The Change Dude’s Blog

Talent Pool – Frozen Solid

I was out with a client last week and we discussing their recent Reduction in Force (RIF) and one executive mentioned that in the next few months they would really need to redesign process to deal with the changes forced by the RIF.  AHA!  Someone gets it.

Being a loyal HBR subscriber I get access to what’s called “The Daily Stat”  facts and figures to stimulate thought and action.  I highly recommend you subscribe to this daily feed.  Last week this interesting piece of data arrived courtesy of a study from Watson Wyatt: 52% of 245 large U.S. employers surveyed in February have already conducted layoffs and 56% have instituted hiring freezes, up from 39%  and 47% respectively in December.  The good news? The percentages of companies still planning layoffs and hiring freezes have dropped almost as sharply.  13% of those surveyed said they expected layoffs compared to 23% two months earlier. 

The absolutely numbing surprise in these numbers is that 100% of the companies surveyed took a step, or two, to freeze their talent.  Like an old cops and robber flick – “freeze or we’ll shoot”.  Step 1 – executives freeze the circulation and development of talent.  Step 2- talent freezes solidly in place.  Step 3 – employees and customers stand around waiting for the spring thaw.  Step 4 – costs, revenues and value freeze. 

Clearly the business community was forced to take actions based on the reset button that was pushed in late ’08.  Talent is the most expensive and easiest lever. Voila – layoffs to the max.  I have the most severe reaction to slamming down the talent lever in response to a downturn without spending a little time evaluating the potential exposure.  Many companies did not take that step.  In most of my conversations with clients I’m hearing that the highest compensated staff are the hardest hit by this wave of talent cutting.  High paid talent is typically in place as a result filling a real need with strangely enough…high quality talent.  The end result of all this is that 100% of the companies surveyed have probably reduced not only their cost base but also their value base.  Lower quality talent delivering lower value to customers and hence the shareholder.

3 Tips on Protecting the Pool

1. Care must be taken in the short term to ensure that the strong talent left in place is provided the opportunity to grow, contribute and feel respected. 
2. Ensure that employees feel commited and secure to reduce the effect that weak employee engagement has on your customers and their confidence in the organization’s ability to deliver on the brand promise. 
3. Use this time to challenge staff and expand their contributions in ways that lever forward the organization and themselves in tandem.

March 23, 2009 - Posted by thechangedude | Uncategorized