Guest Column: Emmanuel Zvada
The economy is not exactly reliable and business today is not what it once was. Zimbabwe is currently going through a tough period economically. Today’s organisational environment is proving to be markedly different from that of the past. Confidence in the economy is lost and decreased sales are threatening all businesses daily. Nonetheless, small businesses are particularly vulnerable as they often do not have enough reserves to help them through difficult times.
Nearly every business is feeling an impact from this economic downturn. There has been no escaping. The root causes are known, but during such times companies should be swift in making decisions that will make them survive before they sink. When it comes to figuring out just where to make cuts in our businesses, organisations should think long and hard before they act. Uncertainty in both the political and economic environment is very critical to organisations as it hinders proper planning as well as progression. Organisations are supposed to prepare for times of uncertainty and HR managers have to take advisory roles and offer advice on how organisations can deal with unrest and increasing unpredictability of the economy.
Managing through volatile periods requires that human resources be prepared to support an ever-shifting business, at the same time managing costs for organisations. Below are measures that can be taken by the HR to enable companies to stand the test of time, especially times of uncertainties:
Reducing headcount usually involves an organisational realignment. When deciding who must go, it is also important to retain not only the best leadership talent, but the right blend of talent for the realigned organisation. Maintaining your company’s best talent during downturns is essential as it is also a way of safeguarding your company. Engaged employees are more innovative and these are the employees that should not be retrenched in economic downturns. Great companies see tough economic times as an opportunity to double-down on their investment in people because your engaged staff members will enable your company to do more with less. It will, therefore, be easy to retain and develop your best people when your company must operate with fewer personnel.
Keeping costs down
Cost controlling is the practice of recognising and reducing business expenses so as to increase profits in organisations. It is the responsibility of HR to assist in trimming organisational expenses, at the same time coming up with strategies that ensure the going concern of the organisation. Boosting productivity without increasing costs requires a combination of employee development programmes and process improvements. HR professionals can utilize a number of tactics to cut HR costs before it becomes an issue, and this can be done without sacrificing employee satisfaction or threatening employee retention.
Track your finances daily and start today. As an organisation, you are supposed to install a key indicator system to track your business and have daily, weekly and monthly financial reports issued. This normally helps in following up profitability per job, per week, per client as well as per product. In most cases, these indicators are used to focus on your most profitable products or services. Make nothing that does not bring in profit.
Reduce recruitment expenses
An economic downturn means candidates are nervous about their job prospects, while companies face cutbacks in their existing workforce on top of uncertainty in existing hiring decisions. In times of uncertainty, it is encouraged that organisations temporarily halt in all recruitment activities for a certain period of time. This is meant to manage human capital costs in times of general economic contraction or uncertainty on the general business environment.
Instead of blindly recruiting during times of uncertainty, recruitment requests should be evaluated on a case-by-case basis. This will also help the organisation later when economic conditions improve as they would already be in possession of employees familiar with company culture and ready to be converted to permanent positions.
Work on refining your value proposition
Value proposition is a complicated principle that can be defined in numerous ways, but it basically boils down to three things which are; what your company offers, what users will get from your brand as well as why your company is the best choice. During times of uncertainty, even the company’s customers can react in a negative manner towards the goods or services you offer. They will be looking for products or services that solve their problems or improve their situation as well as deliver specific benefits to them. In such times, organisations should consider value addition or other propositions they can combine with product/service offerings. The reason is that during uncertainty, it is hard to convince people to spend money.
Recapturing consumer’s confidence in the company
Consumers are loyal to companies that have a good reputation. When consumer confidence is high, consumers make more purchases. When confidence is low, consumers tend to save more and spend less. With the recent economic downturn, a lot of companies found themselves struggling and having to cut on both salaries and employees, including declining profits and productivity.
This kind of picture does not reflect well on the reputation of any company, especially to the consumers. On the contrary, this may kill the confidence consumers have in the company.
Despite all that, it is possible for companies to still have consumer confidence back, provided that these companies start performing the way they performed before the crisis. This can be done by developing new product and service option, packaging your products and services differently as well as innovating around your customers’ concern. Those who keep and make their customers happy in these times will enjoy the benefits later. In actual fact at organizations, every employee who comes into contact with a customer must recognize that in addition to the job they were hired to do, they are also there to create confidence
Communicate and engage your employees.
Intensive communications create a sence of belongingness especially in hard times. By so doing allowing employees or their representatives to be actively involved in the formulation and implementation of organizational restructuring plans, is likely to result not only in shared understandings being created between employees and managers, but an effective joint action to restore profitability. Keeping employees regularly and fully informed of the organization’s commercial position as well as management’s plans is considered indispen-sable to maintaining employee commitment and engagement when adjusting to adverse times
Take care of your key talent
During periods of uncertainty, there is less money to go around. Normally jobs are put at risk and earning capacity is often reduced considerably. I such times HR needs to establish key people, key roles and put in place retention and engagement mechanisms to maintain the financial viability of your business. This is the important time for HR as it has to make sure that it takes an advisory role to the business at a strategic level such as decision on how best the company can protect your clients and your employees etc.
To survive in harsh economic conditions, you need to strengthen your business. The stronger your business is, the less likely it is to be affected by related risks. Strengthening your business does not just involve financial management. It also includes strategies to retain and broaden your customer base, market your business affordably, keep morale high amongst your staff and improve business practices so as to survive.
Emmanuel Zvada is a human capital consultant and an international recruitment expert. He writes in his personal capacity.