Economies move in cycles from growth to recession and back to growth again. Depending upon where you're sitting and what your economy is looking like you'll be subject to either boom or bust HR. Boom & bust HR? Let me illustrate what boom & bust HR is by referencing a great new report from PWC Saratoga, "A new vision for growth ? Key trends in human capital 2014."
According to the PWC Saratoga report, in recession, organisations will:
Clearly this doesn't help employee engagement and as economies move back into growth mode, disgruntled employees vote with their feet as new opportunities start to appear.
Guess what happens as the economy moves from recession back to growth? Pretty much the opposite as organisations start recruiting like mad (to cope with growth but also because they're losing lots of staff for the reasons highlighted above), they invest more in training and pay will often start to move upwards. It feels like the HR strategy lurches from one extreme to another.
Clearly organisations need to react to the economic conditions but does the reaction need to be so extreme? It's neither efficient nor effective to react in this way. PWC Saratoga includes some excellent advice on how to better approach exiting a downturn that I would recommend you read in the paper referenced above, but I'd like to give you my perspective on this.
Let's consider cutting the training budget. This is an obvious thing to do and I'm pretty sure 95% of organisations would react in this way. However you would probably still end up spending a lot on training even with the cuts. The question is whether the training budget is being spent on the right training for the right people? With the right people data, integrated people processes and a laser focus on making sure you're training your most valuable employees; the impact of the reduction in training budgets on employee engagement can be significantly reduced for those employees that matter the most and you can still develop the workforce when times are hard.
What do I mean with "the right people data"? Well, if you haven't already, you need to digitise your HR operations -- all people processes need to become digital processes. From absence management, to compensation review, to performance management, to learning, to succession, to talent review, to recruitment, to onboarding...everything. Ideally in a single system, so that you have access to a tsunami of employee data that is going to help you make better decisions about your people. To cope with that tsunami of employee data heading your way you'll need robust, embedded reporting and analytical tools. The reporting and analytics really do need to be embedded/pre-built in your HR apps so that the decision makers, the managers, can access the insight as and when they need it to make those better people decisions during both the boom and bust years without having to recruit a bus load of data scientists to create those analytics for you.
We could follow the same train of thought for headcount reduction ? without a fully digital HR function it can be difficult to know who to let go if headcount really does have to go down and the absence of digitised internal mobility processes may well mean that you're letting go of people that could quite easily fill other open positions within your organisations.
Digital HR will help reduce the extremes we see in people strategies during periods of boom & bust by enabling fully integrated people processes which provide more employee data than we have ever had access to before. Next generation reporting & analytics tools will help us make sense of that data and lead to better people decisions. This will all be enabled by next generation HR apps available in the Cloud.