Financial Post Magazine
June 24, 2009

Ray B. Williams and Anita Babinszki

Tumbling stock markets and the fear of a deep global recession may be haunting the minds of top executives, but how to fill vacant posts and keep valued staff are just as pressing concerns. During the recession companies are forced to re-structure their most important assets–their employees. Leaders are now being forced to think of innovative approaches, in the absence of flush recruiting budgets.

A study by Accenture has found that more than two thirds of executives are now deeply concerned about not being able to recruit and retain the best talent. In today’s global and highly competitive economy, the war for talent is now global, not local. The survey of more than 850 top executives from the U.S, UK, Italy, France, Germany, Spain, Japan and China found worries about talent management were growing, with 67 per cent this year putting it second only behind competition as the key threat, up from 60 per cent last year. Nearly half of British executives were worried about the effect of low employee morale, with nearly a third pointing to another talent management issue, instability at the top, as a major concern. Manpower Inc., released the results of its fourth annual talent shortage survey, revealing that 30 per cent of employers across the globe continue to struggle to fill positions available despite the global economic downturn. Despite the large number of layoffs we’re witnessing by companies during this recession, there is actually a shortage of talented people in highly developed countries such as the U.S., Canada, the U.K. Italy, Germany, France and Japan, according to Manpower Inc. There is a huge mismatch between the type of individuals available for work and the specific skills and talents employers are now looking for. Governments in these countries will be forced to change their immigration rules to take advantage of the large pool of talented labor from other countries.

According to Edward Lawler II, Director of the Center for Effective Organizations, continuing to develop human capital in organizations is an imperative for companies to survive the recession. The Association for Training and Development have identified human capital planning as a key for companies successfully coming out of the recession.

The shift underway today, embedded in companies’ responses to this recession, will have major unintended consequences for the relationship between organizations and the individuals who perform work. Recent history illustrates how significant shifts in the nature of the relationship between organizations and workers have resulted from practices put in place during a recession. For example, it was during the recession of 1981 that the idea of a “layoff,” meaning a permanent separation with no prospects for recall, came into widespread use. Prior to that recession, the idea that an employer would dismiss workers permanently was so rare that the Bureau of Labor Statistics did not even keep track of such cuts! Furloughs, with the clear commitment of a return when business picked up, were used instead. The reality that jobs were no longer “for life” sunk in. The recession of 1991 saw another substantial change–many individuals became contractors out of necessity – and a significant proportion chose to continue to work as contractors even after “permanent” jobs became available. We accepted the idea that some people may never be full-time employees again and began our evolution to a “free agent nation.”

This recession is ushering in a return to furloughs. Hewitt Associates recently surveyed 518 U.S. firms and found that 70 percent had implemented or were considering implementing furloughs. Major companies such as Dell, American Airlines, and DuPont already have announced plans to send workers home for a few days or a few weeks without pay as a way to cut costs. Much of the attention paid to this trend has focused on the cost-savings opportunities for employers and worries about the economic hardships and potential rights violations to employees. Employers who use temporary hiatuses rather than layoffs save on severance costs, as well as future rehiring and retraining expenses when an economic turnaround eventually comes. Employees, in theory, suffer through some hardship, but not as much as would have occurred with a layoff. This practice is further changing – in irrevocable ways – the relationship between employers and employees. This practice is reframing, perhaps even severing, the idea of “full-time” as many of us have understood it for years.

It is essential that leaders balance talent management needs with short-term challenges and long-term strategies. The companies that recognize the need for key talent in these times will be more likely to emerge stronger when the economy recovers. As organizations deal with cost cutting, it is important to understand what areas are taking a back seat and what impact that will have on their future. During these tough times, business strategies will be reevaluated, organizations will be restructured, new products/services will be created. Leaders in organizations need to think about the talent required to put these new processes and structures in place.

Some important questions to ask to ensure that leadership and key talent are there to power the organization’s growth during and after the recession are:

What are the critical tasks that need to be performed in the current business environment? Do we have the best talent to ensure that these essential tasks are performed well?
1. What are the talent implications of our future business strategy? Are there key talent pools that need to be maintained or
2. expanded to ensure we have the right employees to execute the strategy?
3. Are we providing the best service to ensure that we will retain customers for the future? If new products or services are being proposed, can our current talent pool market and service the new offerings?

While current economic times require changes, it is also critical to recognize the need to retain key talent. Otherwise, organizations run the risk of emerging from the recession without the right employees they need to succeed. Developing and retaining top-performing employees is essential in any business strategy, even-and especially-at a time of economic crisis.

Ray Williams is Co-Founder of Success IQ University and President of Ray Williams Associates, companies located in Vancouver and Phoenix, providing leadership training, personal growth and executive coaching services. Anita Babinszki is President of Gigaminds, LLC, a company based in Las Vegas, Nevada, providing NLP coaching and hypnotherapy services.

Reference: Financial Post