01 Sep 09 HR should do more in a recession?

I read this morning, with some interest, a web page[1] summarising a recent survey by the Economist Intelligence Unit[2].

Broadly, this survey looks at the perceived role of HR in a recession taking the perspectives of both business executives and HR executives.  The survey points to a number of issues including a perception gap between HR and business executives.

But the key findings can be summarised as follows:

(1) HR possesses  “An inadequate understanding of the relationship between workforce reduction and business goals”.

(2) Quantitative performance measurement is seen as a key priority – with over 90% of organisations either having or planning implementation of such systems.

(3) Boosting productivity without increasing employee costs is another major priority – with a focus on training, more stringent performance appraisal and process innovation.

One could conclude that the emphasis is upon cost reduction and increasing productivity.  Understandable in these interesting times, but the question must be: “Are there other elephants in the room?”

I would suggest that there are two that deserve more attention.

The first is the psychological trauma induced by a sudden and unexpected recession.  My research, conducted with colleagues, indicates that getting to grips with an unseen sea of psychological trauma should be top of the list – from the perspectives of both business efficiency and staff well-being. This research revealed some alarming statistics – for example over 80% of respondents noted multiple symptoms of stress among their workplace colleagues and over 70% of respondents said that they had themselves experienced multiple symptoms of stress.  In this survey, only 8% of respondents did not report experiencing symptoms of stress.

And do not think that that recession induced stress is going to go away.  The recovery is fragile and it looks as if we are entering a period of lower growth especially in the advanced economies[3], [4].  So uncertainty induced stress will be with us for the medium term.  The implications for productivity are obvious.  Stress management should be at or near the top of HR’s agenda and too should figure strongly in any organisation’s business planning process for 2010-2012.

But there is a second elephant in the room.  The world is not going to look the same after the recession.  We are seeing quite fundamental shifts in consumer behaviour[5] coupled with an emerging view that, in at least the advanced economies, macro economic restructuring may be needed with a reducing emphasis upon the banking sector [6], [7].  The stuff of creative destruction  – but with plenty of opportunity for externally based not internally based innovation.  Developing exploratory skills should also figure strongly in HR’s agenda – we don’t want organisations that just excel in reducing their expense bases.

We are, after all, moving towards a world where there is more to strategy making than cost reduction.  And getting to that world will take time, new externally based exploratory skills – and of course motivated staff.

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References
[1] Churchard, C “HR should do more in recession, executives say”. People Management. August 2009
[2] The role of HR in uncertain times. Economist Intelligence Unit. 2009
[3] N. Roubini, “The risk of a double-dip recession is rising,” FT.com, Aug. 2009
[4] W. Galson, “The ‘New Normal’ For the U.S. Economy: What Will It Be?” Brookings, Sep. 2009
[5] U. Haque, “The Generation M Manifesto,” Harvard Business Publishing, Jul. 2009.
[6] N. Cohen, “British outlook trailing other G7 nations,” FT.com, Sep. 2009.
[7] S. Sassen, “A global financial detox,” Open Democracy, Sep. 2009

Tags: downturn, hr executives, HR management, Human Resource Management, psychological trauma, recession

08 Apr 08 Financial Services, outsourcing, strategy and innovation: Time to rue past decisions?

Frequent visitors to my website will be familiar with my long-running concerns with outsourcing or BPO – especially in the financial services industry and the insurance sector in particular. I have dealt with outsourcing issues in some detail in two briefings – most notably Outsourcing Problems and Disadvantages Revisited.

My concerns have centred around the accepted trend to outsource two functions in particular –customer contact and Human Resource Management. The rush to outsource these areas is may be surprising if one discounts immediate cost savings.

The offerings or products of insurance companies, for example, are by their very nature intangible. Most of the value, and therefore the source of competitive differentiation, comes from human interaction. And the quality of that interaction is determined by the values and attitudes of employees – in other words the organisation’s culture – a difficult dimension of quality to measure and control at the best of times. So why outsource (a) one of the few sources of differentiation in what has historically been seen as a commodity sector and (b) an area where ‘quality control’ is so difficult?

And then we have the Human Resource Function. Research tells us that it is more than a cost function. It has a central role to play in stimulating change in service organisations that wish to break out of a cost reduction mindset. But it also has another key role and that is building, shaping and maintaining those behaviours, values and attitudes that together make up an organisation’s culture. As I have said earlier, culture is an intrinsic part of a service organisation’s ‘product’ and arguably the only true differentiator. So should we be outsourcing this function in insurance and other professional services firms?

An interesting topic to debate I believe.

Tags: bpo, Human Resource Management, outsource, Outsourcing, outsourcing issues, outsourcing problems, professional services firms, service organisation