HR have access to a wide range of benchmarks and cost standards by which one can measure HR efficiency. All of these metrics encourages cost savings and are the kinds of measures you would find in the first level of our measurement pyramid. But unless you want HR to be treated like a commodity in your organization, you should beware of building your measurement system unthinkingly on these generic benchmarks. Instead, separate out the costs associated with HR commodities such as employee benefits transactions and policy compliance, and the unique investments required to create HR strategic value in the organization. These choices will differ for each organization. A long list of potential metrics are considered and it is important to choose the key metrics carefully. Otherwise, it is possible to become overwhelmed by the potential choices. Benchmarking is fine for the HR commodity activities, but it has no significant influence on your firm’s ability to implement its strategy. The productivity improvement agenda that HR needs to carefully spearhead during business slow down is:
Improving return on compensation spend:
Reassess if your compensation strategy is driving organisational 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. 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 revitalising the organisation.
Increase sales-force productivity:
‘We keep paying sales reps more commission, yet we are not hitting our revenue budget, revenues are up, but we are 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. Organisations who wanted to immediately reduce headcount in the 1999-2001 period which 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 labor 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.
It is to be emphasized, 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, we choose to act in response to the current challenges, we need to appear coherent as an organisation, industry and country.