Leadership Tip #8: Take a strategic workforce perspective

Brought to you by IBM

Recent events in the financial markets have pushed the global economy deeper into an economic slowdown. As companies around the world have lost significant market valuation, they are revisiting their growth projections and bracing themselves against a worsening outlook. Already we are seeing a noted increase in the U.S. unemployment rate to 6.5 percent in October 2008, with more than 1,000,000 jobs lost during the year. 

The US financial services industry has been significantly impacted by this turmoil and has, according to the outplacement firm Challenger, Gray & Christmas, Inc., lost over 102,000 jobs in the first nine months of 20083. Similarly, the unemployment rate in the United Kingdom rose in the second quarter of 2008 by 0.4 percent to 5.8 percent, with over 164,000 individuals displaced between June and September.

In previous economic downswings, strategic workforce issues have often been displaced by the short-term demands of quickly reducing headcount and other variable costs. However, in many industries, previous downturns and subsequent layoffs have already “trimmed the fat” and have left companies operating with fewer employees with greater responsibilities.

These difficult times require organizations to take a closer look at the current composition and capabilities of their workforce, determine their short- and long-term workforce needs and make more informed decisions about the talent they need to survive and, eventually, thrive. Organizations will need to take an integrated approach to their talent management activities, and more tightly link their planning, recruitment, development, motivation and retention processes. By doing so, organizations can use this downturn not just to reduce headcount, but to position themselves for future opportunities.

To stay one step ahead in these difficult conditions, organizations should:

• Make resourcing decisions based on capabilities and gaps (Talent Tip #8)
• Focus attention on core versus non-core work activities (Leadership Tip #9)
• Differentiate high & low performers across the organization (Talent Tip #9)
• Transfer critical knowledge & stimulate social networks (Talent Tip #10)
• Consider the use of more flexible work environments (Talent Tip #11
• Identify opportunities to improve HR & learning efficiency (Talent Tip #12)
• Enable leadership to guide individuals through change (Leadership Tip #10)

Look for these and other tips in upcoming posts or register today forHRO Summit and get a copy of the full Recovery Starts Now Guidebook.

Bottom-line Tip #5: Restructure accounts payable

Brought to you by FAO Summit

In a downturn, new opportunities open up to work with suppliers and get better terms and make better use of working capital. Some examples:

• Segment suppliers on the basis of their value and condition. Strong suppliers with rigid payment terms are not likely to be flexible, but suppliers that are adding little additional value (such as those, for example, buying raw commodities and making only minor changes before shipping it) or those that are in financial difficulty will typically offer lower prices for quicker payment terms.
• Address supplier volatility by linking the cost of business processes with the target market for specific production streams, i.e., low-margin products should enjoy the most inexpensive terms from suppliers.
• Review contract terms across business units, suppliers, and product types and normalize them around the best practices you identify in the process.
• Segment supplier credit terms and identify opportunities to leverage trade credit on terms that are less than your cost of capital.

Bottom-line Tip #5: Review your self-insured long term disability ongoing costs and reserves

Brought to you by Hewitt

A large manufacturing company came to Hewitt LCG for help in reducing the cost of its long term disability (LTD) program. The company had experienced a high volume of self-insured LTD claims, creating inflated LTD claim reserves.

Based on its data, the company lacked confidence that it was getting the best claim outcomes for employees, as well as its business. Hewitt worked closely with the company to do a comprehensive review of its claims and claims process and to re-balance its claim reserves.

Outcomes:

• Eliminated the company's liability for LTD reserves in excess of $16 million
• Increased the number of benefits offsets, reducing the company's financial liability and monthly benefits payments
• Reemployed claimants and/or terminated claims
• Settled claims allowing claimants to pursue career changes