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What Can Regional HR Directors Do When the Economy Can't Decide If It's Up Or Down?

The Chapman Consulting Group today hosted an HR roundtable discussion for 15 select HR Heads. Regional HR Leaders from high-profile multinationals in the Financial Services, Retail, IT & Telecommunications, Oil & Gas, Real Estate, Logistics, Semiconductor, Life Sciences, and Marine sectors met over lunch at the Singapore Cricket Club to discuss the topic of “HR Strategies in Times of Potential Market Rebound: How to Tentatively Plan for Growth while Learning Lessons from the Recent Downturn”.

So Are We Experiencing a Recovery or Not?

The conversation started off with a brief overview of each company’s version of the current economic ‘recovery’. The vast majority of participants agreed that they were dealing with a climate of ‘uncertain positivity’. The contradiction was felt by everyone – in a few cases, there were signs of growth in some business units, while others were still nose-diving; in other cases the picture in Asia was relatively rosy, but the organisation was still being ‘dragged down’ by the stagnation of business in other parts of the world.

The key factor affecting all companies was the overriding importance of cost management. Even those businesses that had ostensibly shown strong growth throughout 2009 and into 2010 were still seeking to keep costs to the bare minimum, in order to hedge against the risk of further economic turmoil in 2010. While the Asia markets are experiencing a fast rebound, this region will not be able to avoid another global slowdown caused by sovereign bankruptcies in Europe or the expected further write-downs of losses in the Western commercial real estate markets.

Where is Investment Still Being Made?

While this cost factor will continue to loom over the year ahead, all companies represented at the lunch were still putting significant resources into areas that they felt made the most sense to their business sustainability. In one case, even though the company had gone through an unprecedented round of cost reductions, they still did not compromise on their graduate recruitment hiring, as they see this as the lifeblood of their long-term internal career management planning. And in another example, while the company was shutting factories in one business area, they were putting significant resources into opening new facilities in another. Money and talent are both gravitating to areas that can offer high-impact business successes in both the shorter and longer terms.

In playing this game of shifting sands, HR Leaders must contribute to the internal communication of business strategy so that employees can understand how and why further restructuring must be completed, even when the economy appears to be picking up in Asia. The market has a tendency to focus on the negatives, so HR and the business at large must counter this perception with the strategies that are being implemented to achieve long term growth. Unlike in boom times where investment can be made across the board, nowadays they can only be done selectively where they count the most. And often only by sacrificing poorer performing areas.

A New Era in Workforce Planning?

The most significant impact on HR Leaders has been the increased need to plan and allocate talent resources effectively and with higher degrees of accuracy. The company must make sure that it capitalises on any growth opportunity, so it needs an employee size to help drive (and cope with) increased demand. But this must be done without overreaching and leaving the business overexposed to a bloated and inefficient workforce. The answer is therefore to build in flexibility into workforce planning strategies.

The success of companies in this field is still relatively limited. Even in companies that have made significant progress in implementing sophisticated workforce planning methodologies, there is still a lot of work that can be done in allowing for short-term contracting, or in making a true talent inventory that takes into account people’s abilities to develop adjunct skills in the future. And in any case, can the talent within a company’s workforce really be boiled down into a series of complicated algorithms or into ‘just in time’ techniques derived from the precepts of lean manufacturing? Without doubt, this area will be an interesting one to watch out for in the future. Technology has already had such a great impact on HR specialist areas such as recruitment or in the automation of HR Operations, so will workforce planning be next?

Now is Not the Time for Good News

On a final note, the group discussed the paradoxical downsides of experiencing strong economic performance in weak market conditions. The HR Director of one company discussed how they’d been reaping the benefits of attracting talent during the downturn, since most of their competitors were suffering heavy financial losses. However they now suffer from the worry that their competitors will regroup, reinvent and re-mobilise In ways that are highly innovative and will leave them at a disadvantage in the future.

The HR Director of another company discussed how the organisation won an unexpected windfall of business at the end of the downturn, but that this has caused a huge and unreasonable expectation in the workforce that salaries and benefits will increase as a matter of course. This HR Director has an uphill struggle in communicating the perils and uncertainties of the current market, and already expects that turnover will be high, as employees will jump to the conclusion that the company is withholding money that deserved to be paid out entirely to them.

Communication remains at the heart of current HR imperatives, as the HR Director must make sure that employees in Asia Pacific Japan see the bigger picture. To many people in Asia, there is no sense of concern regarding the economy, as the local market looks extremely positive to most. So they need to be shown the context of the multinational in its entirety. And at the same time, global decision makers need to also understand that there is a world outside global headquarters in Europe and North America where there still exists optimism and growth. Like never before, it’s the Regional HR Director’s job to bridge together these two disparate worlds within their companies.

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