What Metrics are of Highest Priority in a Downturned Economy?
The UK could be heading towards another recession if a warning from the Organization for Economic Co-operation and Development is to be believed. A downturned economy, with a 0.03 percent contraction this quarter and a further 0.15 percent in the next paints a glum picture for the economy. The need to reevaluate the efficiency of human capital metrics in a downturned economy is more important than ever.
Last week, it was reported that UK unemployment stood at 2.62 million at the end of September, making it clear that something needs to be done to get people back to work.
Hugh Pinkus, writing for Proudfoot Consulting, advised that during an economic downturn "some hard decisions need to be made". He noted that a reduction in staffing is an obvious way of doing this; however, retaining those who add exceptional value to an organization can also be vital.
"One could argue that the entire staff provides critical value. In this case, which members add the least? Are there areas where responsibilities clearly overlap? Those workers who add the most critical value and are not in the firing line should be informed of this to maintain morale levels," he advised.
Mr. Pinkus went on to say that times of economic downturn provide the perfect opportunity for additional training, adding value and skills to the workforce.
"This investment in training also streamlines the process flow and provides deserving workers with extra responsibilities."
A study commissioned by CFE and undertaken by ICM in 2009 found that three-quarters agreed with a statement made by a number of government ministers that "businesses that invest in training are less likely to fail".
Indeed, a report by researchers at Cardiff University also revealed that businesses are seeing the light when it comes to viewing training as an important metric.
It found that key areas were being concentrated on during training sessions, while much of this was being done in-house in order to save money as the financial belt tightens.
Professor Francis Green, an author of the research, told the BBC: "There were some firms that cut their training but they were in the minority. Most just found ways of cutting costs while still providing the training."
Retention is another important metric at this moment in time, with over half of people telling Deloitte that they would choose to either stay or leave their current company depending on what advancements or promotions were available to them.
With money becoming tighter and the cost of living rising, workers are on the lookout for their next pay rise and a chance to better themselves.
Jeff Schwartz, principal of Deloitte Consulting, told the company's Insights podcast that two out of three people are exploring exit signs. "There are a lot of people, who are in some way in the job market, and some of them are active but some of them are passive. When we say passive, one of the things that we are seeing now that was quite different than a couple of years ago, is the use of social media in job boards. There are a lot of people who are looking out there."
Robin Erickson, manager of Deloitte Consulting, stated that applying a "one-size-suits-all strategy" for retention is unlikely to be successful, as different generations had different reasons for looking to move on.
Mr. Erickson advised that support, recognition, additional bonuses and financial incentives were all tools which could be used to boost a company's retention.
During periods of economic downturn, unemployment levels rise and therefore there will be more people competing for fewer available positions.
Olly Benzecry, managing director of Accenture UK, told the Financial Times that the recession has not affected the top graduates who were looking for jobs, hinting that the very best candidates are still being successful.
Campbell Ritchie, managing director of HR Advantage, told The FD Centre that employers can use periods of economic downturn as an opportunity to permanently reduce recruitment costs, while also looking to improve the decisions which surround taking people on.
He noted that with the number of candidates per any given position rising, turning to an expensive job agency does not make any sense, especially when web-based advertising and other time-saving recruitment services are starting to blossom.