Turnaround situations offer a great opportunity for HR leaders to significantly
impact the organization. They also offer HR executives a great opportunity to
restructure their own function to create thoughtful and aligned human-capital
strategy, and efficient and effective programming and service delivery.
Many well-intentioned CEOs subscribe to the notion that human-capital-
management activities in turnaround situations are adequately handled by finance
staff or business leaders, or believe that these issues, focused primarily on
compliance, should be managed by in-house employment attorneys.
Quickly finding cash and restructuring business operations are undoubtedly
complicated. However, managing the intricacies associated with layoffs,
reorganizations, communications, while motivating employees to do more with
less, preserving productivity and, simultaneously taking to a new strategy is
equally challenging.
One of the most classic of missteps on the part of those in charge is that, when
staring into the abyss of cost reduction, solid human-capital strategy and
related investments are reduced to discretionary items.
Ironically, such short-sighted thinking actually slows down a company's
transition toward organizational solvency. While some business leaders may sneer
about the importance of HR, years of sound management and organizational
research convincingly demonstrates that much of a company's success hinges on
how well it manages change and leverages its human capital.
Turnaround represent a unique opportunity for HR to jump in and flex its
considerable muscle. First, HR can support senior leadership's immediate efforts
to quickly find cash, stabilize the enterprise and begin moving toward solvency.
While senior leadership is focused largely on detailed financial reviews and
negotiations with banks, equity holders and other key stakeholders, HR should be
focused on pressing people-related actions and consequences.
Formulating strategies, plans and processes around the items highlighted below
is a great way for HR to establish credibility early on as a key contributor to
organizational success. Moreover, some of the necessary human-capital- strategy
work directed at the turnaround's most immediate needs can be leveraged for
potential broader HR transformation work to be discussed below.
Contributions to the Turnaround
Here are 12 ways HR leaders can substantively contribute in the early stages of
a turnaround:
1. Provide insight on assembling the 'turnaround team'; ensure representation
from HR and high-performing employees.
2. Help senior leadership determine the business' existing core assets,
including talent and processes that define the brand and provide competitive
advantage; determine future core assets, including processes, capability and
talent essential for mid- and long-term success.
3. Develop and equip management with a robust communication and
change-management plan, including strategic objectives, identified mediums,
change-agent roles, messaging and collateral, schedules, measures of uptake,
etc.
4. Explore areas for saving cash, including eliminating nonessential meetings,
programs and events.
5. Review talent information to ensure meaningful headcount reductions; push for
targeted cuts to eliminate weaker performers and those in non-core areas.
6. Develop a plan and a validated process to identify, select and retain
high-performing and critical talent.
7. Design, develop and present key-employee retention plans/packages to lock in
critical talent.
8. Ensure that survivors' workloads are monitored and their efforts don't go
unappreciated; identify useful short-term reward-and-recognit ion strategies.
9. Engage employees to ensure workforce capacity (sales, service, productivity)
; articulate and reinforce the company's new 'employee experience brand.'
10. Assist in the redesign of organizational structures impacting roles,
responsibilities, spans of control and reporting relationships.
11. Coach senior leadership and management on tactics for effective 'turnaround
leadership' (e.g., developing/maintain ing trust; clarifying and reinforcing the
change vision; establishing a sense of urgency; celebrating short-term wins;
setting a challenging pace; maintaining focus and minimizing competing
distractions; rewarding change agents).
12. Ensure that the broader HR community is well-versed in the talking points of
the turnaround.
In addition to adding value on the most immediate needs, a turnaround presents
HR with a second opportunity - to begin substantively transforming itself in
terms of strategy, programming and service delivery to ensure alignment with the
long-term direction of the renewed company.
The soundest approach to accelerating and completing a successful turnaround is
one that engages employees and leverages its human-capital strategy, programming
and service-delivery systems. For company leadership in the midst of a
turnaround, it should be noted that the chance of success increases to the
extent that some level of corresponding HR transformation is taking place.
Specifically, the human-capital function should be transformed with an eye
toward successfully ushering in the emerging reorganized entity and contributing
to its sustained growth. For corporate leadership, this represents a unique time
for deliberate thought and revitalization, not random cutbacks and wholesale
eliminations of human-capital programs.
Senior leadership will need a strong HR partner to promote the most effective
deployment of the organization' s human-capital resources moving forward. Some
of these people-related activities will include engaging employees to achieve
reworked organizational business objectives; actively promoting effective
communication and change-management programs; redesigning jobs
and organizations; developing strategic-workforce -planning solutions; and
redesigning talent management and total-rewards systems that enable employees to
reach their full potential in the renewed company.
To increase the likelihood that HR transformation positively contributes to a
company's turnaround, senior leadership must communicate a clear and compelling
vision of where the company is heading, its new business strategy and what
people need to do to achieve the new objectives.
Once the business strategy and objectives have been articulated, HR can map out
a supporting human-capital strategy. This human capital strategy will likely
include objectives related to areas such as workforce planning, recruitment,
talent development, employee engagement, cultural transformation and adoption of
new competencies.
Next, HR must align its programs, policies, and platforms with the newly minted
set of human-capital strategic imperatives. This may require revamping or
complete jettisoning of existing programs and/or the creation of new ones. The
key is to deliver human-capital programming that has a positive impact on the
company's bottom-line. Importantly, human-capital analytics should encompass a
set of meaningful measures, derived from the human-capital programming, to
ensure that these efforts are having the desired impact.
Finally, no HR transformation is complete without some reworking of the service
delivery model. HR needs to consider such issues as HR organization design
models (e.g.,centers of excellence, shared services, business partners), process
redesign, HR competency levels, leveraging of technology, vendor
management/outsourc ing and manager-employee self-service, all in pursuit of
optimizing the delivery of the revamped human-capital programming.
Planning for a Transformation of HR
Here are a number of questions HR can ask as it contemplates its transformation
as part of the turnaround.
Strategic questions:
1. Are we focused on what the new company needs to succeed?
2. Do we have the appropriate talent now and are we ready to compete in the
future?
3. Do we have the optimal 'employee-experienc e brand' to retain and attract the
necessary talent?
4. Is HR delivering the appropriate programs to help the new company achieve its
strategic business objectives?
Programmatic questions:
1. Are we able to recognize and reward the right talent in the appropriate way?
2. Do we have appropriate balance between program cost and effectiveness?
3. Do our human-capital programs provide a coherent 'employee-experienc e
brand?'
Operational questions:
1. Is our service-delivery model designed to support the new company?
2. Do our processes achieve best-practice standards in terms of efficiency and
effectiveness?
3. Are we effectively leveraging technology?
Even with thoughtful strategizing and action on the part of senior leadership,
recovery will take place incrementally and without blaring trumpets or a host of
singing angels signalling its arrival. A transformed HR function will most
certainly play a critical role in the successful emergence of the renewed
enterprise.However, this will take time as well as unwavering senior-leadership
supports and deft change-management skills.
In the end, any turnaround situation presents HR with a unique opportunity to
jump in and become the strategic business partner that senior leadership
urgently needs. While these situations are messy, those in HR who get out in
front of and successfully navigate these waters will have a chance to create a
function that can facilitate the recovery of a distressed company and put it on
a solid path of sustained growth. HR can accomplish this through thoughtful and
aligned human-capital strategy, and efficient and effective programming and
service delivery.
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