People: the GFC endgame

Suzi Jotwani
General Manager, Develop Resolve

Paul Gretton-Watson
Director, ResolutionsRTK

When it comes to the Global Financial Crisis (GFC), it seems everyone is an expert. Claims of foresight are particularly common and amusing. “Mate, saw it coming,” some casually claim. “It was inevitable,” others observe sagely. The thing that most fail to recognise or admit is that the market is a human not mechanical creation. This is the point made by economists George A. Akerlof and Robert J. Shiller in their book Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism . Speaking at the Brookings Institute earlier this year, Akerlof made the point, “…the problem is we're dealing with people, and we're dealing with people who have changed their thinking.”

Six months ago an article on outplacement would have appeared out of place, given the focus on recruitment and retention of talent into organisations. While this focus remains for some, there is a growing business imperative to align staffing levels to flattening or declining revenue or funding sources. Conversely, an article on exit interviews, while relevant six months ago, may now seem misplaced. However, the main cause, casualties and answer to the GFC is people. In the current economic climate, employers with a reputation for poor retention records or retrenchment practices have failed to recognise that people are the endgame in this crisis. Organisations that understand this will be better positioned to weather the dual financial and psychological fronts of the GFC.

Manage your outgoings

Due to the current dynamics and pressures in the market, client organisations have been speaking to us about possible, likely or imminent retrenchment of staff. Most organisations are still at the stage of seeking intelligence on these services and putting measures in place for potential structural reform, with staff outplacement as part of the strategy.

Being made redundant is a pretty traumatic time in a person's life, and they will need support to get through it. However, with between 60 and 80 per cent of employees likely to be made redundant at least once in their lifetime, people should not be embarrassed or ashamed if it happens to them. Successful outplacement programs involve encouraging the client to think outside the square with career planning, job search coaching, networking, and critical job analysis, as well as honing the resume and brushing up interview skills. Coaching helps clients to make use of their contacts – up to 70 per cent will find their next job through someone they know.

A well-planned and executed outplacement strategy is crucial to any sound human resources strategy for an organisation and ought to have a greater focus during tough times. Our client organisations are aware that when considering staff reductions, either through voluntary or non-voluntary redundancy, the impact of these decisions is felt by all staff, not just the ones who may be leaving. Maintaining self-confidence and a sense of being valued is important for those leaving, and staff who remain in the organisation observe the degree of sensitivity, empathy and consideration with which their departing colleagues are treated.

The horse that bolted

In the current climate, employers and employees alike are bracing for budget cut-backs and redundancies. However, the job market has not dried up altogether and no employer should assume that their best and brightest are safe. Now more than ever, employers need to understand why employees have left the organisation, given the response of most to a volatile job market is to keep their head down.

Unplanned turnover costs money, not to mention creating stress for teams left to compensate, and seeing IP go out the door. Despite a growing focus on the impact of these tougher economic times on jobs, it is imperative that the well-skilled, well-trained, and experienced people working in your organisation want to stay. With the average cost of replacing a skilled and experienced employee at between 100 per cent and 150 per cent of their annual salary, unplanned turnover of staff can be a significant cost to your business.

So how do you find out what could be driving your unplanned turnover?

Exit interviews are used by many organisations to try and find out why people leave. Organisations usually undertake their own exit interviews, with the line manager or Human Resources conducting the interview. This is fine where the relationship between the person leaving and the organisation is relatively open and comfortable. However, many departing employees take a pragmatic view that it doesn't pay to burn bridges, tending to withhold constructive, valuable feedback about their reasons for leaving and their perspective on their time with the organisation. The intelligence gained from such a process is practically useless.

Current trends are for exit interviews to be conducted by an independent organisation, creating a neutral and confidential space to encourage open and frank feedback. Interviewees can feel comfortable knowing that their comments go back to the organisation in an aggregated report. The organisation conducting the interviews is also able to provide recommendations to the client organisation based on information gathered over time.

Exit interviewing should never be viewed as an isolated consultation activity. The process of listening to staff should be occurring throughout the employment experience, not just the end. In the same way organisations benefit from feedback for improvement through staff surveys, the reflections of an employee on their time with the organisation as they are departing can be very valuable. But as with all consultations, the value in successful exit interviewing will be found in the response of the organisation to the feedback, through taking action to improve the workplace for the remaining staff.

Keep calm and carry on

It is reassuring to see that our client base is far from panicking about the current economic and broader job climate. Looking at utilisation of outplacement services and exit interviews in particular, our clients are taking prudent steps to ensure they capture valuable information about their organisations through sophisticated and rigorous consultation with departing employees, while also managing any necessary redundancies with sensitivity, flexibility and compassion.

© ResolutionsRTK 2009