As we reflect on enterprises' strategies for this troubled economic climate, people seem to be thinking about the same old "routine" approaches for battening down the hatches and riding this out - i.e. mass layoffs and budget slashes across the board. This may be the case if this recession is longer and deeper than we fear, but in the shorter term, I am seeing many companies taking a different approach when bracing themselves for this forthcoming downturn than many past recessionary experiences.
The Human Capitalist blogs about the Talent Management software business and makes an interesting case for further growth in this industry, which got me thinking about the need for firms to protect their most prized people assets to ride out this this economic turbulence. If firms are buying talent management software, it is further evidence they are putting their talent issues high on the agenda. Why is this?
1) Firms remember well the dotcom bust and 9/11 nightmare, and are preparing themselves for this one well in advance. Many firms are stalling external hires and prioritizing filling vacancies with internal staff. They are hoping to minimize layoffs at all costs;
2) The aftermath of 9/11 instilled a cost-containment mentality into many companies and there is less fat to trim these days in a lot of companies (especially in HR, with that massive wave of HRO deals in 2001-2005);
3) IT and Business Process Outsourcing are increasingly becoming the logical cost-cutting measures with many enterprises focusing on farming out tactical / routine processes and placing increased emphasis on designing retained organizations (see earlier article). Outsourcing evaluation increases firms' self-awareness and recognition of the people who add value to the business - i.e. those who perform more than simple routine duties that can be done for lower costs by third party providers;
4) The decline in young adult workers is driving increased concern regarding talent shortages - particularly among larger enterprises. Letting talent go now is likely to result is costly re-hiring when we exit this downturn.
Hence, the focus is more directed on developing and retaining talent than ever before. Let's hope this downturn isn't so severe that even these talent issues get thrown out of the window.