The Conference Board’s monthly Help-Wanted OnLine Data Series reported that online job postings dropped by 83,000 in October. The number of newly posted jobs dropped by 24,000.

“The September and October numbers are a further indication that, thus far, the recovery is weak,” says Gad Levanon, senior economist at The Conference Board. “Labor demand is a leading indicator of employment, and the numbers indicate that employment is not likely to rise for the rest of this year.”

That’s bad news for the nation’s 15 million unemployed workers, whose numbers are only expected to swell when the official government report for October is released Friday. One survey of labor economists predicts the U.S. Bureau of Labor Statistics will report that 175,000 jobs disappeared during the month. Another survey predicts the number will be closer to 150,000. Either way, the unemployment rate, 9.8 percent in September, is also expected to rise.

Only a few days old and the beginning of the seasonal hiring slowdown anyway, November is starting off with news of a layoff of 8,000 workers by Johnson & Johnson. The pharmaceutical company said its layoff of between 6 and 7 percent of its global workforce will save it $800-$900 million.

Despite some positive manufacturing and economic news in the last several days, workers are still struggling to find work.

A report from job board operator Beyond.com says 47 percent of the job seekers to its 15,000+ websites reported being recently laid off. Another 22 percent said they are looking because they are unsatisfied or insecure in their current job.

Of the job seekers responding to the quarterly survey on the Beyond.com network, 7.7 percent said they have been looking for a year or more. That’s a 20 percent increase from the previous quarter (April-June 2009) when 6.43 percent reported their job search was taking longer than a year.

The Beyond.com report doesn’t provide numbers or a more detailed breakdown, so it’s not possible to say how many of those are unemployed. However, the BLS September report said that among the unemployed, 35.6 percent were out of work more than 27 weeks, about the time when unemployment benefits begin to run out.

On the Beyond.com network, two-thirds of the job seekers posting resumes had five or more years of experience. The biggest percentage jump in candidates from the second to the third quarters has been among those with 21 years or more experience, suggesting older workers are having a tougher time getting reemployed. No surprise, at least on the Beyond network, where 76 percent of the job postings were for positions requiring less than a year experience. That’s up from the 55 percent recorded in the previous quarter.

Tomorrow, Monster releases its monthly employment index. It’s been stagnant since the beginning of the year, rising a little, then falling back. In September the index was at 119. In September of 2008 it was at 160.

To add to the doldrums, the Consumer Confidence Index released last week by The Conference Board for October was 47.7, down from September’s revised 53.4.

Let’s start with retention. Take the percentage of surveyed employers (26%) who now say they are “significantly more concerned” about retention of key employees than they were before the economic crisis hit and the percentage (39%) who are “slightly more concerned” — add them together, and you find that almost two-thirds are more concerned about top-talent retention than before.

On to salaries, benefits, hours, layoffs, and hours.

Salaries: Now, 54% of the companies that have made salary freezes are planning to restore them over the next six months, according to the Watson Wyatt survey of 201 large U.S. employers. That’s a big-time improvement. In August, 33 percent said they were going to unfreeze salaries. In June, 17 percent said they would.

Meanwhile, almost half of companies plan to reverse hiring freezes in the next six months.

Benefits: According to the survey, “of those reversing reductions to 401(k) matches, 70% will restore the match to its previous level.” Many of those reversals are planned for some time over the next year. On the other hand, the benefits news for employees is bad when it comes to healthcare. Watson Wyatt says that of the companies that have increased employees’ contributions to healthcare premiums, two out of three say those increases are here to stay.

Layoffs: More than one in five companies think they’re going to do layoffs during the rest of 2009 and 2010. At least that’s better than in April, when almost 50 percent said they were planning layoffs.

Worker hours: More than 80 percent of employers that instituted a reduced workweek expect to reinstate full weeks in the next 12 months. Most of those plan to bring back the hours over the next six months.

A Bloomberg survey also says economists expect the unemployment rate to rise to 9.8 percent, the highest since 1983. An ADP report released this morning foreshadows the lower, yet still continuing job loss. The ADP National Employment Report says the U.S. lost 254,000 private, nonfarm jobs in September, a drop of 23,000 from the revised August jobs report. It’s the lowest drop that ADP has recorded since August 2008.

Government economic reports released today showed the tentativeness of the U.S. recovery. A Commerce Department report said consumer spending in August was up 1.3 points, the biggest rise in eight years, and the fourth increase in a row. But fueled as it was by the Cash for Clunkers program, economists warn not to expect anything similar when the September results are reported at the end of this month.

Meanwhile, the Monster Employment Index, also released this morning, was down two points from September, while yet another report, this one from the Labor Department today, said 551,000 first-time claims for unemployment were filed last week, 17,000 more than the previous week and 20,000 more than the consensus of the 41 economists polled by Bloomberg.

Then there is the report from Challenger, Gray & Christmas which says fewer layoffs were announced in September than in any month since March 2008. The 66,404 layoffs tallied in the report are 10,000 fewer than in August and 30 percent lower than in September last year.

Today’s reports prompted the New York Times to start its story this way:

“A fusillade of economic reports released Thursday showed the economy’s rebound off the bottom seems to be leveling off, and that any recovery may come in fits and starts over the rest of the year.”

That seems to precisely describe what most of us have been sensing instinctively: Things may not be getting much worse, but they don’t seem to be getting better either.

In separate conversations with two attendees of this week’s HR Tech show in Chicago, both mentioned that they had been told by vendors who sell overseas and recruiters who work globally that Europe and Asia are recovering more rapidly than the U.S.

There’s a much greater hesitancy to commit (to purchases or hires) here than in the rest of the world, one of the two offered.

That feeling seems evident in the Consumer Confidence Index released by The Conference Board Tuesday. The Index was off by 1.3 points, a small decline, to be sure, but part of a pattern that began in May.

After rising almost 30 points between February and May, the Index has leveled off, hovering right around 50.0. The Index is a measure of how consumer confidence compares to 1985, when the Index was set to 100. So while confidence isn’t dropping much, it isn’t improving either.

Reporting the numbers, Lynn Franco, director of The Conference Board Consumer Research Center, said, “While not as pessimistic as earlier this year, consumers remain quite apprehensive about the short-term outlook and their incomes. With the holiday season quickly approaching, this is not very encouraging news.”

An economist quoted in the Bloomberg story summed up conditions this way,

“The economy is on track for a jobless recovery, and unemployment will likely remain high well into next year,” said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto. “We’re just not seeing a pickup in hiring. It means a long road to full recovery.”

The Conference Board, which issues some of the most watched economic indicators in the U.S., reported that consumer confidence jumped 14 percent between July and August. The Index, which hit a low of 26.9 in March, has more than doubled since then and now stands at 54.1. It’s still slightly below the 54.8 posted in May, but the rise was considerably greater than the 47.9 economists had expected, according to Bloomberg News.

Employers mirrored that confidence in a CareerBuilder / Robert Half survey that said 53 percent of businesses polled plan to hire full-time workers in 2010. The Employment Dynamics and Growth Expectations Report prepared by the two companies found 40 percent of employers planning to hire temporary or contract workers and 39 percent expecting to hire part-time workers.

The report, which has been issued annually for the last five years, found that the positions first to be filled will be in technology, customer service, and sales. Also on the list are positions in marketing/creative, business development, human resources, and accounting/finance.

Most the hires will be either entry-level (say 28 percent of the hiring managers surveyed) or staff-level professionals (32 percent). The traits most valued in a new hire? Employers cited multitasking, initiative, and creative problem-solving.

“Companies already are identifying the key skill sets they will need in new hires to take advantage of the opportunities presented by improving economic conditions,” said Max Messmer, chairman and CEO of Robert Half International. “Firms that cut staffing levels too deeply may need to do significant rebuilding once the recovery takes hold.”

Perhaps anticipating the recovery, perhaps because so many companies have already made cuts, employers are throttling back on layoffs, says outplacement firm Challenger, Gray & Christmas.

“We see more and more signs that the economy is beginning to turn around. While it is too soon to expect a massive hiring binge that will move some of the nearly 20 million jobless Americans back onto payrolls, the pace of job cuts is likely to continue its downward trend,” said John A. Challenger, CEO of Challenger, Gray & Christmas.

In January 241,749 job cuts were announced, the highest since January 2002, according to the firm, which has tracked planned layoff announcements daily since 1993. But the announced job cuts have been declining since.

The August numbers are still being counted, but the firm said it expects the four-month total from May through August to be significantly lower than the 711,100 it counted from January through April.

“Year-end job cuts are likely to increase from the levels recorded during the summer months, which typically see fewer job cuts, but we will probably not return to the levels reached between January and April,” says Challenger. “Job cuts are expected to continue the overall downward trend in 2010, when we might actually begin to see some small improvements in hiring.”

The Wall Street Journal reported this month in its Economic Forecasting Survey that economists expect, on average, the economy to lose just under 27,000 jobs a month next year. While not exactly a recovery, it’s a huge change from the 70,000 monthly job loss they predicted in July.

However, if you actually count the number of economists who predict that jobs will either not be lost or will actually be added, the number is slightly larger than those who predict continued job losses.

The Bureau of Labor Statistics will release its employment report for August next week, Sept. 4th, just in time for the Labor Day weekend.

The following options address those circumstances and are grouped into options for moderate cost reduction and small cost reduction.

