Get Going Whether Times are Tough or Not: Manage Headcount Regardless of the Economy

by  

Print | 1 Comment | Share/Save

Expert Perspective from Grahall’s OmniMedia Editorial Board

The Great Recession, Economic Recession, Economic Crisis, or whatever you want to call it has (as Robert Samuelson said in an article for the Washington Post: The Great Recession’s Stranglehold)  “…changed American psychology, politically, economically and socially.”  Not only have individual psyches been impacted, but also the “functioning psyche” of companies changed as a result of the dramatic and persistent downturn.     These changes will certainly be long term and very possibly permanent. 

Many companies have weathered the challenges of the economic downturn by focusing on the bottom line: carefully evaluating expenditures to ensure the greatest ROI, outsourcing and off shoring non-essential services, reducing headcount and utilizing contingent and temporary workers.  These adjustments have helped many companies stabilize and even increase profits in these difficult times.    The question remains why did it take the most significant financial crisis of the past 70 years to get companies to take these logical steps? 

Certainly we need to remember that companies are run by humans, not yet the other way around, and humans are, well, human.  It is hard to lay off workers and change processes when it isn’t demanded by the economy, but honestly the best run companies would be far better off and more resistant to economic downturns and better able to exploit opportunities regardless of the economy if they were managed as if the worst was yet to come.

This is certainly a harsh approach, especially as far as workers are concerned, but that “brave new world” may have already arrived.   For companies to successfully manage costs, they must manage headcount. And this isn’t just “across the board” headcount reductions.  Companies must identify the critical positions in their company – these would be the jobs that enhance the company’s competitive advantage.  And then ensure that the individuals in these jobs are top talent: the most effective workers with the greatest potential for success.   And companies must then make certain that they put in place all the appropriate rewards, incentives and motivators to retain these key individuals. Business history has shown us that a major ‘driver’ of low margins is paying a many less critical workers too much (versus paying a small percentage of the critical workforce more).

As Jena McGregor writes in her October 27, 2010 article for Fortune (How To Keep You Star) a recent CEB survey found that what a key driver for high-potential employees was “…feeling connected to corporate strategy… [and that] even if money isn’t the best motivator, it still talks.” 

However, as Michael Graham said in a recent Grahall blog:  “Most companies find that only 15% of jobs are mission critical to their success. The employees in these jobs are the company’s most important assets and should be rewarded accordingly.  Anything else is an ineffective allocation of resources and does a company disfavor.” (Read more at Don’t Get In a Twist About Human Capital Turnover.)

A company’s business strategy will dictate the most critical jobs: those that provide competitive advantage.  From the business strategy will flow the people strategy which must identify and retain top performing individuals to fill these positions. The starting point of any talent recognition and retention effort is a talent review and to have the talent review process hard wired into the organization’s people strategy.  This is especially true now that companies are making dramatic changes to the makeup of their workforces to help manage cost and remain competitive.

The trends in employment demographics and workforce structure that have resulted in reduced headcount and expanded use temporary employees are bound to continue.  Because of this, companies need to identify and implement new ways of working with staffing partners (i.e. temporary agency).  As the percentage of contingent and temporary workers in a company’s workforce increases, service level agreements with staffing partners must move beyond the traditional form to ensure that the outcome is successful for all parties (the company, the staffing partner and the temporary worker).   The relationship between the company needing temporary workers and staffing partner must become stronger.  Assessment tools that measure the skills as well as the cultural compatibility of contingent workers will become critical to the overall success of the contingent workforce.

Temporary agencies and their stable of workers will become increasingly important to the overall success of companies of all sizes.   Success will be measured not simply by matching the skills of the worker to the requirements of the job, but by matching the compatibility of the individual to the culture of the company.  We aren’t sure how many dimensions this compatibility would be measure across but maybe 29 is the right number.

Contact Grahall’s OmniMedia Editorial Board at edie.kingston@grahall.com


1 Comment

RSS Follow this discussion

Post a Comment