Don't forget your people

Feb 26 2010 by Nic Paton Print This Article

Chief executives are starting to focus once again on people issues rather than purely financial survival in an effort to head off any future employee retention crisis as and when vacancies and job confidence start to return.

We may still be some way off people feeling confident enough to dip their toes back into the jobs' market, but CEOs are keenly aware that it is something they need to be planning for if they don't want to suffer a mass exodus of skilled workers when a consistent upturn finally arrives.

According to a poll of CEOs by consultancy PricewaterhouseCoopers, tackling morale, employee engagement, training and development and flexibility of working are all likely to come back on to the agenda as key priorities in the post-recession world.

The survey of around 70 British CEOs found that more than eight out of 10 were now starting to prioritise their people and change management strategies, with the CEOs recognising that the challenges experienced during the downturn had led to some HR and human capital failings.

Optimistically, more than four out of 10 expected to be increasing headcount over the next 12 months, while two out of three expected to need to increase investment in training and development.

The vast majority – 85 per cent – fully expected they would have to overhaul the way their organisations managed people as a consequence of the economic crisis.

Four out of five said they would need to focus more now on staff morale, as well as spend more money on this area.

Nearly six out of 10 said they would be making changes to flexible working while more than half said they would be revising their global mobility arrangements, in particular looking at factors such as staff travel or international secondments.

Michael Rendell, partner and leader, human resource services at PwC, said: "Some of the biggest challenges facing organisations include the availability of finance, changing risk requirements and market adaptability, together with responding to new customer demands and change management capability – galvanising employees and executives with the right skills and experience will be critical to operating and competing effectively in the emerging environment.

"We are all well-versed in the assertion that the deep cost-cutting and headcount reduction many companies felt forced to undertake during the recession could impact speed of recovery and competitiveness so it's encouraging that CEOs are now prioritising the people agenda," he added.

"Despite the stagnant labour market, there are always opportunities for the best people and some organisations have used the downturn to poach from competitors that failed to ring-fence top performers.

"As the population ages, organisations' and countries' prosperity will depend on an increasingly-limited number of talented people producing wealth so CEOs are right to be concerned about having the right people in the business," he continued.

Around three-quarters stressed that having a talented, well-skilled and well-educated workforce would be critical to the future competitiveness of the UK, with almost a third believing the government had in fact been effective in helping to create just such a skilled workforce.

But what was also clear from the survey was that CEOs still did not necessarily believe that HR was going to be their most trusted adviser during and beyond the recovery.

The unanticipated scale of the cost-cutting, headcount and redeployment changes required by organisations during the downturn had meant some of their HR processes had been unable to support the rapidly changing needs of organisations, so bringing any organisational HR and human capital failures sharply into the spotlight.

"There is some debate about whether HR did its job during the downturn and whether the function is broken – particularly in terms of the reward models it champions and its ability to cultivate an agile, flexible workforce," said Rendell.

"If not satisfactorily answered, some speculate that these questions could jeopardise HR's opportunity to prove itself and see it reduced to an administrative function," he added.

"There are some big issues that will, in part, influence how successfully these new challenges are met – for example, how supportive the Government is in helping to create a skilled future workforce and how politicised debates around education and remuneration become.

"Preparing for the upturn is a clear platform of opportunity for HR and, in the near future, this will mean refocusing on managing through change and engagement programmes as talent gaps need to be closed and roles redefined," he continued.

"Given the strong focus CEOs appear to be placing on people management strategy and processes, we expect to see significant changes to HR models over this decade," he argued.