Moderate Cost-Reduction Options

Reducing hours: this is another “pay reduction” approach where you reduce the hours of work for selected non-exempt workers. The percentage of hours reduced might vary by individual; it’s similar to short-term furloughs, but hours are reduced as opposed to whole days.
• Effectiveness — medium if focused on poor performers and low-impact jobs.
• Benefits — workers might view it as OK because it’s a stopgap to avoid layoffs.
• Potential problems — hourly employees often live on the edge, so this might result in higher turnover. Employees “fighting” over available hours may cause work disruption. Top performers who have choices may go elsewhere unless the need to reduce costs is an industry-wide phenomenon.

Cut benefits: reducing corporate contributions to pensions/401k or increasing employee-paid health care costs. Sick leave or vacation can also be cut.
• Effectiveness — medium
• Benefits — most employees don’t notice the reduction in the short-term. The key is to identify high-cost benefits that few use and most wouldn’t miss.
• Potential problems — if it gets media coverage, it can hurt your brand image. It disproportionately hurts families and older employees. If you cut sick leave, it may cause sick employees to come to work and spread diseases.

Hiring freezes: where you eliminate the hiring of new employees into vacant jobs.
• Effectiveness — medium with many negative consequences
• Benefits — if you have lots of open positions, this can result in significant salary and benefits savings. Less business impact if only surplus positions go unfilled.
• Potential problems — it will lead to major income reduction if revenue generating jobs are not filled quickly. Major workforce disruptions can occur if the vacancies are in key and non-”surplus” positions. Top talent opportunities may be missed and managers may keep poor performers who they were considering releasing because they are better than having no one. Many freezes are really sieves where the hiring freeze is frequently circumvented. Some managers hire the same candidates under contract, resulting in no net cost savings.

Pay cuts: where you cut employee or executive salaries by a certain percentage but you do not reduce the days that they work.
• Effectiveness — medium if you focus on managers and executives
• Benefits — managers and executives will usually tolerate these cuts because they are more highly paid.
• Potential problems — it may lead to major workforce disruptions, especially if layoffs occur anyway. It may drive top performers the way because everyone was treated equally. It may not be possible under union contracts. Most will have an expectation that at some point these cuts will be restored. In tight economic times, any reduction in income may cause families living on the edge to lose their house, and so on.

Small Cost-Reduction Options

Forced vacation: where employees are forced to take accrued vacation in the short-term to convert to balance sheet costs.
• Effectiveness — medium
• Benefits — because of accounting rules, it reduces corporate liabilities.
• Potential problems — The dollar impact may be low if employees don’t accrue large amounts of vacation. Can result in work disruption when many employees take vacation simultaneously. May disrupt families by forcing vacations during unusual time periods.

Pay freeze: under this approach, salary increases are eliminated.
• Effectiveness — low with negative top-performer impacts
• Benefits — since not all individuals expect a pay increase each year, it might have less effect on employee morale.
• Potential problems — the amount of labor cost reduction might be small. Top performers (those most likely to get a pay raise) may become frustrated and look elsewhere because they feel they’ve earned a pay increase.

Promotion freeze: where all promotions are frozen.
• Effectiveness — low with significant negative top-performer impacts.
• Benefits — in companies with few promotions, cost reduction will be minimal.
• Potential problems — it will frustrate and likely cause turnover among top performers.

Other Cost Reductions

Many firms use a misguided “save people first” approach to cost cutting, so they attempt to reduce travel, subscriptions, conferences, equipment, telephone costs, etc., before they try any of the above approaches. That may seem like a good idea, but reducing the salesperson’s minutes on a mobile phone might reduce sales more than the initial cost-savings.

In addition, a carpenter can’t really do his job without a sharp saw, nor can a programmer without her latest software tools.

The key is to use reduction approaches where the impact on productivity and innovation is considered and measured along with initial cost reduction.

Final Thoughts

As you can see from this checklist, the highest-impact approaches with the least-negative impacts on top performers are reducing contingent workers, surgical layoffs focused on poor performers, expanded use of productivity improvement tools, better use of technology, and the long-term outsourcing of work where the level of work fluctuates significantly.

On the other end of the spectrum, voluntary buyouts and furloughs to reduce salary costs have the most negatives associated with them.

The most important thing to remember is that you should set specific measurable goals before each action relative to both the short and long term, then check to see if those goals were actually met. In many cases, you’ll be surprised to find that some of the approaches have so many negative unintended consequences that you will not have decreased cost due to negative impacts on productivity and top-performer turnover.

The end result of such whimsical action is well established; most labor-cost-containment strategies seem to be effective in the short term, but fail big time when it comes to meeting longer-term goals. It’s not uncommon for cost-containment strategies to negatively impact the organization long term, as the costs of containment paired with the cost of recovery exceed the short-term savings produced. That said, cash flow can be difficult to manage and even as the economy starts to recover, chances are organizations are going to need labor cost-containment options. If you want a more effective and well-thought-out approach, read on.

A Recurrent Need
It used to be that reducing labor costs was something that organizations only needed to do during tough times, but these days it’s a process that might need to be done on a regular basis. As the need becomes more recurrent, the demand for more options will surface. Like all things in life, cost-containment options have positive and negative impacts. The key for organizations battling volatility in the market is to use the right approach at the right time and to avoid options that present more negatives than other choices.

Before you begin determining what makes sense for your organization, note that in today’s business world, labor costs involve a lot more than the salaries and benefits that your organization provides “employees.” In recent years the landscape of labor types organizations employ to get work done has grown substantially more complex. In a modern organization it is not uncommon, for example, for at least 20% of the work done in the organization to be completed by labor not on the payroll. Managing the workforce strategically requires a holistic view of labor that includes employees, contingent workers, consultants, outsourced service providers, strategic partner labor onsite, and interns.

Focusing Your Efforts With Established Goals
For too many organizations the only goal ever stated when cost-containment efforts are introduced is short-term improvement of cash flow. Because the longer-term impacts of such efforts are rarely considered and monetized, moving forward strategically is difficult. If your organization must pursue such actions, it is critical that a broader set of goals drive the decision making process about what options to employ. Possible goals to consider include:

1. Reducing labor costs (a given)
2. Reduce labor benefit costs
3. Reduce the possibility of key employee turnover
4. Maximize the chances of “released” workers returning upon recovery
5. Minimize worker distraction from the cost-reduction process
6. Restructuring of work/workload
7. Increase employee productivity
8. Reduction in force of employees with obsolete skills
9. Reduction in force of employees with unstable history of performance
10. Reduction in labor cost without increased costs of employee separation (severance/legal)
11. Reduction in non-employee labor costs
12. Minimize damage to your external image and future recruiting capability

A Checklist of Labor-cost Reducing Approaches
I’ve been advising firms for over two decades on how to reduce labor costs or increase productivity, and have documented a number of options organizations can consider. The following is a list of the options available, categorized into those that provide significant, moderate, and minimal cost reduction.

Significant Cost Reduction Options
Cut contingent labor — jobs and work that is pre-designated as “contingent” is cut, or contracts are not renewed. Allows for rapid short-term increases and decreases in labor costs.

• Effectiveness — high, if the organization has planned for contingent labor to be used as a buffer to economic conditions.
• Benefits — significant cost savings if low-impact jobs are made contingent. Contingent workers know up front that they may be eliminated. Fewer legal issues exist when releasing contingent workers. Managers are more willing to make the decision to release contingent labor.
• Potential problems — requires that you designate a significant percentage of your work to be done by contingent labor. Managers often resist making “their” jobs contingent.

Permanent surgical layoffs — Releasing a percentage of the workforce with no immediate intent to bring them back. Surgical layoffs are targeted, while traditional “percentage of the workforce” layoffs tend to focus on employees with low seniority.

• Effectiveness — high, only if surgical and targeted toward low-impact jobs and low performers.
• Benefits — in addition to labor cost savings, you can maximize the current and future capabilities of your workforce if you do surgical layoffs. The most effective layoffs target jobs that don’t generate revenue, have a low business impact, eliminate skills sets that are no longer needed and cyclical work that can be outsourced to vendors that can handle a fluctuating workload.
• Potential problems — selecting employees based on seniority can result in the loss of top performers and individuals with key skills. Many firms offer severance packages, dramatically increasing the overall cost of the layoffs. Rumors related to future layoffs can distract your employees, impacting productivity. If you don’t also “change the work,” the remaining workload can stress your workers and increase error rates. If you lay off a large percentage of your workforce, certain federal (WARN Act) and state regulations may require you to notify regulators in advance. Some managers hire back released workers as contractors, resulting in no cost savings. Often low-wage jobs are cut instead of high salaried positions. Negative publicity from large-scale layoffs can hurt your external employer brand image and impact future recruiting ability.

Productivity improvement practices — rather than focusing on costs, improve management processes, tools, and managers so that your current workforce produces more output at a higher quality. Tools might focus on job rotations, turnover reduction, work restructuring, workload re-assessment, identifying barriers to productivity, and rewards for productivity.

• Effectiveness — high
• Benefits — you don’t lose the talent that you’ve worked so hard to recruit and train. Better people-management practices increases output and improves product and service quality. Firing bottom performers has a high ROI and top performers appreciate the focus on performance. Many workforce productivity improvement tools are inexpensive.
• Potential problems — managers may resist change. Your HR department might not have a focus on worker productivity nor a toolkit to increase it.

