From reskilling to redundancies, no business restructuring can occur without considering its impact on the company’s people
Effective talent management has never been more important than in such turbulent times when business restructuring has accelerated.
The coronavirus pandemic has not only brought about a deep, global economic recession, it has also forced significant numbers of organisations to shift their business models, working practices and routes to market almost overnight. Companies have embraced remote working, digital and online activity at unprecedented levels.
But this scenario is also having an impact in two other key talent management-related areas: on the one hand, it is leading some employers to make more or fewer redundancies depending on their circumstances; on the other, it is accelerating reskilling efforts often already begun in response to automation.
How to handle redundancies well
Concerning redundancies, while some players, mainly in the tech and digital, have remained relatively unscathed and even benefited from the current tumultuous circumstances, other sectors, such as hospitality and leisure, have leaned heavily on furlough schemes. Such schemes are thought, in many instances, to be masking the true extent of likely future lay-offs.
But of those industries in which job losses are already taking place, employers generally fall into one of three camps, says Jeanne “JC” Townend, chief executive for the UK and Ireland at outplacement provider LHH.
“We’re seeing redundancies as a result of companies going bust, cost-cutting or a lack of the right skills,” she explains. “But the biggest short-term impact will come from those in the middle group which, in many instances, are cost-cutting to survive.”
Getting the process right
A fourth category, says Andy Brown, chief executive of leadership and engagement consultancy ENGAGE, is that of employers taking the pandemic as an opportunity to “revisit their strategy and what they want the company to be, which for some is leading to quite significant business restructuring”.
Whatever the motivation, what is evident is just how important it is to get the process right, not least because failing to do so can be extremely damaging for the company brand in both the short and long term. According to research by LHH, handling redundancies badly can lead to a 30 per cent drop in morale and a 20 per cent fall in productivity among those employees who remain.
As a result, one of the most important talent management considerations for leaders is taking a cruel-to-be-kind approach. As a starting point, this means the leadership team must be clear in its own mind about what is right for the organisation and its stakeholders, says Simon Bonney, managing director of business advisory firm Quantuma.
Management must also know what it is trying to achieve and what it wants the company to look like following the business restructure. Having a sound strategy and plan to achieve these aims is just as vital.
“If you don’t take the hard decisions early enough with the right degree of force, as you’re trying to be too nice or kind or optimistic rather than ensure the cuts are deep enough to sustain the business, you’ll simply destabilise it, especially if you have to keep revisiting the restructuring plan because the right decisions haven’t been made at the right time,” Bonney warns.
Restructuring with compassion
But taking such an approach does not imply redundancies should be made without compassion or without acknowledging the human cost. In fact, says Brown at ENGAGE, there are five key factors that determine whether such an exercise will end up being a brand-burnishing success or a brand-tarnishing failure.
The first is the importance of swift and effective internal and external communication. This involves leaders being transparent and honest about their decisions and the rationale behind them, to help employees understand and put the situation into context.
Not only does this approach prevent damaging rumours from taking hold, but it also engenders trust that the management team knows what it is doing and instils confidence the business is in safe hands.
The second factor is about acting in a humane way and showing empathy to employees, not just in their capacity as workers, but also as people. Brown cites the example of a food company in Ireland that laid off 30 staff members.
The chief executive spoke to each individual concerned. He also wrote a letter thanking them for their efforts and saying how sorry he was to let them go, while offering an explanation of the reasons behind the decision and acknowledging the impact on them and their families.
“His empathy put the employees in a completely different frame of mind,” says Brown. “They still spoke highly of his leadership and the brand and, without exception, said they’d like to come back when things picked up.”
Creating brand advocates or brand detractors
A third consideration involves taking the blame out of the situation. “People need to know it’s not their fault and there’s a bigger picture they couldn’t change,” Brown explains. “If they do feel at fault, it has a negative impact and can psychologically scar them for a long time.”
Next on the list is the importance of leaders showing some humility and not pretending to have all the answers, particularly in a fast-moving environment when more than likely they do not.
“It’s about setting expectations upfront, so saying ‘we may not have all the answers, but we’ll do the best job we can and provide you with as much stability as we can in the near term’,” says Brown.
A final imperative is for employers to provide help and support for those leaving the company. Such support can range from offering services, such as career coaching and mentoring, to helping them network and find new jobs. Other options include allowing people to keep their laptops or private health insurance for a period of six months or so to smooth the transition. As LHH’s Townend points out: “It may be a low upfront cost for employers, but it makes a big difference to former employees. And treating people as human beings makes all the difference between whether they become a brand advocate or a brand detractor.”
Secret of reskilling success
Meanwhile, for those employers that find themselves in the happy position of not having to make redundancies, or are keen to change the composition of their workforce as they reorient the business to exploit new opportunities, there is a second important talent management strand: upskilling or reskilling the workforce, or at least sections of it.
Josh Bersin, global human resources analyst and dean of the Josh Bersin Academy, says the restructuring going on now as a result of the pandemic is simply an acceleration, in many instances, of the business and digital transformation that has been happening for some time.
Future-of-work trends brought about by increasing levels of automation and the introduction of artificial intelligence (AI) technology is already leading to some manual, repetitive tasks being replaced by software. While this may lead to the elimination of some jobs, frequently they simply morph into something else, particularly if it is possible to augment human activities by supporting them with input from machines.
By way of illustration of the level of change taking place, market research firm Gartner says the average job role has changed by 40 per cent in the last three years. Moreover, it adds, a third of the skills employers were hiring for before the pandemic will be out of date by the end of it, while as few as 16 per cent of new hires are equipped with the digital and data analysis skills required in the future.
