As the economic crisis deepens, an effective talent management strategy is more important than ever. But is it professional or even ethical to use the recession as a convenient means of shedding poor performers? Verity Gough argues that it’s not what you do, but how you do it.

If it isn’t the number of home repossessions making the headlines, it’s the prospect of an impending unemployment crisis. Only this month the Chartered Institute of Personnel and Development’s (CIPD) annual Barometer Report revealed that 2009 looks to be the worst year for jobs in two decades, with a gloomy estimation of around 3.1 million unemployed. So when it comes to ensuring your organisation has the right people to see it through the bad times, the idea of using the recession to ‘spring clean’ your staff could begin to look quite appealing.

Fine tuning the strategy

“Should people be exploiting the situation? I think the answer is yes they have to, they have no choice,” says Simon Mitchell, director of leadership and talent strategy experts, Development Dimensions International (DDI). “HR has been banging on for years about not having a strategic seat at the table; in our opinion, this is the time when they can prove themselves that they absolutely understand the business strategy, they can be that strategic partner. It’s a great opportunity.”

Rather than using the recession as a chance to cull those who have failed to add value to the bottom line, Mitchell says it is a great excuse to shake-up current talent management practices, but adds that redundancy should never be an excuse or alternative for good performance management. “Those seeking to lose their poorest performing people this way is not ethical nor good practice. If someone has a performance issue you should be managing their performance,” he says.

One thing is certain, now is a good time to focus on the talent management system in place to see if it stands up to scrutiny. “If you’re finding yourself in a tough situation, for example there is less work to go around and you’re not quite sure what to do, that’s probably telling you something straight away about the effectiveness of your strategy,” reflects Charles Bethell-Fox, deputy manager director at Personnel Decisions International (PDI).

So what about those employees who are performing under par? Shouldn’t HR be able to clean up their ranks without worrying about a legal backlash? “There is probably more opportunity in a downwards cycle to be a bit of a shark,” warns Mark Butler, associate director of Napier University Business School, Edinburgh Institute for Leadership and Management Practice. “But I believe in authenticity of approach; if you don’t want to act professionally then of course you can take advantage of problems others have in an economic downturn but it’ll probably comes back to bite you in the future,” he adds.

Instead, Butler says talent management strategies should be for good days and bad: “They are meant to planned for the long term by connecting together a number of strands of thinking and approaches which should mean that they can weather storms as well as predict them, so for me, what HR or companies do in a recession shouldn’t be that different to other economic conditions.”

Soft skills are the new skills

Aparna Uberoy, a talent management specialist from leadership and culture consultancy, Blue Edge, believes that rather than focusing on poor performers, HR should start looking at finding the other skills people may possess: “What we are definitely seeing is more of a focus on skills, so the traditional technical competencies will be less important than the more transferable skills that people bring with them,” she says.

And when it comes to identifying your people’s skills, the importance of the line manager’s role cannot be underplayed: “They might not be attending all the important meetings but they are aware of what is going on, and will be feeding down the information about the employees’ skills,” she enthuses.

However, Butler adds that it’s important that HR has a clear idea about what these skills look like: “HR says it doesn’t want to lose the talent but what is the talent and does the talent know that it is talent?” he asks. “Companies tend to focus on poor performance but the double whammy they face is that on one hand, they need to make staff reductions, but on the other side they have a skills shortage. The answer is to retain more and recruit better.”

And of course, it is HR’s job to unearth the rich reserves of talent that could be hiding in its own organisation. Some of the key skills to look out for, says Bethell-Fox, include flexibility and strong interpersonal skills blended with leadership attributes.

“The ability to provide a sense of leadership, purpose and direction to others is going to be particularly important in a time of economic downturn,” he explains. “But the good news is that looking at those sort of skills as part of the performance management system is also going to be useful to you in the longer term, because they can enable the company to grow, adapt, do new things, work across the business successfully, form partnerships, alliances – all of those things that businesses need to do when they’re trying to negotiate difficult times, but also when they’re trying to maximise opportunities in growth times.”

Recruitment blues

Yet the best talent management strategy in the world can’t fend off redundancies if they are inevitable so when it comes to the crunch, the only thing that HR can do is soften the blow. “It’s about minimising the impact and being conscious of the effect on those who stay as well as those who leave,” says Uberoy. “Dealing with change, transition and helping individuals to re- focus on the future in a productive way are key areas that HR can positively impact,” she remarks.

Avoiding bad press in this way can also help when it comes to recruiting new staff, as research suggests that the vast majority of people find work through word of mouth. Furthermore, a recent survey by recruitment specialists People 1st found that 45% of the UK workforce is considering a major career change as recession looms, so HR should be vigilant when recruiting to ensure the real talent doesn’t slip through the net.

“They are going to be inundated with CVs so they need to look for those candidates that really fit the company culture,” says Uberoy. “It is easy to concentrate on people’s pasts and gaps in the CV but those making a career move should not be disregarded – they may well have transferable skills that could benefit the company and provide a shake-up in the organisation.”

That said, Butler advises HR to be sensitive to the mood in the current workforce or risk upsetting the applecart: “If you have made promises to your own staff but you go hunting out new talent you have to be very clear that your own people aren’t being disaffected as a result. There are opportunities clearly for bringing in new talent in a recession; you just have to be very careful how you approach it,” he says.

HR clearly has a minefield to navigate if it is to pick its way through the recession, but a clear and coherent talent management strategy, a sensitive approach to redundancy and the ability to engage the existing workforce can help secure HR’s reputation as a key player in assisting the organisation through the bad times.