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 U.S. 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 2008. Similarly, the unemployment rate in the United Kingdom rose in the second quarter of 2008 by .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
• Focus attention on core versus non-core work activities
• Differentiate high (and low) performers across the organization
• Transfer critical knowledge and stimulate social network development
• Consider the use of more flexible work environments
• Identify opportunities to improve HR and learning efficiency
• Enable leadership to guide individuals through the change.