Although Bersin contests these figures, he acknowledges a growing interest over recent years among large companies at least in hiring candidates who can demonstrate learning agility or the ability to learn and adapt quickly.
He adds: “The key to hiring great people these days is understanding their ‘adjacent’ skills and experience, and whether they’ll be transferable. It’s generally a much better indicator of success than qualifications and certificates, although they’re still important, of course.”
Introducing reskilling pathways
The problem for many HR professionals in tackling skills issues at the moment, however, is they are often simply too bogged down in troubleshooting key issues, such as employee health and wellbeing or how to reward and incentivise staff when whole chunks of the business have changed.
Nonetheless, a number of large, more progressive employers are already starting to put reskilling pathways in place to help staff transition to the new world, with significantly more expected to follow suit over the next 24 months, says Nick South, global leader of management consultancy Boston Consulting Group’s people and organisational practice.
Companies, such as Schneider Electric and Unilever, for example, are already using internal talent marketplaces to match staff with work assignments, projects or job rotations right across the business. Doing so offers two key benefits. Not only is it possible to optimise the use of existing talent and smooth out uneven internal demand, but employees can also take advantage of skills and career development opportunities to which they might not otherwise have had access, including mentoring.
One US bank, upon shutting down 80 per cent of its branches as a result of the pandemic, used an AI system to analyse the skills and experience of the 35,000 staff affected. The aim, according to Bersin, was to understand who would be the fastest and easiest to retrain for call centre positions and who should be placed on furlough. Some 78 per cent of its personnel were successfully redeployed.
What such examples illustrate is that the secret of success in talent management, at a time when there is so little clarity about what the future holds, is no longer to be found in following traditional, often rather inflexible, workforce planning and talent acquisition approaches.
Instead, says Sari Wilde, managing vice president at Gartner, it is about adopting what she calls a “dynamic skills strategy”, which involves filling any gaps by means of a judicious mix of internal reskilling, external hiring and use of contingent labour.
Getting more creative with talent management
“A dynamic skills approach is focused on creating a ‘skills-sensing network’, applying ‘skills accelerators’ and creating transparency around existing skills, with a view to both enhancing those capabilities and using them to solve different business challenges,” Wilde explains.
As an example of a skills-accelerator approach, she refers to a chemical firm that was keen to improve the data science expertise of members of its workforce. After identifying people with only basic data-sourcing and reporting skills, it hired in a number of more experienced staff to assist in developing them further.
But to get the skills mix right, it is also vital employers create two-way skills transparency, says Wilde. To explain the rationale, she cites the example of an oil and gas company that requires its entire workforce to maintain on an internal system up-to-date, so-called career “backpacks” based on their skills, experiences and achievements. The information in these backpacks is then used to help fill internal vacancies, support development conversations and advise on career moves.
Some organisations are even starting to deconstruct hard-to-fill roles into their constituent skills and tasks to help them become more creative in how they fulfil their requirements. This means rather than waste time trying to find the perfect person for the job, they could instead fill it using members of a part-time project team, for instance, says Wilde.
Boston Consulting Group’s South says it is this kind of creativity and ability to think more broadly that is going to become increasingly important if employers are to avoid widespread and repeated business restructuring into the future.
“It’s not going to be just about ‘do we recruit or lay people off?’ We have to ask ourselves where are the skills we could borrow, rent or redeploy, what skills do we need to build and where do we need to be creative on reskilling? The secret will be in thinking more imaginatively,” he concludes.
Case study 1: Aldi and McDonald’s
The temporary staff-sharing alliance between Aldi and McDonald’s, which was rolled out in Germany this March, has been greeted with universal acclaim as an innovative approach to preventing lay-offs.
The coronavirus pandemic has meant many of the fast food giant’s 1,500 restaurants in the country have been periodically forced to close or limit their opening hours. But the discount supermarket chain, which consists of 4,100 stores, has at times struggled to keep its shelves stocked due to high levels of demand for food from shoppers.
The new initiative means Aldi can take on any McDonald’s employees who make the choice to work for it rather than stay at home. As a result, the retailer now has access to additional personnel to staff its sales and logistics departments as it requires, under its own terms and conditions and at short notice.
Once restrictions are lifted, employees “quickly and unbureaucratically” simply return to their former employer, as the two companies put it.
Andy Brown, chief executive of leadership and engagement consultancy ENGAGE, points out that not only are such initiatives “imaginative and flexible”, but they are also a win-win for everyone concerned.
Case study 2: Honest Burgers
In a bid to save as many jobs as possible during the pandemic, the UK’s Honest Burgers restaurant chain introduced initiatives to both reskill its workforce and ensure transferable skills were put to good use.
As with many food outlets, says people director Chantal Wilson, “COVID sped up the impact of Brexit”, which meant that following the first lockdown, it lost about 150 of its chefs due to an exodus from London.
Therefore, in a nod to the company’s roots, it implemented an initiative called Back to Brixton, in which it asked for front-of-house volunteers to retrain as chefs. The success of the move meant it was able to retain all frontline staff and make only seven people at head office redundant out of a total original headcount of 730.
Another even more imaginative scheme was the introduction of a Craft Exchange. During furlough, the decision was taken to stop using third-party suppliers and to post any craft-based jobs, such as graphic design, sign painting or gardening, to a newly created internal skills marketplace.
Staff with skills beyond those employed in their day job were assessed internally and then accredited via bot technology on the company’s Workplace from Facebook platform. “It’s about taking a people-first approach,” says Wilson. “The focus has always been on treating customers as individuals and so we challenged ourselves to do the same with our internal customers, that is our employees, too.”