Eight key things to do to lead in a recovery

Tzeitel Fernandes Updated on Aug 24, 2009

The nine months following September last year have been some of the most difficult in the recent past, but with signs of an economic recovery, business leaders and human resources managers are likely to find themselves with a new challenge - employee retention. Experience has shown that recessionary periods are followed by an "attrition avalanche", as critical talent begins to seek new opportunities outside the organisation. Our research shows that while external signs of a recovery are beginning to appear, employers are still cautious. More than half the organisations in Hong Kong have not increased salaries this year, while the average salary increase is about 1.6 per cent, far lower than that in previous years. However, a reduction in involuntary turnover in the second quarter to almost half of what it was in the first quarter shows that organisations are far less pessimistic than they were at the beginning of the year. A look into the past has shown that performance during the recession is not a good indicator of performance during recovery. Leading organisations (those that outperformed competition) were those that managed talent differently from the rest of the pack. Here are the eight most important things to do to lead in a recovery: Craft the long-term strategy: The aftermath of a recession often changes the "rules of engagement". Organisations need to cope with changes like slower growth projections, lower inflation, changing consumer preferences and spending patterns. Leading organisations are those that recognise these changes early on, define the "new normal" and craft a long-term strategy for recovery. Put the right leaders in front: Once the strategy has been identified, it is critical for the organisation to get the right leaders to communicate, execute and drive that strategy. The right leaders here are often a mix of "old timers" who know the organisation well, as well as new hires who have a proven track record of leading organisations in the new direction that has been defined. Get the staffing right: Workforce reduction is a characteristic of all employers during a recession. Leading organisations are able to identify the right skills for the recovery and strategically invest in those - by conducting employee development initiatives and even hiring for critical skills that may not be present in the organisation. Focus on critical talent: Critical talent should be defined not only as high performers, but more importantly as those who are high performers and have the skills relevant to the organisation's new strategy. Reward right: Leading organisations focus their budgets on critical talent and ensure that they receive adequate market corrections and a greater share of performance pay. In times of recovery, leading organisations increase the differentials between high and average performers, as they focus on their critical few. Nurture the talent pipeline: Despite tight budgets, organisations need to ensure their future leaders feel motivated and special. Internal training and mentoring are effective substitutes for more expensive training methodologies. Some of the content training can also be offered through e-learning, for example. Focus on reducing long-term cost: Rather than focusing on purely short-term measures of cost control (like headcount reduction), leading organisations make strategic investments in technology and innovation that lead to long-term cost-saving. Communicate: Clear communication is the keystone of all change management, and one cannot underestimate its importance in a recovery. Frequent, consistent, multi-channel communication that reinforces the organisation's strategy, its commitment to goals and core values and builds employee trust in the leadership will go a long way towards soothing the pain of a recovery. Tzeitel Fernandes is a practice leader at Hewitt Associates