When the economy is in flux, knowing your business financials and overall business strategy is critical to positioning your HR strategy for success. Not all companies will react the same way to economic changes; some look to cut costs to survive, others focus on their most successful products and still others buy up the competitors while they can. Deciding to alter your overall strategy or only the specific goals in place to realize that strategy will depend upon the direction your particular organization chooses to take.
When financials are strong, HR strategy needs to concentrate on the core areas of talent acquisition and retention to ensure the best and brightest are offered competitive total rewards programs. In addition, HR should invest in training and organizational development initiatives. These investments help to lay the groundwork for employee and employer satisfaction, a strong internal brand and a mutual goal for organizational success.
When economic times are tougher, and budgets leaner, HR strategy must be able to affect the bottom line by balancing effective cost-reduction strategies with plans for retaining and engaging key talent. No small task! In this situation, work to retain top employees and keep morale steady by communicating with employees and speaking honestly about the challenges the organization is facing. Conduct a skills analysis and tap into unused resources that allow employees to add to the bottom line and the company's abilities to achieve its goals. Project the duration of the downturn for the organization based on the business plan, and plan cost cutting in incremental stages, rather than one abrupt change, to reflect the duration of the downturn for your particular organization.
Strong knowledge of your organization's financials and business plan, coupled with a focus on the most critical HR areas to meet that plan will guide you to adapt your strategy as needed.
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