Substituting technology for labor — where you substitute software or hardware for labor.

• Effectiveness — high, although the initial costs of any equipment or software may be high.
• Benefits — a significant percentage of “people work” can now be done remotely on the web, with software, hardware, or robots. Technology can work 24 hours a day and doesn’t get sick. Leasing can reduce initial costs.
• Potential problems — there may be workflow disruption in the short-term during installation. Technology management and maintenance costs must also be considered. Unions and current employees may actively resist any substitution of technology.

Outsourcing work — where work formerly done by employees is shifted to outside vendors that are willing to adjust their costs based on the changing workload.

• Effectiveness — high, when work that frequently fluctuates up and down in volume is outsourced.
• Benefits — a shift to a more permanent level of flexibility in labor costs.
• Potential problems — you lose direct control over the work. When you add the need for a vendor profit margin, the overall labor costs might increase. Vendor reliability and maintaining quality are also issues.

Long-term furloughs in select industries — where you release employees, but you intend to bring some back when business improves. You generally maintain a relationship with individuals affected while they are on furlough. Furloughs are commonly used in the airline and transportation industries.

• Effectiveness — medium in industries with high-volume roles
• Benefits — enables medium to long-term containment of labor costs in industries where people are extremely loyal, like the airline industry, where employees get used to the pattern and learn to find secondary jobs while waiting for you to call them back. Unless you have that high level of attraction, long-term furloughs are the same as long-term layoffs.
• Potential problems — employees on furlough might fail to return if the furlough is too long. Industries without a history of long-term furloughs will have difficulty with this approach.

Plant closings — were you close an entire facility or plant, and you shift work to other facilities.

• Effectiveness — medium
• Benefits — all labor costs are eliminated for the associated facility.
• Potential problems — your firm’s capacity to produce is also eliminated. Unless you are willing to pay for relocation (and even then some will not move), you will lose some top performers and individuals with key skills.

Seasonal furloughs — where you release employees during traditional slow periods. These furloughs are often during seasonal periods and may be repeated at the same time each year.

• Effectiveness — high, when you hire individuals who understand and accept the pattern.
• Benefits — if your employees easily adapt to the pattern (especially if your employees hold a job for extra income), most will return each time. This process works better if you hire individuals who understand and can accommodate this pattern and if you tell them when they will likely be allowed to return.
• Potential problems — individuals who need a continuous income stream probably won’t return. Top performers will likely look elsewhere first.

Short-term furloughs to reduce pay costs — this approach asks/tells employees to take several whole days off each month without pay. The days can be free or picked by the organization. The net result is that employees receive a 3 to 10% pay cut.

• Effectiveness — low with many work disruptions
• Benefits — employees may in the short-term see it as a positive thing that they are keeping the job and they get some days off, even if they are unpaid.
• Potential problems — may shock employees and cause major schedule disruptions. Employees may see it as a trick way to institute a pay cut. It does not generally reduce the need for future cuts. Top performers may leave because they know they can demand full pay at other firms. Exempt employees may not be able to legally have their pay cut if they work any hours during the furlough period. Union contracts generally prohibit pay cuts of any kind without union approval. If you promised employees an annual amount of pay, you may face lawsuits.

Voluntary buyouts/early retirement — where employees are given the choice to accept a severance package to separate prior to plan. Often rewards for early retirement are part of the plan.

• Effectiveness — extremely low
• Benefits — managers avoid having to make tough decisions
• Potential problems — top performers and key employees may accept the package, resulting in you paying your best people to leave and perhaps go to competitors. Too many or too few employees may accept the offer.

Next week, I’ll add to this list with lower-impact options for organizations seeking moderate or minimal cost-reduction options.

But maybe you weren’t quite as fortunate, and your crew was heavily loaded with regular staff recruiters, who were going full steam to keep up with the incredible hiring requisition load. Or maybe you have shed the contractors, but even your remaining staff is struggling to stay busy. Unfortunately, now that the economy has gone south, they’re running half the req loads they once did. Not only are they questioning their own job security, but you’re constantly fending off queries from your boss, the rest of HR, and maybe even the CFO as to just what the recruiters are doing, and why should you be maintaining the same staff you had when the current workload has shrunken so dramatically. Sounding familiar?

Hopefully, back in January of this year, you took Lou Adler’s sound advice that “hiring will start to recover in Q2, 2009, and now is the time to rebuild your recruiting team and massively upgrade your sourcing and hiring processes.” Perhaps you’ve done just that, and are now well positioned to address any coming business increase. Or possibly you didn’t get that opportunity, or your business still hasn’t begun to bounce back.

In any event, you do have alternatives — methods you can use to gainfully deploy your staff resources in ways that clearly, and measurably, demonstrate their ongoing value to the business. The challenges will be different, depending on the size of the company you’re in. In a small firm, you are likely to have more latitude in initiating change — but possibly fewer resources available. In a larger firm with more resources, you are likely to need to build a support coalition of colleagues, business partners, or executives to create the right atmosphere for change. But in either situation, it’s critical that you build the “business case” — show the ROI through well-tracked and supportable metrics.

In my more than 20 years of recruiting leadership, predominantly in hi-tech, I’ve had ample opportunity to face this challenge, given the cyclical nature of that business. And as you can imagine, I willingly responded to a blog posting earlier this year asking other recruiting veterans for their experiences in facing the same issue. 13 of us shared our stories, from a variety of industries and backgrounds. The following are a few snapshots of some of the proven practices and strategies that have been successfully implemented by others to preserve their key recruiting assets during previous business slowdowns.

Some of these are creative twists on previous themes, while others represent really out-of-the-box thinking. [NOTE: All of them are predicated on the assumption that you know your staff --- their skills, strengths/weaknesses, and backgrounds. If you're new in the role, you might want to begin with a resume review and light career discussion with each of them.]

I do hope you find some of the suggestions below fascinating, creative, and useful. I will be presenting a seminar/workshop on this very subject, and with a lot of additional detail on implementation, at the upcoming ERE Expo in Florida in September, and we’d love to see you there.

1. (Internal) Outplacement Services: For the regular recruiters, create a corporate career university — in essence a full outplacement program modeled after those offered by external vendors (at ridiculous prices). The recruiting staff would run workshops, on and off-site, such as resume writing, interviewing skills, campaign management, negotiating offers, use of the Internet, etc. This one is very easy to show a solid ROI for.
2. (External) Outplacement Services: Take the same offering “on the road” to college placement offices, state unemployment offices, and even social groups/non-profits, as a community service. It may also be a tax write-off.
3. Business Development: Deploy researchers/sourcers on business development activities. You can gain access to your sales department’s CRM (client/customer relationship management system), and then scan those prospects that had weak or limited knowledge recorded in the database. Then you can create a full Company Profile — sort of like a Dun & Bradstreet Plus workup, and at no cost to the organization.
4. Directed Research: Those same researchers/sourcers, working with the senior admin staff, can get a “heads up” on all planned executive travel that would be visiting customers or prospects. Once you know who they are meeting with, create a “personal dossier” on each of the individuals they will be meeting with, (including home addresses, photos, personal data, etc,), put it in a packet, and give it to the traveling executive the day before departure, as “airplane reading.”
5. Top Grade your Recruiting Staff: Assuming you’ve already reduced your roster of contract recruiters, go through a performance-based ranking of those remaining, with career development as an outcome, (and preparation for further staff reduction if needed).
6. Build a Talent Pool Pipeline: Assess your past “hardest to fill” position, and launch a branding outreach campaign to candidates for future consideration. Be very clear about any available openings, and work from a perspective of building a “friends of (our company)” that you want to stay in touch with. Newsletters can be perfect for this.
7. Train the Hiring Managers: This is something we often never had the time to do, but certainly do now. There are some great programs available in the market — or better yet, create your own.
8. Re-skilling: While you’re in training mode, what could you deliver internally to your own recruiting staff to better equip them for when the market picks up and the “war for talent” resumes? Do they need refreshers on the latest Internet recruiting techniques, or using social networking tools in recruiting? There are some great resources offered right here on the ERE website, or you may even have a resident guru on your own staff.
9. Internal Process Analysis: When was the last time you sat back and closely examined the actual workflow in your recruiting operation? Most any analysis will turn up innumerable inefficient practices, roadblocks, and artifacts of “the way we always did it.” This is a great time, during low volume recruiting, to experiment with new ideas and even some best practices you “borrow” from other firms.
10. Technology Upgrade: It may be a little tough to get resources approved for an upgraded applicant tracking system, but when was the last time you shopped the market? As the competition and functionality has grown, prices in many cases have come down, and if you “upgrade” to a less expensive system, you’re the hero! This also applies to your firm’s recruiting website, which most of us will admit is often out of date.
11. Special Project Work: Thinking outside the walls of recruiting, what special projects may be in need of some of the skills your recruiters can bring to the table? HR has many cyclical programs that roll out throughout the year, such as newsletter releases, career/succession planning, etc. that may lend themselves well to the recruiter’s skill set.
12. Assist HR in Core Services: Recruiters often have two key ingredients that could add value in assisting with employee relations issues (which often escalate during a downturn). Many of them will have previous experience in many aspects of the “HR Generalist” role, and all of them have pre-existing relationships with many of your employees — because they hired them!

