But some of the functions attached to sales – advertising and marketing, for example, might see their budgets cut.

Neither can a company survive without people, but the headcount almost always comes under scrutiny when business takes a dive. This usually means redundancies that not only damage morale, but divert human resources staff away from their focus of building a company’s talent base.

Job cuts, however, are usually only the start. Often finance chiefs will be seeking economies elsewhere in areas such as recruitment and training. Managers will be under pressure to leave some vacancies unfilled. Other areas of HR spending may also be affected. Employee satisfaction surveys, assistance programmes and human capital measuring could all be scrapped in budget cuts.

It’s difficult for chief executives to appreciate the long term consequences of such interventions when they have been charged with ensuring the survival of the enterprise.

Measuring, in particular, gains strength through long term analysis and comparability. How can a company know whether its management has improved year-on-year if it cannot compare employee satisfaction survey responses over time?

A reduction in training will make its impact felt in falling quality, poor decision making and future inertia. In the same way, a freeze on entry level recruitment will deprive the business of a specific age cohort moving through the ranks, leaving shortfalls in key positions sometimes years in to the future.

Some may argue that those positions could be filled from outside. But to do so is to risk changing the culture of the organisation on which it has depended for its past success. Perhaps the culture needs to change so such injections of fresh blood may turn out to be a bonus, but should any business present itself as a hostage to fortune in this way?

If HR expects and is expected to place itself at the heart of strategy it must be making a business case now for the continuity of its most important functions.

There may be room for cuts, particularly if HR heads have been prone to adopting the latest fashion picked up at a conference or from the last management consultants they engaged.

Human resources processes should be reviewed constantly but they should be scrutinised particularly strongly at the first sign of a downturn. A review should supplant any temptation to respond with a knee jerk reaction.

If there is no choice but to respond to declining sales with cuts in production, HR heads must be at the heart of such discussions, raising longer term concerns that may not have been appreciated by colleagues. Can staff be redeployed on prospective business projects? Would there be support for collective pay cuts, trading pay for jobs or short time working? Could some training functions be better undertaken by existing employees rather than outsourced training companies?

Staff whose jobs are in jeopardy will sense and appreciate the work of those who are capable of empathy with their plight. They will welcome, also, the best endeavours of HR to keep them abreast of changing circumstances. Good communications is vital when taking decisions affecting people’s futures. One of the worst aspects of some redundancies in the past has been staff hearing the bad news through the media.

If HR can do one thing in a downturn, ahead of any other function, it is to keep one eye on the future. One day there will be an upturn. A company’s fitness to meet the demands of that upturn will be measured on the fitness of its employees.

Managing In A Downturn – Part 3 is a post from Advanced Business Solutions - Supplier of accounting software, business intelligence and document managment

Large companies, however, prefer to launch new businesses in the fatter years, closing them, sometimes, as a panic measure when markets take a dip. I know this from bitter experience. But, in spite of my reluctance to start a business within the confines of a larger enterprise, I might do so to save my job.

The temptation of managements when confronted with a need for economies is to start hacking at the workforce. Cuts always seem to be made in neat proportions – 10 per cent here or five per cent there. It’s rarely 6.25 per cent. Yet every job is precious to the individual doing that job.

Suppose, instead, an employer takes a “people last” approach to cutbacks. If companies really believe that their people are their greatest asset, they would do anything to hold on to their employees, would they not?

We have to question the sincerity of such beliefs when we see swathes of employees loosing their jobs. But desperate times call for desperate measures and redundancy hit companies would argue they had no alternative but to part with staff.

Some, such as Landrover and BMW, had built whole shifts from temporary workers for just such a contingency. The use of temporary workers in this way makes sense if companies must plan for fluctuations of demand.

But can companies afford to be so arbitrary with skilled workers. Jaguar decided it could not afford to let go of its skilled woodworkers responsible for some of the finer features and veneers in its cars. Managers found alternative work for its carpenters building furniture.

If managers can’t think of projects themselves – and they don’t have a monopoly on ideas, after all – they can seek ideas from their workforces. Suggestions schemes have been running for years. They tend to be short lived and faddish. But such schemes can extend working lifelines to creative staff with great project ideas.

