The CIPD’s John Philpott has predicted that 600,000 jobs will be lost next year and that the redundancies will continue into 2010. The British Chambers of Commerce have warned of pay freezes and even cuts in wages over the next year. It all sounds very gloomy.
That said, some people are going to be very busy. There will almost certainly be an increase the case-load for Employment Tribunals and, therefore, a corresponding growth in business for some employment lawyers. The reason being that many employers don’t have a clue how to implement pay cuts or large-scale redundancy programmes without falling foul of the law or provoking industrial action.
You can’t just sack people or cut their pay and expect no comeback. There are rules about how companies must handle redundancies and implement pay cuts. In both cases, the laws on consultation, communication and negotiation are quite complex. Trying make large numbers of people redundant, or persuading people to take a pay cut, while staying within the law and maintaining good employee relations requires a particular set of skills. I have met any number of HR professionals over the course of my career but only a few who are really good at this sort of thing.
And many of the good ones are getting on a bit. It has been fifteen years since the last recession and considerably longer since most firms have had to grapple with difficult industrial relations issues such as pay cuts. During the good times, many HR professionals have focused on talent management, leadership development, change management and coaching. These have been seen as the interesting areas and those most likely to lead to career advancement.
As a friend of mine said recently, with a hint of irony, “We are all development consultants now.”
The oily rag activities like employee relations, disciplinaries, redundancies and the practical application of employment law have become the Cinderellas of the HR function.
I know a number of organisations in which most HR professionals have never done a disciplinary, never negotiated a contentious change and never managed a large-scale redundancy programme. HR managers who have prepared cases and given evidence at tribunals are even more scarce.
At the risk of sounding like an old git, we have a generation of HR managers who came into the profession after the last recession, have known only good times and have never been faced with the nastier HR tasks. Many of these HR professionals are now in relatively senior positions.
Most of them are bright people and will, no doubt, learn quickly. But there is no substitute for bitter experience and some people will doubtless end up learning their new skills the hard way.
By contrast, some of the older HR professionals for whom these messy tasks were second nature have been pensioned off or have left their organisations to become consultants. Often, their skills were seen as being no longer necessary in a world of economic booms and talent shortages.
Inevitably, many organisations will get it wrong and will get caught up in the legal minefield that surrounds large scale redundancies and pay cuts. Those that avoid the courts may still, by ham-fisted implementation, end up with a disgruntled staff, working to rule and ready to jump ship as soon as the economy improves.
Managing through this recession is not going to be easy. When times are good, it’s easy to say ‘people are our greatest asset’ and look as if you mean it. In a downturn, cutting staff costs legally while still motivating your workforce is no mean task and one that requires a high level of skill, judgement and patience. Those HR managers that keep their jobs will need to have these skills or will need to develop them quickly. Either way, they are in for a tough year.