Watson Wyatt’s survey this month of 141 employers shows that 26 percent of employers plan to increase cost-cutting initiatives over the next 12 months, way down from 51 percent who said so in February. Of the companies who have avoided layoffs thus far, only 5% expect to start laying people off over the next year.

In a nutshell, the first two columns below are the nasty ones; the last two are the good ones.

The chart shows the percentage of companies adjusting their restaurant staffing levels, including reducing number of managers per unit, number of hourly employees per unit, or number of hours.

The data is from a People Report study of hundreds of restaurant-chain executives.

Fifty-one percent of companies say they’re reducing or planning to reduce the number of managers per unit, while only 34% are doing so with hourly employees. Also, 42% of the companies have reduced or plan to reduce the hours worked by their restaurant employees.

In addition to cutting staff, the study finds that most chains have either closed down a restaurant unit or slowed the pace of new openings.

Most of the job cuts and restaurant closings, the study says, “seem to be already in the past, which means we should see job losses in the industry starting to slow down.”

All you have to do is read the paper on a regular basis to see that many firms and their respective HR departments are struggling to find ways to reduce labor costs. Rather than implementing sound and well-established workforce-reduction plans, HR and talent managers appear to be making it up as they go, all in an attempt to avoid layoffs.

More often than not, they are utilizing ineffective and often damaging approaches like furloughs, pay cuts, and voluntary buyouts. After years of clamoring to get a seat at the table, many HR departments are demonstrating why they shouldn’t have a seat; they struggle to deal with a predictable and reoccurring problem, economic downturns, and the related need to dramatically cut labor costs.

At least to me, the lack of a long-established plan of action at most firms is an unnecessary embarrassment when it should be a significant opportunity to stand and deliver.

Déjà vu All Over Again

The lame reaction by HR departments around the world wouldn’t be nearly as embarrassing if it weren’t for the cyclical nature of the economy and the fact that organizations have faced downturns every few years since the emergence of civilization, most recently in 2001 and 1994.

Organizations are challenged to grow quickly during upswings and reduce labor costs during downswings, yet most in HR seem utterly “shocked” at the challenge before them. This time around, unfortunately, organizations are proving that despite lots of practice, they are no better equipped to handle the problem than they were the last time it occurred.

It’s almost like those in HR feel exempt from learning from history. Shame on those in HR who are so busy with day-to-day activities they can’t learn lessons from their mistakes. Even a struggling sophomore in economics knows that the economy is cyclical and that ignoring or pretending that it simply isn’t so is a prescription for disaster.

When business is good, senior executives expect HR professionals to be ready with a plan to hire and develop more people so that the organization is capable of meeting its growing obligations. When revenues decline, executives expect HR to have a plan to painlessly cut labor costs, again to right-size the organization to its obligations.

Executives expect all business functions to be able to adjust their expenditures with the changing business cycle. Can you imagine a store manager at Macy’s not realizing that there is an established retail holiday cycle where employees are added for the busy season but then “released” when consumer demand subsides? Ignorance of this business cycle would get any retail manager fired on the spot.

Similar cycles occur at ski resorts, amusement parks, and ice cream parlors. In fact, this “hire and then release” cycle occurs in every industry, the only difference is that instead of the down cycle occurring at the same time each year, it instead occurs in five-, seven-, or 10-year intervals. Just because they don’t occur at the exact same time every year is not an acceptable excuse for being unprepared.

Don’t You Dare Use the ‘L’ Word (Layoffs)

It seems to me that only Pollyannas or naïve individuals should be “caught with their pants down” without a plan for how to lower labor costs as business revenues decline, but isn’t that exactly the problem with many HR functions? They are so focused on day-to-day operations and are so “positively oriented” that frequently they don’t even want to think about the periodic need to conduct layoffs.

Other managers throughout the business routinely face up to the fact that they must periodically reduce costs. Managers of product inventory know it, production managers know it, even call center and shipping managers know it.

Because the total cost of employees is often 60% of all variable costs within an organization, it should never come as a surprise that the firm’s largest single expense item would be first on the chopping block when revenues decrease.

It seems like some HR departments try things almost at random (like hiring freezes, voluntary buyouts, and employee furloughs), even though these “stopgap” methods almost always fail to prevent the ultimate HR failure: large-scale public layoffs that dramatically damage the firm’s employer brand image.

When HR is pushed by the CFO’s office to reduce labor costs, more times than not, they react emotionally rather than logically, which is a poor substitution for collecting data and figuring out the best ways to cut labor costs without negatively impacting productivity.

HR needs to stop developing an “ad hoc” cost-reduction program every seven years, only to immediately abandon it after its first use; instead, a permanent process that provides for the real-time adjustment of labor costs and overall staffing levels is needed.

There are only three effective solutions that enable rapid labor cost containment:

• A fixed contingent workforce percentage program. Where workforce headcount growth and labor cost reductions are both handled through the use of a fixed percentage of labor cost being allocated to contingent labor. This approach uses a combination of variable cost outsourcing contracts and the hiring or releasing of temporary or contract workers to meet the required change in labor costs (Google and Microsoft are benchmark firms).
• A continuous reduction plan. Under this approach, surplus labor (usually bottom performers and those with obsolete skills) are proactively released each quarter (Cisco is a benchmark firm).
• A SWAP process. This approach is designed to continually improve your talent pool without changing headcount. Using the SWAP approach, bottom performers and those with skills that are no longer needed, are replaced whenever a high potential recruit is found. The net result is an overall increase in productivity and skills with no net increase in headcount (Slide is a benchmark firm here).

All of these approaches provide an organization with the capability to adjust the capability of the organization while containing labor costs.

The Four-Petal Shamrock Workforce Management Strategy

The most effective workforce management strategy is known as the shamrock approach where a portion or group of the workforce is represented by one of four petals:

• The first petal (permanent employees with good performance and current skills) reflects jobs and individuals who would not usually be reduced in a normal downturn.
• A second petal represents a group of contingent workers who could be easily released when labor costs need to be cut.
• The third petal represents work that would be outsourced under flexible cost contracts.
• The last petal would reflect the SWAP program and individuals who would be replaced whenever a high-potential recruit came along.

HR Should Identify Warning Signs

There is a relatively simple, two-part process that allows HR to identify precursors or warning signs that would alert HR leaders before they need to reduce labor costs:

1. Identify first-action firms. In every industry, there are repeatable historical patterns where certain firms act first to either reduce labor costs or to increase hiring. Here is an example to illustrate the approach. If you look back to 2001 and 1994, you might find that computer-chip equipment manufacturer that we will call Firm X was a “first action” firm. Meaning that they began to reduce labor costs months before their competitor, Firm Y. Several months later, you, their customer (Firm Z), followed suit by cutting labor costs. If Firm X acted immediately after their orders decreased by 20%, your company, Firm Z, can now use that pattern of first- and second-acting firms as well as the precursor (20% cut in orders) as early warning signs about when your firm might need to act to reduce labor costs. Changes in key economic indicators like unemployment rates, interest rates, or consumer spending rates might also serve as precursors or warning signs.
2. Identify the ideal labor cost to revenue ratio. If, for every $60,000 in labor costs, there should be $100,000 in revenue (a 6-to-10 ratio), you know that when the ratio reaches 8 to 10, it’s time to reduce your labor costs. In the opposite direction, when the ratio reaches 4 to 10, you know it’s time to consider new hiring. Alternative ratios include your average revenue per employee and the percentage of all variable costs that are spent on all of the various types of labor.

Other Action Steps

Pre-identify jobs that are likely to be protected, even during slow growth periods. By working with managers, you can identify jobs that should not be reduced, even when revenues drop. These “protected” jobs might include product development and sales. Individuals in these jobs should be informed of their relative job security in order to avoid unnecessary anxiety.

Conversely, there are jobs that are almost always reduced or declared “surplus” whenever revenues and workloads decrease. Typical jobs that are likely to have surplus employees might include customer service, supply chain, and production employees. There should be an absolute requirement that a fixed percentage of these jobs that have a high potential for becoming “surplus jobs” will be filled by contingent workers that are more easily released.

Make the internal redeployment and transfer process more proactive. Not only should the process be sped up, but individuals with key skills should be proactively “moved” from low priority and low-impact jobs to roles where these employees will have a higher ROI.

One last but very important action step is to make labor cost-reduction decisions more “fact-based” and metric-driven. Whenever any labor cost-reduction program like furloughs or voluntary buyouts are administered, use metrics to assess how effective they really were in cutting overall labor costs, while documenting their impact on morale and productivity. By collecting data, you can avoid implementing expensive stopgap measures that end up causing more harm than good.

Final Thoughts

If you are an HR leader and take umbrage to this article and its characterization of HR as a group that fails to learn from history, we will just have to agree to disagree.

Any organization that tries short-term “stopgap” measures only to be forced months later to conduct large-scale public layoffs has to be classified as a workforce planning failure. A superior and more strategic approach is a permanent workforce strategy that allows you to continually “vent” or seamlessly reduce workforce costs. Contingent workforce, continuous reduction, and SWAP plans all produce less workforce disruption, gossip, bad publicity, and surprises.

It’s time to face reality. In a volatile world, the ability to expand the workforce and then later to contract it is fast becoming a required capability for all firms. In the near future, it will likely be necessary for HR to have the capability of hiring new skills and talent in some areas, while simultaneously releasing workers in low-priority areas. The ability to handle this “continuous churn” will become a key competitive advantage for firms and a primary differentiator between good and great HR departments.

