The recent economic developments, war for talent and diminishing labor supplies pose significant challenges for organizations that need to cut costs while at the same time retain key talent. However, companies still have critical roles to fill and will always need to hire. With every problem, opportunities are created so this could be a great time to find talented individuals that are currently on the job market.
Here are five ways that will help organizations not only to cope with the economic crunch, but also come out ahead of the game:
1. Re-evaluate your organizational goals
During times of economic crisis, organizations need to strategize, re-evaluate corporate goals and cut costs in order to remain competitive. This involves calculating risk and evaluating multiple workforce scenarios in order to find the right balance between developing talent and cutting back on costs. Modeling tools can help users visualize and analyze the impact of their scenarios, such as restructuring the organization, eliminating roles or departments, creating new teams, etc. Accelerate the decision making process, while at the same time make better, more informed decisions for your workforce. Focus on the activities that matter most to your organization and come through in a position of strength.
2. Reduce risk by not cutting jobs too fast
Companies need to carefully manage their budgets in an economic downturn, but cutting too many jobs too fast can increase organizational risk. The costs of associated with losing talented employees could be upwards of five times their annual salary, not to mention the knowledge that they take with them. Cutting jobs can also send mixed signals to employees, who may be discouraged and leave the organization out of fear.
Effectively managing talent involves attracting, retaining, and developing the right talent for your organization, and sometimes this involves letting go of the wrong talent. The truth is that a depressed economy can be an opportunity to cleanse your organization of poor performers and improve your corporate culture. Succession planning software can help companies visualize underperformers and make the appropriate cuts.
3. Leverage your HCM / ERP system
According to Aberdeen Research, of best-practices organizations using HCM systems:
- 91% increased employee performance
- 84% decreased cost of hire
- 84% increased revenue per employee
- 66% improved their ability to determine projected growth by job category
- 49% improved their ability to forecast annual retirement rates
Save money by building upon your current IT infrastructure, such as your ERP, instead of purchasing multiple point solutions. In the end, integrated solutions will save on costs and provide a single source of truth to all users.
4. Focus on developing and retaining your talent
When facing an economic crisis, a better solution is to act in advance so as not to lose key talent since short-term fixes and poor talent decisions can have unwanted lasting effects. Shifting mindset from recruiting talent to retaining talent can help organizations increase their future competitiveness.
Focusing on your critical roles and high potentials should be a key priority. Succession planning software provides unique insight and helps you to:
- Reveal critical positions and high potential employees
- Identify skills gaps and build bench strength
- Intelligently deploy manpower
Taking a proactive approach to managing talent and putting career paths in place will help mitigate risk and ensure that organizations hold onto their key employees and critical roles are filled. It is easier to retain employees if they know they have a career path in place.
5. Be open to adaptable workforce planning
Workforce planning is an iterative process and must be adaptable to current business conditions. Through strategic human capital management, organizations will be able to achieve a long-term competitive advantage as well as cost savings. Talent planners must find effective means to manage talent gaps and ensure that HRs activities are aligned with corporate goals. Remember, successfully managing your talent through today’s ever changing global economy can improve your competitiveness, sustainability and earnings.
The old adage “don’t be penny-wise and dollar foolish” has significant meaning during times of economic turmoil. Saving money today by cutting key talent can have disastrous consequences when the economy picks up. Think forward and ensure you have a talented workforce in place to deliver on your future business objectives.