a financial crisis is redundancies, this is where your high performing HR team will come into its own. A well-functioning HR team will be able to spot inefficiencies in your organisational structure, pick up on poor performance, and will be able to pinpoint whose role is surplus to your needs and more importantly, how you can maximise savings and minimise operational impact. Under pressure you need to make smart people decisions, get them wrong and your recovery can be severely hampered.
My goal is always to do whatever we can to save jobs, so we want to make sure that it is absolutely necessary to make cuts – and if that is unavoidable that we do it very carefully and compassionately – it is people’s lives we are talking about after all.
2. HR drives efficiencies
Most companies don’t realise a high-performing, commercially thinking HR Team can make your team more efficient, more agile, and most importantly more profitable. If this is done well you can ride through a financial crisis without the need for drastic decisions. For commercial and strategic HR teams this is second nature and happens in bull and bear markets. Action should never be triggered by a financial crisis. Whilst it is up to the CFO to find the financial savings, your HR Team will be able to get more return on your biggest investment; your people.
3. Company culture makes or breaks you during a crisis
HR harps on about creating a unique and amazing company culture for a reason, it drives efficiency, growth and productivity.
But during tough times it also keeps a business together. High morale, commitment and fight is so important for a team in tough times. We have seen a workforce of 50 staff all moving to part-time employment for a period of six months to get the company through a difficult period. This was possible because of the culture they had created over many years. Yes, you get many rewards for creating a positive culture but it is also like saving for a rainy day! It can really deliver for your business when you least expect it … but need it most.
4. HR takes the long-term view
HR should have been working behind the scenes for years, to create a great workplace, and to improve efficiencies in your business. Whilst many business owners think the first people you cut during a crisis are the non-billable support team, be careful where you classify HR. A commercially focused HR team can determine your success. Your HR team should have assessed the risk and planned ahead to avoid any impending disaster.
They should be ready to jump in with level heads and try and get everyone through unscathed. But their ultimate aim is to have a high-performing, sustainable workforce regardless of the financial climate and this just might save you taking a backwards step.
5. HR can soften the blow
If it really goes wrong for your company, your HR team will be there providing the compassion and the support for the employees who unfortunately are going to lose their jobs. It’s important as a business owner, you ensure your HR manager is a part of any discussions around cuts, so they can plan and make this as easy a time as possible for all your employees.
During tough times you cannot afford to make your employees your enemy, I am sure we have all heard the horror stories about employees being laid off and no one knowing who is next or what is going on! The ripple effect of redundancies can hinder your recovery, so messaging and communication must be deliberate and consistent.
Whilst, we can all hope this latest doom and gloom around the stock market is an overreaction, it is important as business owners we have plans in place to maximise the return on our staff investment whilst protecting and supporting our most important asset.
Sue-Ellen Watts is the founder and director of wattsnext, specialists in HR, recruitment, compliance and people performance.