Responding Effectively to Current Economic Pressure Anjum Fayyaz – UNIDO/LHRF Human Capital Management Conference, July 22, 09 – PC Hotel Lahore.
Responding Effectively to Current Economic Pressure
Anjum Fayyaz – UNIDO/LHRF
Human Capital Management Conference, July 22, 09 – PC Hotel Lahore.
“if millions of
jobs were not
at stake, not
to mention
the economic
balance of
the planet.”
(Laurent Joffrin,
editor Libération
newspaper)
When fortune frowned
• The worst financial
crisis since the
depression is
redrawing boundaries
between government
and markets, says
Zanny Minton Beddoes.
Will they end up in the
right place? • Oct 9th 2008 – The Economist
Survey: Latin America – Nov’08Effects of Economy on HR
• Turbulence affecting global markets
• Companies seeking answers to questions:– Postponing new hires
– Reducing training & development
– Recruiting & hiring in most affected area
• Concerns:– Reducing cost and investment (particularly
training)
– Layoffs & hiring freezes (downsizing or right sizing)
– Salary increases and compensation (?)
– Organizational climate & employee motivation (?)
Activities Last 12 Months
Next 12 months
Stop Hiring 44% 40%
Reduce Training & Development 23% 43%
Restructure Company 17% 43%
Increase Communication with Employees 12% 48%
Reduce Workforce 17% 38%
Variable Compensation 10% 30%
Change Health & Benefit Plan 10% 30%
Change HR Focus, Structure & Function 9% 28%
Survey Conducted with 245 Respondents
Survey conducted in Nov’08
Reaction to a Crisis Situation?
• Normal reaction; ways to cut
costs, almost always in the
area of labor
• Reduce productive capacity
due to contracting demand
• Main mistake; adjustments
without analyzing
• Look for greatest quantitative
adjustment rather than
interventions & improvements
• Crisis requires global analysis
Reaction to Crisis Situation by Leading Cos. in Pakistan?
• IT
• Telecom
• Beverages
• Electronics
• Engineering
• Management Development
Crisis Handling: Leading IT Company
Two Strategies
• Hiring
– Congealed for 3 months; not a high impact
– Head of Department; justified and hire although normal hiring blocked
• Compensation– 2008; no annual appraisal; first time in the
history of Co.; shared with employees (why)
– Provident fund; ceased for limited time; linked with target; reduced fatty areas
• Training & Development– External trainings reduced
– Internal talent explored; team of trainers
– Reduced training cost
Crisis Handling: Leading Telecom Company
• Hiring– Layoffs: Oct’ 08;140,Apr’09;60 (bottom 10%)– Decision; took 4 months (ideal 15–20 days)– Poor communication; WIFM (employees)
• Compensation & Benefits– Benefits; rationalized; gross to basic– Provident fund; 10% – 8.33%– Gratuity; 3 – 5 years; gross to basic
• General Concerns– Employee morale; bad– Delegation of power & authority– Expectations management (solution)– Transparency, communication, decision
Crisis Handling: Leading Beverage Company
• Hiring– No Layoffs; 2800 to 3200 (one year)– Crisis vs. Opportunity; improved quality of
hiring; talent available– Linked with vision & strategy; 22% growth
vs. 15% average growth of industry
• Salary– Increased by 22%; above average
• Training & Development– Increased by 60%– Number of training hours increased– Training; opportunity in crisis– Treat people as assets
• Vision & Growth Strategy– Main pillars
Crisis Handling: Leading Electronics Company
• Hiring– Layoffs; 3% – 4%; 40 – 50; revisit; additional
fat reduced (opportunity)– Linked with Vision & Strategy
• Training & Development– Increased by 40% (more important in crisis)
• Strategy– Intrinsic motivation of HR Department– Change of focus; Outreach to other
departments– Workforce trained; behavioral skills in
addition to technical skills• Communication
– Frequency of meeting increased by 50%– Employee engagement
Crisis Handling: Leading Engineering Company
• Hiring– Overall workforce increased; 35000 to
42000; 20% additional fat reduced; careful communication on rightsizing
– Performance evaluation; good talent retained; average / below average had to go
• Training & Development– Huge budget; changed strategy; external
resource persons to in-house faculty– Training of executives & business
managers; external trainings• Strategy
– Business paradigm; local to overseas– No change in compensation & benefits– Expectations management
Crisis Handling: Leading Mgmt. Development Company
• Hiring– No layoffs– Increased by 9 people; 3 months– 2 senior professionals hired
• Strategy– Focus on growth & strategy– Regional expansion; 1 to 3 cities
Crisis: Lessons/Opportunity• Hiring
– Some hiccups; Reduce additional fat– Opportunity; revisit Co. & hiring strategy– Easy to find and retain good talent– Communicate, Communicate &
Communicate
• Compensation & Benefits– Rationalized (oppt’y); share ‘why’ part
• Training & Development– More important in crisis– Reduce external training– Explore internal talent; develop trainers
• Business Focus & Strategy– Based on business growth & strategy– Change focus of HR department; outreach– Expectations management