I was meeting with a senior HR leader recently, asking how she was navigating the economic storm. She mentioned that in a recent senior staff meeting, her CEO wondered aloud if they needed to consider across-the-board pay cuts. When she took her job, the CEO used to just make those kinds of decisions, perhaps in consultation with the CFO. Now, the CEO asks her.
And so in the meeting, she said “Let’s assume we go with your approach, you know that star player we just recruited from our biggest competitor? Do YOU want to tell him about the changes you just made to his compensation plan?”
That put a new spin on things. Naturally she did not come unarmed to the meeting, she had a long list of other places to cut back before the tired old chestnut of across the board pay cuts. In the end, she found the savings they needed, communicated it clearly to hundreds of employees and avoided creating a new problem beyond their need to reduce expenses.
Score one for using HR strategically.
I’m not suggesting that across the board pay cuts are a bad idea, indeed, they might be brilliant for your situation - your employees can be amazing. 22,000 Montgomery County School employees recently agreed to forego their contractual pay raises to balance the school budget, rather than cut classroom jobs.
But before you make big HR decisions, you need to look at all your options and choose wisely. Few CFOs have the tools to do that. But HR does.
A few weeks ago, I wrote that this is HR’s Golden Moment - a time to shine, to earn that “seat at the table” and really make a difference. And now I read, in the Huffington Post, an article about a national conference of HR professionals held in Australia. The writer, Juliet Bourke seems to agree with my viewpoint, observing that now is the time HR leaders need to pull back business from “knee jerk retrenchments.” So she went looking for how HR pros were helping their companies to avoid layoffs and other damaging across-the-board actions.
“Our bottom line proposition was that the global financial crisis provides HR with a unique opportunity to demonstrate its value to business — namely, how to survive, if not thrive, under extremely challenging conditions. One hundred percent of the HR attendees agreed that talking about flexibility was relevant to their business’ needs . . .”
But sadly, she found that more than three quarters of the attendees were nowhere near ready to lead this effort. ”It’s as if they are looking for someone else to lead the way.” So sad.
If you are a CEO and don’t feel like you are getting sound HR advice for your big decisions, grab your phone and call me. Right now. That’s easy to fix. And if you are an HR professional please know that I, for one, hope you don’t let this financial crisis go to waste. Send me a private note, or post a public comment, tell me how you are using your golden moment to step up and make a difference in the future of your organization.