The economy is in recession and profits have been hit. You are summoned before the CEO and finance director. 'We need to save money and we need it now.' It's time to wield the axe - and staff are on the receiving end. Fast forward two years and the economy has picked up. Suddenly you have to recruit, induct and train all over again.
This was the typical recessionary strategy of the 20th century but firms have learned from the past. While headcount cuts still abound, a raft of strategies - from voluntary pay cuts and reduction of hours to paid sabbaticals - has emerged as companies seek to retain the best people.
But there is still some way to go. While most leaders understand the skills crisis has not gone away, too many are taking resourcing decisions without an eye on the future. Research conducted by HR finds that, of two thirds of firms that are cutting costs, one third is not factoring in future thinking. Some 97% admit they have effectively put the future 'on hold' while they try to navigate through the recession.
Yet these same HR directors expect to be part of a very different organisation a mere five years hence. They talk about decentralisation, empowerment and collaboration. Nine in 10 expect knowledge marketplaces to be widely adopted, replacing functional team-based structures. Staff will work across boundaries, with technology at their fingertips to connect with each other.
So how likely is this vision? How is high performance created in this future workplace? And what is the role of technology going to be? These were just some of the questions debated in a special round-table event hosted by HR, sponsored by BT Conferencing.
Balancing the operational day-to-day needs of a business with future requirements is a tricky act and Danny Kalman, director of global talent, Panasonic Europe, agrees that in the past, some companies did not take the view that they needed to continue investing in people during a downward cycle in order to seize business opportunities in the upturn. He advises: "Look at your lines of business and think, yes, we may have to make certain cuts and yes, we may have to make a reorganisation, but at the same time we have core businesses and we still need to develop people."
Terence Perrin, chair of the Association of Graduate Recruiters (AGR), believes organisations are not making the wholesale cuts of the past. In 2001, he says, over-aggressive cost-cutting led to a complete halt in graduate recruitment and internships. But during this recession companies are tending to reduce rather than halt the number of graduate vacancies. So while Perrin finds more than 25% fewer graduate vacancies "disturbing, given this is the biggest ever year of graduates coming in to the marketplace", there is still some recruitment taking place. "I think many organisations have taken a medium to longer-term view," he says. "This is to say if we stop recruiting, we are going to be left with a hole in our talent pool in the future. Let us look at what we are doing, let us re-evaluate, but let us keep recruiting."
It's not just in graduate recruitment either. Donald Taylor, chairman of Learning Skills Group, says training budgets are holding up. "In January I was absolutely sure training budgets were going to be slashed massively. I'm surprised they have not been," he says.
"Generally the feedback I am getting is that we are expected to do more with the same or with slightly less, but there have not been huge cuts in the budgets. What this is indicating to me is that companies understand the value of what their people can add."
The upshot of all this is that organisations are taking a more innovative approach to people practices this recession, with flexible working hours one of the biggest winners. One such business is BT, which has combined job losses with reskilling and increased use of technology to keep people connected. "The approach we have taken is to cut where it makes sense to become more productive, more efficient, rather than cutting skills that are short-term," says Deborah Lee, HR director, consumer and enterprise, BT Conferencing.
All agree technologies such as video conferencing and webinars are useful ways of achieving such cost savings but Angela O'Connor, chief people office of the National Policing Improvement Agency, questions whether many organisations have the management processes in place to deal effectively with these new ways of working.
"I am not convinced we have got our managers and leaders to deal with a disparate workforce. Video conferencing and all of these things are all very well, but I think sometimes we miss out on some of the relationship issues that can only be dealt with through a blended approach that involves face to face," she says. "We have learnt through making mistakes that you cannot leave people isolated. They need human interaction, they need to work with colleagues. The same goes for e-learning; you can save lots and lots of money, but it is a very different proposition to cohort learning. We have now opened a college of police leadership and we are having a real balance between what we can do using technology and what actually matters with a cohort of people learning and developing together. Even though it will cost us more, we think the benefits are there."
