Manage talent to wade through the turbulence |
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The boardrooms and offices are
experiencing tremors. Fluctuating crude
oil prices, the present bout of inflation, the
sub-prime crises, controversy about bail-out
packages, higher interest rates, recession
and other key issues causing uncertainty
are building a high-pressure environment.
Business heads are under pressure to find
ways to shrug off the deeper effects on their
organization of a downturn in the global
economy.
Importantly, they are trying to think
through the consequences of this sliding
momentum. The pressure further mounts when
multinationals, such as General Electric, look at
their overseas operations in markets like India
and China, to bail them out from first the US
and now the global economic downturn.
Ultimately, the war for Indian business
is global. The stakes are high since success
is largely aided by harnessing global talent
together, which by far is the most vulnerable
commodity in both the good and the not-so good
times.
The biggest fear is that, in order to manage
the situation, we should not end up mismanaging
it. The culprit for this would be the managerial
talent's inexperience in understanding recession,
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especially since the global services marketplace
relies significantly on the outcome of Indian and
other overseas talent.
History has shown that organizations in such a situation frequently make early mistakes:
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Handle cost takeouts in a fragmented and not so strategic fashion |
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'Aim low,' failing to differentiate and
acknowledge key contributors |
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Think that the talent war is now over. |
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Businesses often pull in the reins on spending
when the economy turns south. One is already
hearing of cost cutting measures, like taking
away the lunch subsidy or even taking away the
lunch, a freeze on travel, squeezing the training
budget, etc.
Our research indicates that continued
strategic spending through a market downturn
can, in fact, create a competitive advantage for
the market upturn, and an extra dollar spent
today may pay extra dividends tomorrow.
Can the "boom generation" of managers
cope with downturn? If managers have
only witnessed the long period of economic
expansion, they may lack the experience
required to lead in a bear market.
While many top executives are confident
that their companies are better prepared for
a downturn than their competitors, few admit
to taking any practical measures beyond cost
cutting.
The keys to execution are intangible:
talent, relationships, and knowledge - and are
easy victims of hasty responses to economic
uncertainty.
While this is surely an opportunity to
reset business and the executive performance
agenda, leadership in organizations must
have a broader agreement on strategy and
pathways. What we have learned is that soft
tools like communication, common voice,
sharing information, and the hard practices
like systematic change and redesign, are both
extremely important in managing stakeholder
expectations.
How radical can the change be is what
India Inc is finding hard to answer.
From embracing a global talent mindset,
elevating talent to an item on the CEO's
agenda, providing exciting rewards, and wealth
creation opportunities, accelerated careers,
and creating global leaders, we cannot choose
between engagement or results. Real success
resides in striving for both.
We have to equip ourselves and cascade the
right message to our shareholders, employees
and customers or clients.
Focus on 'real performance'
Gurus and industry leaders have already
realized that 'productivity' can help India tame
inflation and seems the only sustainable factor
which we can independently influence.
In India's burgeoning economy, there is
a colossal waste of resources, from capital to
talent deployment. organizations need to take
stock and enumerate various ways to improve
efficiency and boost productivity.
Some of the items on the productivity
improvement agenda that HR needs to carefully
spearhead include:
Improving return on compensation spend:
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Reassess if your compensation strategy
is driving organizational and employee
performance. Best performers do better
than others by 50 percent or more on all
measures of productivity, sales, building
employee commitment, etc. It is important
that we give special attention to driving
improved retention of vital talent. Our focus
needs to change from 'attract & reward' to
'retain & invest'. Therefore, a combination
of short and long-term incentive programs
will build employee ownership in
revitalizing the organization. |
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Increase sales-force productivity:
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Common industry voices across all sectors:
"We keep paying our sales reps more
commission, yet we're not hitting our
revenue budget"; "revenues are up, but
we're not making enough profit". |
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It is important that our sales compensation
is helping us change the mindset from
selling to building relationships, existing
customers to new acquisition, competitive
behavior to achievement orientation. |
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Organizations need to reduce cost of sales
while retaining the top sales talent and
without sacrificing the top line |
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Manage your talent supply for the long-term,
not the downturn:
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Most organizations cycle through talent
surplus and shortage with inadequate
long range planning. A recession often
leads to workforce reduction that hurts
the organization's turnaround and final
survival. |
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We have enough of examples of
organizations who wanted to immediately
reduce head count in the 1999-2001
periods. They fell victim to knee jerk
elimination of jobs. |
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Many business leaders ruefully admit that
they had the wrong strategy for coping
with an economic slowdown and were
ill-prepared to deal with its consequences.
Many of them identify a startling lack of
forward planning for when the economic
cycle did finally change and a lack of
recession experience among senior and
middle management. |
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A restructuring is a defining moment and
hence needs to be managed with experience
and uttermost caution which will help find
real redundancies. |
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Focus on eliminating hierarchical levels, as
opposed to work. |
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Communication is the key:
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Lack of communication creates a downward
spiral from uncertainty to fear. This, in turn,
leads to decreased morale and productivity. |
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It is most effective to drive systemic
performance and engagement actions
through our best people. |
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Reduce labor cost:
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While multinational organizations have
created efficiencies by means of global
sourcing, creating shared services
organizations, etc., this seems like the
opportune time for organizations to stream
line their functioning to cut costs and
improve efficiency and service delivery. |
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In conclusion, the challenges today and
potentially into the foreseeable future will
require a diverse management focus in running
businesses and building organizations of
tomorrow.
It may appear obvious, but frequently these
points are overlooked in our rush to make a
difference:
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Start before you have to: We need to
emphasize restructuring as a proactive
measure, rather than a reactive strategy. |
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Focus on core issues: 'cost' may not be the
problem. |
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Shift from mindset of deadline to reinvention. |
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Ultimately, however we choose to act in
response to the current challenges, we need to
appear coherent as an organization.
Sandeep Chaudhary is
head of Consulting for
Hewitt in India, and can
be reached at
sandeep.chaudhary@hewitt.com
Contact
infoasia@hewitt.com if
you'd like to learn more
about how Hewitt can
help your organization
during these times
of turmoil by turning
these ideas (and
others) into action. |
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Hewitt Quarterly Asia Pacific
is made possible through the combined skills and experience of Hewitt consultants from across the Asia-Pacific region.
For further information please contact:
Hewitt Associates
2601-05 Shell Tower
Times Square
Causeway Bay
Hong Kong
Tel: (852) 2877-8600
Fax: (852) 2877-2701
editor-hqap@hewitt.com |
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