Investing in Talent Management in a downturn?

May 14th, 2008

Economic news aside, many companies are recognizing the importance of actually investing in their employees now, in an effort to protect competitive position when things turn around (and they will!)

According to a recent article in Talent Management, US employers cut jobs by 63,000 in February 2008 - the most in five years. But a large survey by Mercer revealed that more than 40 percent of organizations indicate they are considering or implementing initiatives such as creating new talent sourcing programs, building pipelines of high-value candidates, retaining high performers and maintaining historic levels of employee engagement. This suggests employers have learned lessons from previous downturns and are less prone at this stage to quickly institute extreme measures. Instead, they appear to be focused on managing aggregate staff costs rather than scaling back.

We recently worked on a whitepaper with Creelman Research that showed that talent management, when put on-line, provide at least three powerful tools for CEOs managing through a downturn:

Better Decisions: Better insight into individual performance helps you make informed decisions.
More Maneuverability: Improved ability to manage goals allows your organization to change directions faster.
Tighter Control: An opportunity to tighten the reins so that everyone remains strictly on track.

It’s not surprising that employee performance management software would be important in a downturn. A study by CedarCrestone showed that companies who use performance management software have higher operating income growth. Anything that can positively affect income is a coveted advantage in a downturn.

When a down cycle hits, C-level executives need to recast their thinking from growth to conserving strength. In the human capital arena, this means that programs should not be switched off, but how you use your systems may change. In particular your employee performance and talent management system ought to focus less on reward and more on control. If yours is a slow moving administrative system that merely keeps things ticking from year to year then it won’t help. But if you have a technology based system, you can rely on it to do three things: help with decision making about talent, provide a mechanism to quickly drive changes through the company and tighten the reins to more closely manage the company.

What’s going on in your organization in response to the downturn? Is your management tightening the reigns or changing course? Are they still investing in their people?

Tags: employee performance management, HR, talent management