Hiring freeze not always the best policy

PUBLISHED : Saturday, 26 September, 2009, 12:00am
UPDATED : Saturday, 26 September, 2009, 12:00am

The past year has been challenging for Hong Kong's workforce. Those with jobs have feared losing them, those without have struggled to find employment amid an atmosphere of fear and anxiety in much of the job market.

Gradually, though, executives in some industries are starting to see light at the end of the tunnel. There are, they say, some signs starting to emerge from the crisis that are sure to benefit businesses, employees and job seekers. The downturn has given companies a chance to take stock. It has provided the impetus to restructure, re-examine costs and get ready for the recovery with better processes in place and a clearer sense of corporate direction.

'A recession is a distinct call to action with regard to re-evaluating time-honoured processes,' said Edmund Lee, a partner at professional services firm PricewaterhouseCoopers (PwC).

Companies were looking at ways of reducing costs, he said, starting with optimising their processes. They are examining financial systems, considering sharing services with other areas of the business, and outsourcing where possible. This is part of a drive to simplify and standardise procedures. The intention is that when revenues return, costs will not return in parallel.

At labels manufacturer Avery Dennison, management has capitalised on a lull in business to re-evaluate operations. According to Karl Davies, the company's vice-president of finance for retail information services in Asia, it has been possible to improve the product portfolio, build new markets, find ways to enhance customer service and review internal processes.

'We have multiple processes and procedures in our organisation,' Davies said. 'It is about streamlining those and keeping them simple. Our ultimate aim is to emerge from the slump in an even stronger position.'

More generally, the good news for employees is that business leaders are reaching a consensus that freezing headcounts can adversely affect the rate of post-downturn growth. Indeed, one of the factors that emerged in a recent roundtable discussion, hosted by recruitment company Robert Half International for finance chiefs in Hong Kong, was that a company's approach to human resources was key to its survival in a recession.

Most participants agreed that one of the lessons learned from the downturn was that firms should not necessarily stop hiring.

'Smart managers will always be on the lookout for candidates who can help improve their business,' said Davies, adding that strategic positions should be exempt from freezes on corporate headcount.

Andrew Morris, director of Robert Half in Hong Kong, has also found some reasons for optimism, despite the fact that recruitment companies feel the pinch in a recession more painfully than most.

'It has certainly been a difficult time, but it is important to remain positive,' he said. '[Companies] always want good people, so if we can find someone who can add efficiency or increase sales, companies are willing to pay a [good] price for them.'

While recruiting to meet specific needs, other companies have also made special efforts not to lay employees off.

'I have been through recessions in the past and one thing you learn is not to overreact to them,' said Dave McCann, Hong Kong, China and Singapore human resources partner at PwC. 'You have got to stay true to your long-term people strategy.'

PwC's first decision in tackling the downturn was to make no one redundant. 'We've made that mistake in the past, where the knee-jerk reaction tends to be to cut heads,' McCann said. 'You end up regretting [that] when things pick up again.'

Instead, PwC has managed costs by initiating a voluntary unpaid leave scheme. Staff were asked to take 15 days' leave between April and September and virtually all agreed.

The firm also introduced flexi-time options, short sabbaticals and the chance to gain broader experience. Furthermore, the human resources department took the opportunity to organise additional training in technical, business and soft skills.

Knowing their jobs were not at risk, employees responded positively, and a recent internal survey found staff to be more engaged than previously and impressed by how the firm had managed them through the crisis.

'People feel they are all in this together,' McCann said. 'Recessions are actually quite cathartic and, if you manage them well, you can come out that much stronger.'

Another way companies have managed through the crisis is by offering more contract work. Morris said this was now a quite significant proportion of his firm's business. He noted that clients could see the benefit of short-term contracts because the overheads were clearly definable, making it easier to be flexible and hire responsibly.

Contract work also has attractions for job seekers. They are paid at reasonable rates, keep their skills up to date, and may be asked to stay on in a full-time post.

An interesting trend reported by roundtable participants was that some companies were encouraging Hong Kong natives, who had been living and working on the mainland to return home.

The aim was to draw on their experience of doing business in China and pass it on directly to other staff in the organisation, at least until things picked up again.

In many cases, the recession has also shown employers the true value of their top performers and the importance of hanging on to them.

'If you lose the top 10 per cent of your staff, that can have severe consequences as your business grows again,' Morris said. 'You can't afford to lose [them] and they are the people other companies are trying to attract.'

He noted that retention issues centred more on making staff feel secure, since the days of offering huge pay increases had gone for now.

Companies which are best able to allay fears quickly and which can show the opportunities that lie ahead are generally going to be most successful in holding on to their top employees.

'Those that have made continual redundancies and haven't been able to stabilise their company quickly enough have lost a lot of talented people to their competitors,' Morris said.

In the months ahead, he noted, it would be difficult for employers to strike the right balance for some time.

They still have to keep costs under control, but cannot afford to be caught short as competitors move forward.

One key is to keep investing in training so that staff can adapt quickly to the changing environment, understand what has to be done, and make the most of any chances to take extra market share.

'Those companies that pick the turn faster than anyone else and move faster on increasing headcount and increasing skill sets across the business are going to be those who benefit the most,' Morris said.