BT's Lee concedes that one of mysteries of flexible working is the value of face-to-face versus virtual team-building. The challenge, she says, is to destroy the view that 'if I do not see my workforce they are not working'. "There comes a point at which you need to be able to make a judgment call on when it is beneficial to get people together."
The fact that a defence for flexible working is still required after a decade of debate around the subject irks Penny de Valk, chief executive of the Institute of Leadership Management.
"We are talking about an outdated model that has not been relevant to the working population for about 15 to 20 years. So the intransigence of organisations always amazes me," she says. But she agrees some models for flexible working have not helped its adoption. "We often give managers competing remits. We say we have got these performance issues but we do not really design flexible working in a way that enables them. Managers are expected to somehow choose between, say, Mary's mother with Alzheimer's and John's three-year-old. We do not want them making choices on that basis, we want them to be able to sit down and have grown-up conversations around what works for the organisation and what works for the individual."
The wide gap between HR directors' desire to see empowered, flexible, agile, collaborative organisations in the future and the ability to execute this in practice is noted by everyone. Lee believes part of the blame lies with HR itself. "In order to get to an empowered workforce, HR needs to be providing processes and policies and structures that enable people to feel empowered. I think this is a challenge, and it is the same as the leadership challenge, which is allowing people to be empowered rather than necessarily being directed."
Alan Warner, former director of people at Hertfordshire County Council and communications officer at the PPMA, says the real question is what is the "burning platform" for change. "In public-sector organisations, you have got people that come into the business for different reasons. To try and get them to move to where you need them to be, you have got to give them an explanation of the need for change. You have to say, well actually we can provide more of that if we can reduce some of our operating costs."
De Valk agrees, saying one of the problems is there are too many generalisations and "flavours of the month" and not enough business reasoning. "That is confusing for organisations because they get these flavours of the month raining down on them. Middle managers sit there defending themselves from the latest initiative that is coming from on high and try to bash it back while coping with a workforce that is changing fundamentally.
"I think what all of us probably call the 'buggers in the middle' who stop change from happening are probably the 'engine room' we may have neglected, as we spend so much time on senior executives and leadership development. It is a tough world at the front end. I do not think we equip those guys well enough to do that tough job."
Tony Sheehan, learning services director at Ashridge Business School, notes there have been a number of trends in recent years that everyone assumes are good. "Collaboration is good, acceleration is good because we are all working faster and faster, and technology is good. I would challenge each of those. If we look at slow blogging, for example, people are now actually thinking about something before they do it. I think we can rush headlong into all of these fads and maybe they are not all as great as they are cracked up to be."
Referring to a Harvard Business Review article that states unnecessary collaboration can be a hindrance to productivity, Elly Tomlins, head of HR strategy and planning at Thomson Reuters, says: "For us collaboration is on every single strategy document I have ever seen. It is a part of who we are, how we engage with our customers and how we engage with each other. That is not necessarily true of everybody," she says. "Not everybody needs to collaborate. What we have been trying to do is articulate which groups need to collaborate. It's about making it specific rather than saying everyone has to be wonderful at collaboration."
Perrin raises the subject of recent AGR research which shows the assumption Generation Y is only interested in working online and remotely is wrong. "When we talk to Gen Y, it is the complete opposite. Having a blended approach, or having a range of options, is more important. Otherwise you can make some big mistakes around perception and lack of understanding about what people's learning style and needs actually look like."
With all this confusion, yet a general desire to design organisations that are flexible and innovative, HR needs to take a more active role in developing strategies to help the transition. Perrin believes it is vital to crack the existing culture that rewards presenteeism as opposed to performance.
"That is a big one that needs to be nailed," he says. "There is need for definition around performance - not going down the route of HR getting out a whole load of policies and procedures again, but actually just making people feel comfortable and it becoming engrained in the company's values."
O'Connor says this goes back to employee engagement and discretionary effort while Lee believes a big challenge is engaging those employees in roles for which flexibility is not always an option. "The flexibility aspect for our workforces is part of our culture. Some 80%/90% of our managers could not live without our flexible options. The challenges now are more around those roles where a customer is dictating how we need to operate the business."
