‘Leading With Less’ in economic recession, what does it mean for the HR profession?
The UK seems poised on the brink of more economic upheaval, strapped into a financial rollercoaster and about to go on a wild ride. Will we survive or will it drive us around the bend? Perhaps we will just arrive at the end of it exhilarated and a little poorer for the experience? Here we explore the challenges and solutions of ‘leading with less’.
Economists have warned for years of a potential spike in financial interest rates around the world. It has now taken place with repercussions for us all. One being, of course, a big increase in the cost of borrowing money. Be it for nations, organisations or individuals. Higher borrowing negatively affects earnings, increases the cost of capital, and dampens investment. This has caused volatility in the domestic mortgage hedging markets and will see mortgage rates rise and increases in other costs across the board. As if the fuel crisis was not enough. The world has certainly seen plenty of challenges, conflict and tragedy recently.
What are the economic figures?
The UK currently owes over £2 trillion and thus we have achieved the dubious goal of being around the 100% ratio of debt to GDP. Meaning we owe as much as we make. What are we spending it on? Our biggest domestic UK expenses are the health service (10-15% of GDP) and social security (20-30% of GDP). Both of which have tripled since 1990. We had been stabilising our national debt recently. But now, amongst many other factors, the economic effect of the pandemic is making itself known.
But take heart, dear friends, for we are not alone! In a globalised world, we all must face adversity together. We must adapt, improvise, overcome and survive.
What is survival in an organisational sense?
Focusing on survival is important. What do we think of when we say ‘survival’ in an organisational or business sense? Perhaps survival is merely an uncelebrated walk across the fiscal line every year. While others sprint into the category of thriving, to wild cheers from the crowd. Organisations that merely survive often lack the praise attracted by their peers who thrive. But survival should be celebrated as it is an important target in itself. It may be the most important goal over this coming period and it requires the right approach. One which professional training can help to provide. All organisations are very familiar with ‘tightening the belt’ and ‘cutting back’ but this may go further and require a different mindset.
What does this mean for our HR profession?
In many organisations, when cuts are looming, HR is sometimes viewed as being outside the core functions and thus a target for cuts. The onus is then upon HR to ensure they are contributing to the overall functionality of the organisation. How can HR effectiveness manifest itself in tangible ways? One recognised way is maintaining a well-trained, managed and motivated workforce that is able to adapt to the prevailing conditions and continue to make significant contributions to output.
What kind of skills may help organisations survive?
Let us consider the phrase ‘Leading With Less’. Maintaining the status quo with a reduction in resources. Nothing new as a concept, but one highly relevant to this set of challenges we are about to face. It encompasses many areas such as: adapting to change, leveraging relationships, facing reality, managing with the available resources and coping without them. As people, having the presence of mind and confidence it takes to operate under constant pressure while maintaining output, making the best decisions, to lead under adversity and above all, to target survival. As that, fundamentally, is what many organisations need to focus on at the moment. ‘Managing or Leading With Less’ is a way to organise our thoughts in order to cope.
Leading with less
Leaders must fully understand the situation. This current period of austerity is different from any other in history in several unique ways. Let us consider these four:
- High levels of inflation
- High costs
- Lowest UK unemployment rate for 50 years
- Increased demand for specific skills and technology in the workplace
HR leaders will need to manage these strategies, potentially putting HR in a favourable position within their organisation, with a clear sense of belonging and purpose.
Organisations must decide on a well-reasoned plan of action. One common knee-jerk reaction, in the past, has been to freeze recruitment to cut costs. But in our current, unique situation in a post-Brexit UK with record-low unemployment, many organisations have important vacancies to fill. A freeze on recruitment might mean that an organisation will have staff shortages, rendering them less productive and competitive. Not only that, but if you cut jobs to cut costs you may not be able to fill those vacancies later on.
The agricultural analogy of ‘cutting back’ is usually associated with ‘growing back’. But those who cut back in the workplace don’t always see the green shoots of recovery they hoped for.
Therefore, there is a pretty solid case for these 2 strategies:
- Retain workforce
- Upskill workforce
HR leaders will need to manage these strategies. Which potentially puts HR in a favourable position within their organisation. With a clear sense of belonging and purpose. That being: to create a skilled, agile workforce with a positive working environment in order to aid retention and motivation. To maintain or even increase skill levels and use of technology in order to augment productivity and competitiveness.
When questioned on leading with less, Roffey Park Institute’s Head of Executive Education George Kunnath had this to say; “The message to directors of organisations is that the HR function is a vital one within this unique economic situation. HR leaders need to be aware of what is happening, know what they can do, and adapt accordingly to demonstrate their value. The concept of ‘leading with less’, of course, varies from one organisation to another. HR needs to move from the back office to front and centre. HR leaders can reevaluate HR strategy to create a more agile, productive workforce and organisation. They could be looking at areas such as staff engagement and retention, and supporting the staff and organisation through organisational change and transformation. Even to ‘up the ante’ by doing business partnering and leveraging important relationships. The risk simply of cutting staff numbers and training now is short-term thinking, that could result in you losing your edge and struggling to replace valuable staff.”
This pro-HR approach is not simply a biased or skewed view of the situation. It is based on independent logic and fact. It also holds true for many other countries besides the UK. If not observed, the obvious alternative may be that an organisation becomes less able to generate the necessary output and becomes a negative workplace. With all the associated consequences which may occur as a result.
There is no ‘one size fits’ all approach to ‘leading with less’. It is a way of thinking which can provide a set of strategies and structures. You must decide what is the right approach for you and then set your course accordingly. Conversations with all stakeholders can help ensure well-informed decision-making. As can reaching out to an independent professional organisation when creating your plan, such as Roffey Park Institute which has over 75 years experience of helping organisations face such adversity.
On a positive note; we CAN and WILL get through this. It is in our nature to do so. Just don’t wait for someone to come along and clear up the mess. Get involved and decide your plan of action. Be mindful and active. Think about empowering your teams. Work together, leverage relationships and help and support one another. Above all, survive.
Readers who enjoyed ‘Leading With Less’, may be interested in this government report from 2015, the 2015 Institute For Government report ‘Managing With Less’. It was written during another period of austerity and examines the effects of financial cuts. It makes particular reference to the NHS and Civil Service, but not exclusively. You can read the report via this link: https://tinyurl.com/mrhpb8e8