Tactics to Tackle Tough Times

August 31, 2001
In this time of economic uncertainty combined witha continuing labor shortage, there are two areas that HR should focus on: 1)Strategic staffing. This assures that the talent you need to grow thecompany is not lost in the mad rush to cut expenses. 2) Employee retention.You can't afford to let up on efforts that make your company a great place towork. If you do, you not only risk losing valuable talent, but you also increasethe potential for litigation by disgruntled employees.

Strategic staffing

  • Performance management: "In the last downturn, companies losta lot of good people," says Richard Wellins, senior vice president,Development Dimensions International. "This time around, they are tryingto be more systematic in using performance management systems to determinewho is worth keeping."

    Some companies are starting to force-rank employees, dividing them intogrades or categories based on their performance levels. Texas-based EnronCorporation, for example, divides workers into five categories, from "superior"to "needs improvement." This kind of system ensures that companieseliminate only the low performers when cutbacks become necessary.

  • Feeding the talent pipeline: Even in tough times, companies alsohave to keep their talent pipeline full so that they are prepared when businessimproves. "Pick your two to three most critical spots for long-termtalent pipeline initiatives and keep recruiting in those areas," saysBarbara Yoli, principal, Change Results Consulting, Centereach, New York.

  • Layoff alternatives: Instead of laying off talent now and lamentingthe loss when the economy improves, some companies are looking at layoffalternatives, including making temporary pay cuts and providing one-third-salarysabbaticals to employees who wish to work for nonprofit organizations.

  • Negotiating with search firms: Jim C. Nunan, senior vice president,human resources, for Nonstop Solutions in San Francisco, is taking advantageof the economic downturn by negotiating reduced fees with executive searchfirms. Instead of paying the firm a fee equivalent to one-third of an employee'stotal compensation and incentives for one year, Nunan has negotiated feesdown to 20 percent of an employee's base salary.

Employee retention

  • Retention strategies for "A" players: Take time to identifyyour "A" players and create innovative -- and individualized --programs to keep them. For example, if a group of technology people areyour "A" players, pay them for five full days of work but allowthem to play with new technology one day each week. Other ways of rewarding"A" players are covering the cost of sabbaticals or allowing themto write books and articles on company time.

  • Retention strategies for "B" players: "B" playersare those employees whose talents you may not need on a long-term basisbut do need while developing new processes or technologies. Because youdon't want "B" players to leave before new processes are developed,create retention bonus strategies that reward people for staying the fulllength of the project. This could be anything from 10 to 100 percent ofbase salary.

  • Leadership development: Because the quality of an employee's relationshipwith his or her manager is critical to job satisfaction, don't skimp onleadership development during down times. Good management skills are mostin demand during tough times.

  • Work-life programs: By the same token, you should not scale backon work-life initiatives and other programs that make your company a greatplace to work. In a nervous environment where the threat of litigation hasincreased, you not only want to keep employees, you also want to keep themhappy.

Workforce, September 2001, p. 35 -- SubscribeNow!