Sandeep Chaudhary, Business Leader
Talent & Organisation Consulting

THE BOARDROOMS AND cubicle-filled trenches are experiencing early tremors. Rising crude oil prices, the present bout of inflation, the sub-prime crises and higher interest rates are building a high pressure environment. The Indian business heads are under pressure to find ways to shrug-off the presumably unavoidable downturn in the global economic activity. Importantly, they are trying to think through the consequences of this sliding momentum on the future of doing business in India. The pressure further mounts when organisations like General Electric look at India and China to bail them out from the US economy downturn.

Ultimately, the war for Indian business is global. The stakes are high since our 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. Our biggest fear is that in order to manage the situation, we should not end up mismanaging it. The culprit for this would be the Indian managerial talent's inexperience in understanding recession; especially since the global services marketplace relies significantly on the outcome of Indian talent.

Organisations in such a situation are likely to make early mistakes

Handle cost takeouts in a fragmented and not so strategic fashion, 'Aim low,' failing to differentiate and acknowledge key contributors, think that the talent war is now over.

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, freeze on travel, going back to non-a/c transport, squeezing the training budget etc. During a down economy, HR can continue to serenade high performing talent, while captivating interest from the external talent market. Our belief is that continuing strategic spending through a market downturn creates a competitive advantage for the market upturn, and an extra dollar spent today has extra dividends for tomorrow.

The boom generation can't cope with downturn: Having witnessed the long period of economic expansion, today's generation of 'boom leaders' 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 executive performance agenda, leadership in organisations must have a broader agreement on strategy and pathway. What we have learnt is that soft tools like communication, common voice, sharing information, and the hard practices like systematic change & redesign are both extremely important in managing stakeholder expectations. How radical can the change be, is what India Inc is finding hard to find answers for. 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 suddenly regress and expose our undeveloped leadership and decision-making capability. We cannot choose between engagement and 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 realised that 'productivity' can help us tame inflation and seems the only sustainable factor, which we can independently influence. In our burgeoning economy there is a colossal waste of resources, from capital to talent deployment. Organisations would need to take stock and enumerate various ways to improve efficiency and boost productivity. Some of the productivity improvement agenda that HR needs to carefully spearhead is:

Improving return on compensation spend

Reassess if your compensation strategy is driving organizational and employee performance. Best performers do better than others by 50% 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.

Increase sales-force productivity

“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”, are common industry voices across all sectors. 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. Organisations need to reduce cost of sales while retaining the top sales talent and without sacrificing the top line.

Manage your talent supply for the long term, not the downturn — most organisations cycle through talent surplus and shortage with inadequate long range planning. A recession often leads to workforce reduction that hurts the organisations turnaround and final survival. We have enough of examples of organisations who wanted to immediately reduce headcount in the 1999-2001 period which feel fell victim to knee jerk elimination of jobs. 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. A restructuring is a defining moment and hence needs to be managed with experience and uttermost caution, which will help find real redundancies, reasons for slow decision making, focus on eliminating hierarchical levels, as opposed to work.

Communication is the key

Lack of communication creates a downward spiral and uncertainty, to fear, which in turn leads to decreased morale and productivity. It is most effective to drive systemic performance and engagement actions through our best people.

Reduce labour cost

While multinational organisations have created efficiencies by means of global sourcing, creating shared services organisations etc., this seems like the opportune time for Indian organisations to stream line their functioning to cut costs and improve efficiency and service delivery.

In conclusion, it will require a diverse management focus in running businesses and building organisations of tomorrow. Few key messages which actually state the obvious, but yet are overlooked in our rush to make a difference are:

Start before you have to: We need to emphasize restructuring as a proactive measure, rather than a reactive strategy. Focus on core issues: 'cost' may not be the problem Shift from mindset of deadline to reinvention.

And ultimately, however we choose to act in response to the current challenges, we need to appear coherent as an organization, industry and country.