Free Webcast on Contract Labor Management

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Economic downturns, mergers, and acquisitions all place pressure on organizations to curb labor costs. No time in the last decade has that tenet been more apparent than right now.

Layoffs, large or small, force organizations to cut loose the talent in which they have invested salary and training dollars. While talent released during a layoff today may seem like little more than an expense, tomorrow it could be the difference between success and failure.

World-class organizations need to develop a process that will allow the organization to quickly and easily “re-recruit” alumni with proven track records of success when economic conditions warrant hiring.

The solution that makes re-recruiting possible is a corporate alumni program. Alumni programs allow you to maintain a mutually beneficial relationship with former employees who may someday provide significant value again, providing you with an excuse to remain in contact and a mechanism to recruit them back quickly when needed.

Because so much great talent is being released into the labor market right now, it is a great time to either start a formal program or upgrade your existing corporate alumni or “boomerang” program.

Corporate Alumni Programs Can Also Increase Revenues

While the primary reason organizations develop alumni programs is recruiting-related, lots of research demonstrates that investing in corporate alumni programs increases the sales lead generation and deal closing capability of the organization.

As many sales professionals are seeing their jobs evaporate today, it makes perfect sense to partner with sales leaders to build a program that is designed to support both the recruiting and sales organizations mutually.

Leveraging sales professionals who have been let go as lead generators, brand builders, and in some cases, as customers provides added capability to the organization in a time of budget cuts and hiring freezes.

If you treat them right, former employees (i.e., corporate alumni) can be converted into “ambassadors” for your organization. Despite being laid-off, odds are that a significant number of former employees remain loyal and committed to your organization.

If you proactively build and maintain a relationship with them after they leave, they will continue to “talk up your firm” and maybe even become a customer when they land in a new role.

Program Goals and Benefits

Well-designed corporate alumni programs can benefit the organization in many ways. Some of the possible goals of corporate alumni programs include:

HR-related goals:

• To improve the quality of hires by rehiring top performers and innovators (boomerang rehires are low-cost, typically have higher retention rates and reach minimum productivity much more quickly than most external hires).
• To increase the number and the quality of employee referrals by expanding the program to include alumni.
• To strengthen the employer brand image throughout the industry.
• To increase retention rates among current employees by developing a stronger positive image.
• To increase the number of mentors available to current employees.

Business-related goals:

• To generate direct sales by making alumni customers.
• To increase the number of leads generated (customer referrals).
• To capture ideas and innovations from alumni.
• To get product assessment help.
• To get benchmarking help and to learn about industry best practices.
• To gather competitive intelligence.
• To get help from alumni in building strategic partnerships.

What Differentiates Great Programs From Average?

Firms like McKinsey and Microsoft were pioneers in formalizing relationships with their former employees. Other firms, like Deloitte, Ernst & Young, Booz Allen, and Bain, join the pioneers in operating successful corporate alumni programs with features that set them miles apart from the typical alumni program.

After years of research, I’ve identified 14 factors that clearly differentiate great programs. Whether you’re starting your own, upgrading your current program, or considering using a vendor to operate your program, it is important to incorporate these key differentiators:

1. A strong business case. The most important differentiator is the perception of the program as a business initiative, not just another HR fad. Establishing the program as a business initiative requires that it be supported and budgeted by leaders because a clear connection has been made between operating a successful program and increased revenue/profit. At the best firms, the program manager works with the CFO’s office both to demonstrate the ROI of the program in terms of “dollar impact.” That means that the dollar value of bringing back top performers and the economic impact of having your former employees act as “brand and product ambassadors” has been quantified. In fact, at least one firm has made the argument that the corporate alumni program should be housed in business development rather than recruiting.
2. It prioritizes alumni and treats them differently. While most programs treat all corporate alumni equally, the very best prioritize their alumni based on their future value to the organization. For example, if both Homer Simpson and Tiger Woods were both corporate alumni, it would not make sense to treat them both equally because one you would want to return and the other you wouldn’t. Obviously, Tiger would be more influential and well-connected and thus he could more effectively spread the word about the firm and its products. Target top performers, individuals with key skills, and innovators as potential boomerang rehires.
3. They use technology. The days of running corporate alumni programs off of Excel spreadsheets are gone. The best firms and vendors use either customer-relationship management software or emerging social networking tools to keep track of alumni and effectively maintain the relationship. Alumni are contacted periodically with personalized information based on their individual needs and expectations. Web-based “alerts” are utilized to keep up with the activities and accomplishments of alumni.
4. Dual goals of recruiting and development. The very best corporate alumni programs have a dual focus. While almost all programs focus on rehiring alumni, the very best also commit major resources into building an alumni network for business development purposes. The second focus is impactful because not every former employee can or would want to return but they can all help make referrals and positively spread the word. This business development component is especially important in tight-knit industries where most employees stay within the industry throughout their career.
5. They utilize social networks. It’s been true for a long time that social networks are effective mechanisms for building and maintaining relationships. As a result, most corporate alumni programs leverage either public social networks or build private social networks to expand the scope of their program. The best programs leverage both, just as great recruiting organizations use multiple channels to reach target talent.
6. They use metrics to continually improve. Traditionally, these programs were allowed to operate because they made logical sense. However, in a fast-changing world, the best programs have learned to use metrics to drive continuous improvement. The shift to “fact-based decisions” means that program emphasis and resources are continually shifted toward areas with a higher impact.
7. Above 10% rehire rate. The very best programs produce exceptional results, which means that between 10% and 20% of all hires should be boomerangs. A significant percentage of business leads and sales should also be directly traced to your corporate alumni network.
8. 100% electronic capability. Although face-to-face meetings are still necessary, the very best programs have the capability of working 24/7 around the world. That means that every key program element must be Web-based. Legacy paper-based systems are simply too slow and expensive.
9. A dedicated alumni webpage. The very best alumni programs feature a webpage designed exclusively for corporate alumni. It might include forums, FAQs, blogs, learning wikis, podcasts, videos, and an alumni directory that can be sorted by name, location, and interests.
10. It has a diversity and a global component. The best programs understand that diverse alumni and those with international backgrounds have needs that might differ from the average. As a result, they offer a range of information and options that can be tailored to fit individual needs.
11. It utilizes a broad definition of alumni. In traditional programs, participants were exclusively full-time employees who voluntarily left. However, the best programs realize that there are a wide range of individuals who can act as firm ambassadors, so consider including laid-off workers; retired workers; former part-timers; contractors; interns; applicants who declined the position; and spouses of former employees.
12. An onboarding component. Firms that want to excel begin educating employees during orientation about the firm’s expectation that this is a “lifelong” relationship. They build on that expectation by involving current employees with alumni. And should they leave the firm they participate in a “welcome interview” that welcomes them to the next phase of their relationship with the firm.
13. A dedicated staff. The best firms have a dedicated staff that allows for continuity and allows the firm’s program to become a competitive advantage.
14. Proactively improve the reasons for leaving. Rather than paying lip service to the under-lying causes that convinced some of the top employees to leave (bad managers; a lack of challenge/growth), the best programs confront these issues head on. So postpone exit interviews until well after separation. This way, you can identify the real cause of turnover, develop a formal process to minimize future turnover, and remove obstacles that may inhibit former employees from returning.

Final Thoughts

It’s unfortunate that the current economic climate is forcing firms to release so many valuable employees.

However, you can look at this as an opportunity to turn “lemons into lemonade” if you can maintain their interest in returning and if while they’re away, they continue to drive business to your firm.

Due to advances in technology and social networking, the cost of operating alumni programs is low while the ROI of alumni programs is higher than ever. Instead of considering those who have been forced to leave your firm as value-less, and those who opt to leave as traitors, simply look at departures not as a goodbye, but rather, as an “I will see you later.”

Free Webcast on Excelling at Corporate Alumni Relations
Dr. John Sullivan will deliver a free webcast detailing how organizations can excel at engaging corporate alumni on Tuesday, March 3, 2009 from 1:00 PM – 2:00 PM ET. Those interested in attending can learn more here.

That’s partly because a lot of companies have already cut. In December, 39% of companies said they’d already done layoffs; now, 52% say so.

Meanwhile, the percentage of the 245 large U.S. companies surveyed last week that say they froze salaries more than tripled from the December survey to this one.

This article will cover the many problems associated with putting employees on furlough, or a temporary leave of absence or temporary layoff and a “lower-impact” alternative to permanent layoffs.

Under furlough programs, employees are asked or forced to take days off without pay. The net effect is a reduction of an employee’s annual income. Furloughs are being used in a variety of industries from healthcare and education to transportation and high technology.

Firms that have deployed them recently include newspaper giant Gannett, network appliance superstar Cisco, computer chip maker Intel, the state of California, Arizona State University, and the #1 car maker in the world Toyota.

While the tool may be popular and widely used, that doesn’t make it effective or the best choice.

Managers Lack Courage to Make Tough Decisions

Firms use furloughs instead of layoffs because they lack the courage to look individual employees in the eye and terminate them.

The key to any effective salary-savings program is to target the individuals who add little value compared to their salary. The process of selecting low-performers can cause turmoil among employees, so managers take the easy way out by cutting a portion of the salary of every employee.

In my view, managers get paid to make tough decisions, not to avoid them.