De Valk reiterates that the intransigence of organisations is the stumbling block. "How do we take this opportunity, in such an ambiguous environment, to see if we can come up with new solutions? And how do we support organisations and managers so they are able to do that?" she asks.
Meanwhile Sheehan and Tomlins identify new ways of innovating and communicating as challenges. Sheehan points to Procter & Gamble's colloborative strategies. "These ideas do not just come from within an organisation. As HR professionals we have to be able to encourage this in terms of some of our policies," he says. Meanwhile Tomlins raises the question of new forms of communicating and engaging for the leadership model. "Look at the way President Obama engages with the world," she says. "He is confident and comfortable. But it requires a certain type of individual to be able to do that in such a transparent way and that is a fundamental shift. It is hugely risky but this is the new front line for management.
"We in HR have to help them experiment with it in ways that feel engaging. We have a CEO who puts himself on Facebook, and it is amazing to see the number of people in India in employee surveys who say: 'I love Tom because I am his friend on Facebook'. Tom must be one of the most befriended men in the country, but it does have a very tangible, real impact."
Warner concludes that HR needs to be more innovative and "spectacular" in what it does. "We need to look at ourselves and ask what is the most imaginative, creative thing we have done today, or this week or this year? HR people are dropping down the hierarchy in their organisations. There is more credence given now to the finance people and the corporate services type folk. We need to fight back by being creative and providing solutions that are practical ways of dealing with the sorts of things we have been talking about. It is no good just describing them, we have to gradually come up with the solutions."
- Penny de Valk, chief executive, Institute of Leadership and Management
What does leadership and management need to look like in terms of employee engagement? In the context of the recession, we are finding some interesting leadership behaviours. Some of these are very adaptive and some are not, but they are instinctive nonetheless.
- Alan Warner, communications officer, Public Sector People Managers Association
There is a big push in the local authority and public sector world for collaboration, either with each other or via outsourcing. As such, there is a huge further step to take in terms of how the public sector develops in what is going to be quite a tough financial scenario in years to come.
- Danny Kalman, director of global talent, Panasonic Europe
I have three desks: one in Japan, one in Bracknell - headquarters of Panasonic Europe and UK; and one at home. This links to some of the issues around home working. I communicate with people and executives, and the talent team, in different regions and take much more of a global approach.
- Terence Perrin, chair, Association of Graduate Recruiters
I am interested in the Generation Y theory, looking at what the aspirations are of Generation Y coming in to their first role from university. I hope to draw on findings from other graduate recruiters and development specialists in the graduate field on how they are tackling a number of these issues from that perspective.
- Donald Taylor, chairman, Learning Skills Group
I am interested in technology that helps people work flexibly. I think video and web-conferencing is one of the great 'submarine technologies'. I am typically on a Skype call to Tehran or Armenia at 8am, having a webinar with somebody in the UK in the middle of the day, and then with the US in the afternoon.
- Elly Tomlins, head of HR strategy and planning, Thomson Reuters
We have more than 3,000 journalists in 93 countries, so my perspective is often driven by that extraordinary range of cultural diversity. Social media is core to our proposition. Everything from how we use Twitter in our journalist networks, to how we collaborate with customers to create products is really important.
- Deborah Lee, HR director, consumer and enterprise, BT Conferencing
We have the global problems of getting people together as well as the talent issues about retaining and getting the new generation engaged with our workforce. At the moment, one of my main concerns is the swine flu pandemic, and how we keep our business working when people are at home caring for loved ones.
- Tony Sheehan, learning services director, Ashridge Business School
What is an executive going to look like in a few years' time? It certainly touches on the Gen Y issue and definitely on the multi-generational workplace. On the one hand I see the need to share knowledge, and on the other, the challenge of actually absorbing that knowledge, given the rate at which it is generated at the moment.
- Angela O'Connor, chief people officer, National Policing Improvement Agency
One of our biggest challenges is we have 43 independent police authorities and forces, and the ability to work across them has not been that common. We are introducing a national strategy around information systems so we can pull together a number of disjointed practices.
This article was first published on Human Resources