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recession and budget cuts are some of the first to come to mind. Jobs in most
industries and roles were major casualties of the global financial crisis, thrusting
leaders into an unflattering spotlight and straining relationships between HR and
staff.
There are plenty of reasons for HR to celebrate the arrival of 2010 in Singapore. For
the local workforce, economic growth is imminent as major projects like the
inaugural Youth Olympics and two integrated resorts create new employment and
training opportunities.
While a new year signals the arrival of opportunities for jobseekers, it does not
necessarily translate to a fresh start for employers. Dealing with the aftermath of the
financial crisis will not be an easy task. Between managing expectations,
strengthening trust with employees, and continuous efforts to control costs, HR will
have its hands full with a number of different people-related issues.
At the same time, it’s not all bad news for HR. According to Mercer’s global Leading
through Unprecedented Times survey, published in June, companies in this region
are more upbeat about their economic prospects. Indeed, HR issues will be more
pronounced than ever before, but the mood in boardrooms appears to be lifting as
the period of recovery begins.
When asked to enumerate the likely challenges of 2010, most HR consultants say
they are concerned with resources for managing talent. Among their chief priorities
are talent retention and skills development as a strengthening economy opens more
doors to recruits. Branding and attraction will also be an issue for HR, particularly in
companies whose reputations have suffered from decisions to cut staff.
The end of the economic downturn may be drawing near but employers still have to
look carefully at their balance sheets. Residual uncertainties from a year of pay
slashes will continue to have an impact on employee morale in 2010. Companies will
be scrambling to adjust salaries and pay bonuses to keep up with employee
expectations and maintain loyalties. For this reason, compensation and benefits
issues were also prominent on experts’ lists.
If 2009 made one thing apparent, it’s the way HR functions in locally-based
companies link to those in offshore sites. With the economic crisis affecting
economies on a global scale, this was a year for re-assessing international
assignments. Employers had to adjust remuneration packages according to the
sudden weakening or strengthening of currencies in host countries. Additionally,
overseas assignments might have been seen as major career incentives before
budget cuts forced companies to scale back. HR will have to communicate across
borders to restore and re-assess expatriate packages in the upcoming year.
Employers and employees agree that 2009 was a year of inequity – whether in terms
of salary cuts compared to rising costs of living, or overtime hours versus leisure
time. Achieving Work-Life Balance shifted from the check-list to the wish-list in 2009,
but it is likely to be solidly back on the agenda in 2010. The fact that experts are
moving it to 2010’s HR challenges list is both good and bad news. It is heartening
that work-life balance will become a priority, and that HR may be better equipped to
give employees that much-needed break. However, like each of the top five
challenges facing HR professionals in 2010, it indicates HR will certainly have its
work cut out for it.
5 Perceptions of HR
Experts found it difficult to rank something so subjective and multilayered, but most
agreed that this is an issue HR must address. HR has been one of the most vilified
departments in many organisations this year, and its efforts to limit attrition were
largely underestimated. Not only does HR have to improve its image in the eyes of
employees, it has to strengthen ties with other business departments.
4 Cost control
Cost control will be a corporate-wide priority in 2010, but there will be added
pressure on HR to manage budgets through process and policy standardisation. HR
must consider cost-efficient solutions in areas such as compensation and benefits
and training programmes.
But if forecasts show an upturn is on the way, why will cost control still be a
challenge? Talent2 reminds employers that recovery in 2010 will not be so drastic
that employers no longer have the challenge of dealing with budget constraints.
Organisations will not restore budgets and head counts to anything near pre-crisis
levels as they want to maintain continuous efforts to be as distanced from the effects
of the economic downturn as possible.
In multinationals particularly, the mantra “do more with less” has trickled from
headquarter offices in the US and Europe to Asia, despite this region faring relatively
better in the crisis. But economic uncertainty is not an excuse to ignore the
backbone of any business: the people.
3 Employee Engagement
If there is a lesson to be learned from past recessions, it’s the erosion of employee
commitment in organisations. Cost-cutting measures and other effects from the
economic downturn have impacted levels of trust and loyalty in employees. Many are
feeling stressed and nervous. The upturn will see some of an organisation’s best and
brightest workers leaving to join competitors if their employers don’t take immediate
steps to motivate and retain them.
If resignations become more frequent, HR must structure its exit interview process
to find out why people are leaving, and what it can to do retain current and future
employees. Feedback should not just address HR’s initiatives - leaders should also be
assessed on their roles in motivating employees.
The economic downturn has changed the way HR approaches compensation and
benefits. According to Hudson, 2010 will be a year of realigning total rewards
programmes to meet corporate objectives. Research from Talent2 suggests adjusting
salary and rewards packages will be half the battle for HR professionals in the
upcoming year. Finding creative and cost-effective ways of combining tangible and
non-tangible rewards will also be a major challenge.
Not only will HR have to be more innovative in this key area in 2010; they will also
have to take a more individualised approach to rewards and recognition schemes.
Incentive programmes should target all employees rather than just sales personnel
who have traditionally been the focus of such initiatives. Out-of-the-box thinking will
be crucial in 2010 as companies strive to choose rewards which are relevant and
motivational.
This issue makes it to the top of the HR challenges list for a number of reasons.
While the global financial crisis helped to retain staff in 2009, employees will be less
cautious and more inclined to change jobs during the recovery. Likewise, competitors
will once again able to afford to hire and poach. In particular, employees who were
more closely scrutinising remuneration and benefits, job security and career
advancement prospects in other companies will gladly make the move as hiring
freezes are lifted. Proactive HR strategies must be implemented now to retain
employees.
According to the Hudson report, 22% of respondents expect that talent development
will take precedence as HR’s first priority moving into 2010. Improvement of talent
development strategies and delivery will be key to leveraging the available talent as
effectively as possible, especially for success-critical positions.
Mercer adds that developing high-potential talents for the future should also be high
on HR’s agenda. Being one of the top executive talent challenges faced by companies
in Asia, leadership development initiatives must be stepped up in order to avoid
talent shortages at the most crucial levels.
Employers should ensure future leaders are given access to future development and
learning opportunities to accelerate their skills development. They must also gain a
better understanding of the skills, competencies and behaviours that will be required
of leaders in their organisational culture, and assess the gap between these needs
and existing talents.
HR’s priorities
There’s no doubt it’s going to be another tough year for HR. Hudson has looked into
the priorities for its clients going forward – here are the key HR issues on their
minds.
+ Talent development: 22% of respondents place it as their top priority
Watson Wyatt says next year is going to be just as challenging as the last; but HR
can ease the burden by putting some strategies into play immediately.
» Be clear with employees about what is expected of them and how they are doing