This “peanut butter” approach where you spread the pain evenly might seem like a good socialist type idea, but if your goal is to maintain a high level of organizational performance, furloughs can cause more problems than they solve.

Potential Problems with Employee Furloughs

Not all furlough programs are exactly the same, but in general, here are some of the many issues or problems that they can cause:

1. Cost savings? Although they are designed to save money, most furloughs save a lot less money than actual layoffs would. During furloughs, employees receive either a reduced wage or no wage, but their employee benefits (up to 40% of salaried), equipment costs, office costs, etc., continue. Many organizations have units that require certain staffing levels (i.e., hospitals) or 24-hour service providers. In those situations, you will be forced to pay expensive overtime (or to hire costly contract replacements) to make up for individuals who are out on furlough that day. As a result, the net savings is less than most reductions in force. If your organization also freezes construction projects, the weather damage and the pilferage that occurs during the delay might cost you more than the actual labor savings from the furlough.
2. The workload doesn’t decrease. Just because an employee doesn’t come to work doesn’t mean that someone else will do the work for them. It merely means that there will be more work “piled up” when they return from their furlough days. The net result is that employees have to do the same amount of work in less time. Obviously this formula increases employee stress, customer wait time, and error rates.
3. Top performers deserve better. Treating everyone equally might seem fair, but actually, it’s not fair to top performers. They have done an excellent job, delivered tremendous value for the organization, yet are punished the same as poor performers. In other words, if you had a choice between furloughing Tiger Woods and Homer Simpson, would you actually furlough them both? Wouldn’t you want your top performers there everyday? It’s also important to realize that top performers differ from average workers in that they are in constant demand. Regardless of the economy, top performers have other job opportunities. A better practice would be to reward your top performers by permanently releasing the bottom performers so they don’t have to work alongside them. Incidentally, the idle time off during furloughs is an opportune time for all employees to look for another job where performance is rewarded. Incidentally, furloughs unfairly frustrate high-performing and mission-critical business units because they are treated (punished) the same as the slacker business units. In the same light, business units with a short-term impact and focus are damaged, while units with a long-term focus (who could stand some delays in the short-term) receive the same level of cuts. Again failing to offer pinpoint cuts demonstrates bad management decision-making.
4. Turmoil. Most organizations fail to adequately explain why the furloughs are needed, and none promise that they won’t be repeated. Both the talk of furloughs and their actual execution is always a major distraction to employees. Both will cause stress and anxiety, but more importantly the amount of inner office discussion, rumors, and gossip will increase to the point where it will be hard to get any work done. Pinpoint layoffs are painful but they’re over quickly and they don’t drag out the pain and turmoil.
5. It’s not really a short-term solution. While furloughs are billed as short-term solutions there’s plenty of research to show that they don’t always forestall layoffs. What you end up getting is short-term turmoil and then the same layoffs that you probably should have done in the first place. Stretching out the pain with the same end result isn’t a sign of great management.
6. Angry customers. Reduced staffing levels anger customers. You have reduced their service but not the fee that they pay. In a competitive marketplace, some customers either can’t or won’t wait, so you’ll lose them to someone else that is fully staffed. Organizations that constantly strive for great customer service can kill their “brand image” quickly as a result of the turmoil caused by a work furlough program. Delaying sales calls and customer complaint resolution translate into lost business opportunities that might never return. Customers aren’t stupid; they read about furloughs in the paper and they can sense turmoil and reduced service levels.
7. Product quality. Reduced workloads affects product quality. Reduced staffing levels and having your best people “out that day” will likely increase error and accident rates and it will hurt your brand image.
8. Innovation. If your organization requires continuous innovation in order to compete in a fast-moving environment, furloughs are a bad solution. The disruption and uncertainty that they cause will kill any innovative spirit almost immediately. Because your key generators will be facing the same workload with less hours to complete it, their innovation levels will go to zero. It’s hard to plan ahead and think of innovations when your job security is up in the air.
9. Job search. The uncertainty by this short-term solution is likely to cause most of your employees to go into “job search mode.” Some of this is likely to be on company time, further decreasing productivity.
10. Recruiting will be damaged. Because most furloughs are publicized, potential candidates will certainly think twice about joining the organization. Referrals will likely go to hell because your employees will be reluctant to refer anyone into the current state of turmoil. All of this will likely damage your external employment brand image as a “well-managed” organization and the cost of repairing it will be huge.
11. Teamwork. Project deadlines don’t change because of furloughs. Because some furlough programs allow individuals to take their “time off” during different time periods, teamwork will deteriorate. Projects that require all team members to be there at the same time will suffer dramatically. If a manager is on furlough, poorly supervised employees are likely to do undesirable things during their absence. Because your experts will be available for fewer hours, costly consultants might have to be hired to supplement their normal workload. If your organization conducts research or experiments, reduced staffing levels may kill or damage them.
12. Lawsuits. Many furloughs will be challenged or stalled by lawsuits from unions and others that feel that they were “legally promised” a certain amount of pay per year. The costs of the lawsuits must also be factored into your ROI equation.
13. Scheduling. Furloughs are a nightmare to scheduling managers. If individuals are allowed to select their own days off, the amount of time that managers would have to devote to scheduling in order to keep the workers happy, as well is to maintain performance, would be significant.

An Example

Imagine if your organization was the Arizona Cardinals right before the Super Bowl. Under the standard furlough program, your star quarterback Kurt Warner might be absent during one day of practice when your star receiver Larry Fitzgerald is there.

Both would wonder why they are being punished both in preparation time and in salary, when the smarter move would have been just to release the poor performers (the third string quarterback and wide receiver). If the trainer was on furlough, injuries would increase and last longer. The turmoil that the furloughs would cause before the game would strap morale and concentration. The fans that expect the very best would be frustrated and obviously team performance would suffer. Both would probably leave the team as soon as possible to go to one that was managed better and offered stability.

How much would that cost your team compared to the proposed salary savings?

A Better Solution Is Workforce Planning

Most crisis decisions can be attributed to poor workforce planning and weak management. Business revenues seldom fall off “overnight,” so the best managers identify “precursors” (warning signs) and act before things get out of hand.

Unfortunately, most HR departments have painfully weak workforce planning capabilities, so they don’t alert decision-makers in enough time to come up with an effective plan. The net result is that weak executives make truly dumb “peanut butter” decisions to institute hiring and pay freezes, voluntary buyouts, and furloughs.

The workforce planning solution is simple and straightforward. Develop a process that pinpoints poor performers, low-impact jobs, and no longer needed skills well in advance of any crisis. Then a percentage of the workforce must be made contingent (i.e., part-time or contract employees). Then when costs increase or revenues decrease, these contingent workers are easily scaled.

Should the need for larger cost-reductions occur, managers must pinpoint terminations where they have the least impact on performance and the highest impact on cost reduction. That means selecting and terminating individual low-performers, individuals with non-mission-critical skills, and reducing the workforce in low-impact and low-performing business units.

Final Thoughts

There is no weaker area within talent management than workforce planning. This problem, coupled with the fact that managers and executives are literally “afraid” to make tough termination decisions, result in the widespread use of many ineffective cost-reduction approaches that end up doing more harm than good.

They often institute these programs for the silliest of reasons. For example, one newspaper chain instituted work furloughs because “that’s what Gannett did.” Managers will continue to make these uninformed decisions, in part, because talent management executives make little attempt to institute metrics to prove which “labor cost reduction” approaches actually work.

Because managers refuse to collect data, you’ll have to take my word for it. A majority of the organizations that have recently instituted employee furlough programs will have to institute a second round of cuts or layoffs before the year is over. Sad but true.

On the other hand, recruiters and hiring managers still report that it is exceedingly difficult to find workers for certain key jobs which include computer-security experts, computer engineers, pharmacists, health workers, and even senior-level executives. The time it takes to fill open positions seems to have increased, and hiring managers frequently complain that they have to settle for “second best.”

Is there something we don’t understand going on?

Panic, Job Markets, and Emerging Work

I believe there are several factors influencing us. The first is simply panic. Corporate leaders are just reacting and playing the lemming game: They are thinking, “If one company is laying people off then I probably should be as well.” Despite market information or sales data, they view layoffs as an insurance policy against future shareholder complaints and against possible market downturns. They do not factor in employee morale or the effect such actions have on key workers, nor do they realize that by their actions they signal that things must be bad and thereby potentially influence customer behavior.

Most of us do not understand how deeply the job market is changing. We are in the midst of a global redefinition of what a job is and how it should be performed. The Internet and the virtual worlds it has made possible, combined with video technologies and virtual-presence capabilities means that thousands of traditional jobs are going to disappear permanently.

We will need thousands of people newly skilled in occupations that are being invented right now. Jobs such virtual community managers, collaboration experts, globally skilled sales consultants, and web designers with a mix of graphic language and human interface skills are just a sampling. No one knows what all of these jobs are, but we do know that many will be performed virtually. Many will be augmented with mobile devices and will require a blending of old skills with emerging ones.

One emerging example is in hospitals where doctors and nurses will be equipped with mobile, wireless information devices. These devices will read a barcode or RFID chip on a patient and get that person’s full medical history. Doctors can examine a patient virtually using remote sensors connected to this device and subsequently order drugs and start treatments virtually. These devices are already in use and are getting more sophisticated each year. Congress is about to focus on digital medical records, and this is a keystone in every discussion about national health care. These devices will eliminate many current jobs by reducing the need for record departments, accountants (the devices track all procedures and drugs and automatically generate invoices that can be directly sent to insurance companies) and a host of other occupations, but they will create many new jobs.