This is the time that businesses should throw away fashionable theories on “core and none core” business. Some of the world’s best businesses have grown from so-called none-core sidelines.

Nokia, the mobile phone company, began life as a paper mill that switched to rubber boot production, then cabling. It’s ironic that a company, making cables should find itself a pioneer in wireless telephony, but Nokia is a business that has developed a talent for spotting and pursuing innovation.

Most companies are not good at this. Many boards of large public companies, partially divorced from the day to day running of their businesses, become focused on buying and selling. Manufacturers, to their credit, tend to remain close to their products because innovation is a continuous process. A car company cannot survive without new product in the pipeline.

Sparing funds for new projects is difficult in a recession but start ups do not always need big cash injections. Many of today’s internet businesses have been started on a shoestring. Often they require nothing more than a leap of faith.

It’s surely better to let people try something new than keeping them on the bench – the term that is applied by companies who sometimes retain workers with nothing to do. Sometime there is no alternative to redundancy but every troubled company should see it as a duty to ensure they have explored every alternative first. Employees respect that kind of response.

Managing In A Downturn is a post from Advanced Business Solutions - Supplier of accounting software, business intelligence and document managment

Apparently not, according to recent research carried out on behalf of BT Business and Nortel. It found that nine out of 10 managers did not trust their staff to work from home.

The finding emerged from a YouGov survey of nearly 3,500 employees, almost two-fifths of whom said they were confident they could do a better job remotely. Yet across the UK just now there have been outbreaks of “busy office syndrome” as more people with the option to work where they choose have been drifting back to their offices during the recession.

Why this drift? The answer is very simple: fear. As job insecurity rises, so does what in the US is called “presenteeism,” where employees feel the need, often encouraged by managers, to be seen in the office. The phenomenon is manifest both in the insecurity of managers who may feel more comfortable with more of their team members around them and among employees who want their contribution to be visible, witnessed both by colleagues and supervisors.

The danger is that such regressive behaviour invites the wrong measures where work becomes assessed not by quality but by the width of a shift.

A feature of downturns is that they encourage people to withdraw in to behaviours and practices that have worked in the past. People shrink a little too. If you are familiar with Maslow’s hierarchy of needs, you will know that job security sits on his second tier, classed as a safety need and just a tier up from life’s most basic needs such as food and shelter.

Those who are confident in working from home sit higher in the needs triangle, one reason why they have been found to be more productive. They parcel the kind of work that might be strung out over a whole day in an office, in to focused, productive chunks, free from office distractions.

It would be naive to suggest that distractions do not exist in the home and not everyone can retain the self-discipline to maintain focus. But those same people usually struggle to focus in the office too. Ultimately they must be measured by their results.  

BT now has some 70,000 employees working either all of the time or some of the time from home. Its move to encourage such working has saved the company £500m in building costs. The move has led to a 30 per cent rise in productivity, it says.

Office occupation patterns have changed too in that may staff still come in to the office two or three days a week to ensure they maintain social contact with other colleagues and managers.

The danger is that such productive working developments are abandoned as workplaces become more fearful. The opposite should be happening and managers need to be leading the way since good working systems feed through to the bottom line.

But home-working in the 1990s, when it began to grow informally, was rarely a management led initiative. For much office work it spread through technologies allowing people to download their work from home. Today connections are instantaneous. In its early days people began doing chunks of work at home for their own convenience if they had hands-off managers who trusted them to deliver good work.

The problem is that too many managers, even now, view such work as a kind of privilege and surprisingly few seem trusting enough to allow it. While the YouGov research revealed a question of trust, I think that just as big an issue is the insecurity  among many managers. Experience is an issue too.

A recession demands that managers must learn to manage again and this sometimes means making tough or innovative decisions. Additionally managing people at arm’s length requires the kind of confidence that sits higher on Maslow’s pyramid and that is lacking just now. The last thing we need is a return to micro-management.

To learn more about Richard Donkin, please visit his bio

Working from home in the downturn is a post from Advanced Business Solutions - Supplier of accounting software, business intelligence and document managment