· 2 min read · Features

The role of the HR director in a recession


The recession brings challenges and opportunities to organisations, a chance to question their entire business model, including markets, sectors and communities they serve - all at a time when employees and other stakeholders are braced for and open to change.But these are demanding times for HR too. Technological processes, often with individualised portal access, have rendered HR increasingly invisible. Today, HR staff are usually seen only when there is a problem such as a grievance or redundancy.

HR can only work effectively where the HR director has demonstrated the ability to win and maintain influence - particularly with the chief executive. This is vitally important today where the task of the HR director is to ensure HR functions smoothly, and, more importantly, question the status quo, tease out new business directions and areas for performance improvement.

As I see it, the HR director should focus on five key areas:  

1 Ensure executives have a strong set of common values, are flexible, resilient and able to deal with high levels of uncertainty. Specifically, the HR director should act as the organisation's ‘glue and oil' by coaching and facilitation, including helping executives recognise and abandon hidden agendas that hinder true teamwork and optimum organisational performance, and encouraging executives to identify and assess ways the current business model can be flexed to help sustain and grow the business.
2 Control costs by encouraging managers and staff to question how they are accrued and whether they are absolutely necessary. Although cost-cutting is not new, there are certain to be activities that could be stopped or slimmed down because they add little value.

3 Nurture talent. During the last recession, many organisations mistakenly cut headcount and outsourced service functions thinking that they were not eliminating core competence. Subsequently, when service level agreements with external providers failed to meet standards, businesses recognised they had shed key support areas but had no way to assess how badly things had gone awry, or to argue coherently with these providers about the best remedy to put in place.
The HR director should focus management attention on key capabilities needed right now as well as gaining a picture of future resource needs and how best to secure them. One option in any recruitment freeze is to actually deepen university links by offering students projects as part of their degree courses. This makes good business sense post freeze, as it could save on recruitment costs, because the business will have access to candidates already vetted in a more rigorous way than through an interview.

4 Maintain a positive climate. Organisations are communities of people, not abstractions on an organisation chart or historical numbers in a balance sheet. The way to maximise success during major commercial upheaval is to win confidence, motivate and inspire people with straightforward messages that emphasise a strong future vision with honesty and integrity.
It should always be part of the HR director's core role to foster internal dialogue - not just by implementing an open door policy, but also by walking around and talking to people. In the current stressful environment, it is particularly important to ensure all people are treated with dignity and respect, whether or not their jobs are earmarked as redundant. 

5 Restructure reward. Given recent events, executive reward schemes need to be scrutinised more closely. Part of the current problem lies in the failure of remuneration committees and HR directors to stand up to chief executives and finance directors who devise or influence the design of their own packages. It is difficult for an HR director not to collude here, given the potential threat of unemployment. Now there will now be increased pressure for change from institutional investors, including pension funds, and from governments that have invested taxpayers' money in financial services companies. In any event, as the person accountable for overseeing and optimising employee contribution to the business in its broadest sense, the HR director must be alive to the damaging sense of inequity that such rewards can create in an organisation, ensuring that the remuneration committee is alerted to the wider impact of its decisions.

Martin Goodman, director of Martin Goodman Associates has worked as an HR director, consultant and researcher in a range of international organisations