Every profession is the midst, whether they realize or not, of a similar transformation. Tools, technologies, processes, and traditional assumptions about how people work are changing at a very fast rate. This is the cause of many layoffs. Most employers are followers, not leaders, and rather than take a chance at defining the future, they are using the time offered them by the slow economy to wait and see what the trend becomes.

In many cases the layoffs are triggered by human resource and recruiting functions that very narrowly define jobs and lack imagination about how a traditional occupation might be transformed with training and a new focus. We set up expectations and define jobs based on yesterday’s needs.

Education and Learning Models

Corporate training and recruiting functions have a lot to offer in these recessionary times. They can be showcasing the emerging jobs and educating management about which jobs are in demand and which are declining in interest. Job postings and a variety of analysts offer this kind of information. For occupations where demand is growing, the learning functions can concentrate on developing those skills. The best firms are building learning portals and guiding employees to explore and learn around areas of emerging need — even if specific jobs are not yet defined.

Successful firms accept that they have a responsibility and a business need to develop the people they need. Unfortunately most of us — or most of our employers, anyway — would rather spend money on search fees, agency fees, administrative overhead, and advertising rather than on finding the right balance between recruiting new people and intensively training those employees who have decent basic skills. After all, it is very hard to find people when the skills you may need are vague or not clearly defined. On the other hand, development programs can be much more general and strive to create an adaptable and flexible employee with the technical skills needed for 21st century success. Waiting for the school system or the government to do your job for you has never been a very good strategy.

As recruiters, we need to become coaches to our managers, as I have mentioned in previous columns. It is very difficult, I know, to convince a hiring manager that the kind of person he is looking for is better developed in-house than found externally. But I think it is to your credit if you can convince them. As a recruiter you need to develop a relationship with them that is good enough and strong enough that they will listen to you. In a slow economy, you can use the time to build the relationship and redefine your role as a talent adviser rather than just a recruiter.

I constantly argue for integrated staffing and development because I believe the two functions are inextricably intertwined. It is very difficult to do one without doing the other. If we are to look at recruiting as a process, we are going to have to incorporate development into our staffing thinking and staffing into our training thinking.

Whether this is done by merging departments or whether it is done simply through good collaboration doesn’t really matter. What is critical is that there is a dialogue between the two functions. If you work in a small company where there are no separate training and recruiting functions, then this becomes even easier to do.

Layoffs are unavoidable, but understanding why they are occurring and having a strategy to deal with them and with the demands that will face you as we recover from the recession will keep you sane, safe, and successful.

Employee-productivity differences have attracted their share of researchers. Most agree that folks in the top half of workers out-produce the bottom half by about 2:1 (i.e., it makes no difference if people are shuffling papers or making widgets). And, when managers and knowledge workers are examined separately, the productivity ratio rises to 3:1, 4:1, or higher (i.e., responsible jobs have bigger ratios).

Productivity is more than a mental exercise. It shows up as absenteeism, errors, reduced throughput, turnover, low morale, rework, an excess number of employees, and so forth. Productivity losses are also sneaky because they are not easily seen; yet, they translate into hard cash: between 20% of base annual payroll leaked for unskilled workers to 50% for skilled and managerial employees — enough to separate a successful organization from a flop.

Converting payroll leakage into gross sales can be an even bigger eye-opener. Twenty percent leakage, for an organization that pays out 1/5 of its gross sales in salaries and benefits, would require a 500% sales increase to balance the books. Want to do more scary math? Calculate the incremental sales necessary to offset a 50% leak in managers and professional salaries!

Enter Financial Chaos and Uncertainty

We are in serious financial times. Opinions vary, but experts estimate our financial stress will last throughout 2009 and perhaps into 2010. The prosperity party is over. Like the dot-com bust, the world changed virtually overnight.

We cannot do much about external economic factors except dig in and wait. But, we can do something about employee productivity, especially when it comes to intelligent downsizing.

Ah’ll be Baack!

There are two ways to downsize. Most managers are accustomed to the Rambo model: plunge into the organization armed with rocket launchers, machine guns, and grenades terminating anyone in the line of fire. At the end of the rampage, the gross payroll body count is reduced; but, since both high- and low-producers are terminated without regard to skills, the organization continues to live with its 20% to 50% cash hemorrhage. Rambo-sizing is the norm.

What about examining employee performance before making termination decisions? Everyone knows performance recommendations are part fact and part fiction. Promotions and performance ratings are almost always based on personality and popularity — not specific skills. Just examine organizations that Rambo-sized their workforce in the past. What effect did it have other than forcing fewer people to spend more time at work? Termination decisions done without future planning are like bloodletting to rid the body of bad humours … they are more likely to kill than cure.

Planning Ahead

If management takes the time and HR is able to competently manage the solution, downsizing can actually help the organization get healthy and stay that way. It’s more like Mr. Spock than Rambo. It is rationally based. It begins by clearly defining the skills the company wants to leave in the past and acquire in the future. Here is an example.

We’reAllThatMatters is a legend unto itself. Employees generally want to work there because they can brag about the big-name. Unfortunately, people (read customers) outside the organization have a different opinion. Employees often treat customers rudely and without respect. For example, even if We’reAllThatMatters’ buggy bookkeeping system overcharges a customer 400%, employees treat anyone who complains as if it was his or her fault.

Now the organization must cut back its workforce due to economic conditions. Should it Rambo-size its employees? Should it ask managers for their subjective opinions about who stays and who goes? Should it amputate whole divisions? Since We’reAllThatMatters’ has been around some time, a majority of terminated employees may be over 40, raising the possibility of a nasty class-action suit. What to do?

Rambo-sizing would be a serious long-term mistake. The payroll would shrink, but both skilled and unskilled employees would suffer the same fate. Customer-sensitive as well as customer-insensitive employees would be terminated equally. We’reAllThatMatters’ payroll would shrink, but payroll hemorrhage would continue unabated. Logical-sizing would be different.

We’reAllThatMatters would a take hard look at itself and honestly calculate the financial impact of poor customer service on future business. It would then develop some key job profiles containing both technical competencies to do the job as well as customer service competencies it wants to build and retain. When this is complete, it would move on to the next step.

Employee-Level Evaluation

Individual employees would have his or her performance objectively evaluated using the list of necessary competencies as a target. For example, customer-centric skills might be evaluated by gathering past examples of service (e.g., similar to behavioral event interviewing), reviewing performance appraisals (to the extent they might include relevant information), giving tests, administering surveys, and so forth.

The secret to success would be to evaluate the skill set of every employee using an objective standard based on the organization’s tactical plan. Results for each employee would be anonymized and independently reviewed by a few highly competent managers. Employees who matched the profile would be retained, and those who did not would be reassigned or laid off.

Smart-sizing could be done with competencies such as analytical skills to develop better problem-solvers, initiative to encourage operational improvements, teamwork to develop better internal working relationships, creativity to foster new ideas and designs … the list goes on.

Final Question

However, there is a price to pay. HR has to develop the skills to help managers analyze and clarify the skills needed. It has to become proficient in accurately measuring competencies (real ones, not garden variety stuff), and it has to professionally manage the process. Managers have a price to pay too. They must have the patience to work through the details of smart-sizing, dedicate the energy and commitment to making sure the process is followed, and be able to clearly define the future at the employee level.

The outcome of this initiative is a smart-sized operation; in other words, the skills of the employees are intelligently aligned with the objectives of the organization. Overall, this should result in fewer employees doing more work (because each employee will be more skilled), less turnover (because employees will be more satisfied), fewer mistakes, better quality, and so forth.

The final question faced by everyone in the operation is whether saving 20% to 50% of base payroll is worth abandoning Rambo-sizing for smart-sizing.

Not this time.

One month severance pay plus a couple of weeks unused vacation puts six weeks between him and reduced living. His wife works, and her job looks “pretty secure,” for now.

But he needs to find a job. Immediately interviewing, he’s finding that departments are looking for a new kind of recruiter — one who can do their own sourcing on the front end as well as bringing up the rear in hiring. It seems to me like a lot to ask, and maybe one of management’s forays into “let’s see all we can get” while the “gettin’” appears to be good. It smacks of greed to me but maybe I’m just sensitive on the issue, sensitized as I have been at all the recent media coverage of excess and waste among those with influence.

“Have you thought of doing anything else?” I asked. I could hear him brighten somewhat when he told me, quickly, in a pleasant-sounding stream, of how one of his secondary skill sets at his company was keeping some of its outdated equipment running — he was the go-to person, it seems, for the company’s “Help Desk” requirements.

“Do you enjoy that?” I asked. Quickly, and eagerly, he admitted he did but then added that going there would mean a drop in pay.

“But do you like doing that?” I pressed.

“Yes, I do,” he admitted.

“Then doesn’t that count for something?” I pressed again, trying to be gentle.

“It does, I guess.” I could hear he wasn’t wholly convinced but his mind was starting to ponder the idea.

“I think of this whole thing as a “reset” mode for all of us,” I continued. It’s not like some of us are on the outside and some of us are on the inside. We’re all in this together and whatever happens we’re all of us affected, together.”

“That’s true,” he agreed.

“It doesn’t make it easier, I understand,” I said. “But maybe, just maybe, some of us will be able to go in the direction of our dreams, as that old saying goes,” I continued, referring to Henry David Thoreau’s, “Go confidently in the direction of your dreams! Live the life you’ve imagined. As you simplify your life, the laws of the universe will be simpler.”

We then talked about some proactive things he might also do: posting a “job-wanted” notice in a geographically-local LinkedIn group; attending some in-person networking events; getting active in the “groups” and “discussions” on the social/business networking sites like ERE, RecruitingBlogs.com, and Fordyce; contributing articles, remarks, and advice; and sourcing who was left in staffing at local companies and contacting them directly with his resume. Before we hung up I asked him to stay in touch with me. I told him I was interested in where he goes from here. And I am.

The layoffs will be spread among many, but not all, divisions including HR, which was specifically mentioned in the announcement. At least some of the company’s 250 or so internal recruiters are among those laid off today.

One recruiter, who works outside the company’s Redmond, Washington, headquarters, told us he and his colleagues were “still sorting it out.” He was not directly affected, “as of now.”

Another recruiter, who works far from Microsoft headquarters, confirmed she was among those let go.

“It’s OK,” she said. “I understand. Things happen with the economy.” She had few details about the severance package or other terms of the layoff, explaining she would be meeting with HR later. However, she was certain from she had been told so far that the company “is not going to leave you out in the cold.”

Last fall, Microsoft began trimming its contract workforce including all its contract recruiters. Shally Steckerl, a former recruiting director at Microsoft and now a VP with Arbita, told us that he personally knew of 35 whose contracts were ended. Many of them, and many of his former recruiting colleagues from Microsoft, have reached him to him in the past several months, reinvigorating their networks.

Finding new recruiting jobs, Steckerl told us, is not impossible, but it is challenging, especially for those who have spent their career in a single industry. Those recruiters, he says, will have a “tough time making that transition” from one industry to another. Recruiters with experience in other industries, even if it’s “old experience, but a variety of experience” will find the going easier, Steckerl says.

Microsoft will provide outplacement services for its laid-off workers, according to this morning’s announcement. How that will be handled wasn’t detailed, and contacts at Microsoft either couldn’t be reached or didn’t know. However, one Microsoft recruiter who declined to give us her name said she had heard that some recruiters would be reassigned to work with the displaced workers.

Google terminated some 300 contract recruiters last fall and then earlier this month laid off 100 internal recruiters as part of a company-wide belt tightening. Google disclosed its cuts on the company’s official blog. Microsoft has so far said nothing about staff cuts on its blogs and even its Employee Evangelist, Heather Hamilton, has not yet discussed the layoffs.

Challenger, Gray, and Christmas, the outplacement firm, issued a press release shortly after the announcement noting that the layoff was the ”first layoff event of this size and scope in the company’s history.” The firm warned that “other companies that have proven adept at avoiding layoffs, such as Southwest Airlines, FedEx, Aflac, and Toyota North America, may find themselves equally vulnerable as the downturn continues to transcend industries, while companies like Hypertherm, Lincoln Electric, and Nucor, might have to rethink their no-layoff policies or find increasingly creative ways to cut costs.”

Two in five major firms will cut HR jobs, according to the Acceleration of Globalization report by consultancy Hackett Group. Hackett’s research of 200 global companies in October and November found that 40% were planning HR staff cuts. A further 12% were planning HR recruitment freezes.

As Dr. John Sullivan pointed out in his October column, freezes lead to “a majority” of internal recruiters being laid off and also severely limit the amount of work going to agencies. However, most freezes are and have been hastily and poorly executed, and rather than saving money, often cause serious damage to companies by leaving key revenue-generating roles either unfilled or under-serviced.

These companies have cut off their noses to spite their faces and have crippled themselves moving forward. I understand that many of you will seek employment elsewhere and in other industries. But there is opportunity afoot — opportunity for those who can go the distance. That’s you, isn’t it?

I’m not going to address the metrics of what recruiters do for companies. God knows it’s enormous. What I am going to address is what you, Sourcer, can do for yourself in these times of opportunity.

You and I both know the huge savings we bring to the recruiting process. At least 75% of ordinary recruiting costs can be done away with using a sourcer who understands how to use the Internet as well as the phone (yes, sourcers, you’re going to have to up your game). Think about it — there is nobody left in many recruiting departments to fulfill the needs (and the needs are arising, still, and will always arise unless the company is out of business!) to source and even develop candidate leads. Many staffing departments (if they’re left at all) are down to bare-bones minimum — maybe one or two persons left out of a normal 70 to 100 person workforce. They need your help more than they ever have, and believe it or not, many of those few remaining don’t know you exist or what help you can be to them! Enlighten them.

“How do I find this work?” you’re thinking. Put your sourcing skills to work. Like we’re so fond of telling others, make a job out of finding a job. You have a great advantage because you understand how to find the decision-makers in organizations. Find out which companies have killed off their recruiting departments and go at them. Find that one (or two) person(s) left in the fractured organization who can give you work when the need arises.

Try Tech Crunch’s Total Layoffs Since August 27, 2008 report to start. Find out which have decimated their recruiting departments as well.

Here is the 24/7 Wall St. 2008 Report on the 20 largest layoffs by company as well. It includes:

1. Citigroup
2. The Bank of America buyout of Merrill Lynch
3. General Motors
4. Hewlett-Packard
5. Lehman Brothers
6. AT&T
7. DHL Express
8. The California Department of Education
9. Starbucks
10. Chrysler
11. Wachovia
12. Dow Chemical
13. NASA
14. The State of California
15. Sun Microsystems
16. Bennigan’s
17. Washington Mutual
18. Bear Stearns
19. American Airlines
20. Merck

It’s going to take some digging but hey, isn’t that what we’re good at?

Edvard Munch Google Logo: Graphic by rustybrick on Flickr (cc)

Google is arguably the most storied company of the new millennium, but even it is not immune to the global economic slowdown.

The company just announced via its official blog that it will be laying off 100 recruiters, a large slice of their recruiting team, which our own Dr. John Sullivan has called “one of the most innovative recruiting organizations on the planet.”

With the exception of cuts after its DoubleClick acquisition, these are the first staff layoffs ever for Google (although it has recently made deep cuts to contractors). It’s a logical move for an organization that sees less hiring in its future, but still feels jarring to me that recruiters were the first to go.

I’ve met several recruiters from the Google team over the years, and have found every one to be smart and capable. I hope they land on their feet.

In our communities, we’re constantly coming up with and discussing great ideas about initiating change, but all of that is worthless unless we can execute and implement those ideas. In this new year, change is a real buzzword — but rightly so! Because we have to change and flex every minute of the day, planning for difficult times and good times alike require excellent change management skills. And as someone who has learned some hard lessons over the course of my 25-year career in not knowing how to manage change, I speak from experience.

For instance, several years back, when I was head of staffing for a large, multibillion dollar company, the whole company participated in a global reengineering initiative. In HR, we decided to take advantage of this effort to implement some changes of our own. We decided to combine all of the staffing functions in the separate business units into a centralized, shared-services model. As the leader of the staffing area, I figured that since the whole company was going through change, there was no need to have any additional communication with our clients about our staffing reorganization — after all, it could be considered as simply another element of what we were all going through. Thus it wasn’t until the head of HR of a business unit and my boss were sitting in my office, complaining about my team’s dwindling performance in the wake of this change, that I realized just how important it is to communicate extensively about, and have a comprehensive plan for, implementing change.

It’s not that I didn’t communicate at all about what was happening; it’s that I didn’t “get it” in terms of what was necessary with respect to engaging others and making them “partners” with me in this change. I was subjecting my plan to what we like to call “Death By PowerPoint” — I was going around with my little PowerPoint presentation tucked under my arm, informing everyone as to what was going to happen versus truly engaging and communicating with them.

Though the change was ultimately implemented, the cost was high — people we wanted to keep within our recruiting organization left and some of our customers were alienated.

Thus when I was asked to facilitate a panel at the ERE Expo Spring 2009 this coming April, I could not think of a more important subject in today’s climate of almost constant change. So the question I introduce in this article (and which we will cover more thoroughly in our panel entitled “Managing Change: A Dialogue With Recruiting Leaders on Leading Through Change” in San Diego at the upcoming ERE Expo Spring 2009) is “What are the key elements involved in successfully managing change?”

The first step in this process is to realize that whenever change is involved, there’s always something called “S.A.L.Y.” in the room. SALY stands for “Same As Last Year.” SALY is that urge in all of us (in some stronger than others) to resist change. It’s the urge to say “Let’s stick with what we did last year,” to cling to the familiar, the comfortable. So before anything happens, it’s always important to realize SALY’s in the room.

However, knowing this can help frame how to begin to address implementing change. The other important thing to realize is how people deal with change. My experience is that, though everyone deals with change differently, generally people meet change with the following reaction I call S.A.R.A.H.: Shock, Anger, Resistance, Acceptance, and Help.

So knowing this, what are some guidelines for leading people through change? This topic is so important I decided to reach out to other recruiting leaders for their thoughts. I have asked some really well-spoken, highly experienced people to join me on our upcoming ERE Expo Spring 2009 panel and I have asked them some of their thoughts on change management.

“Not having an effective change management plan is usually the death of projects,” says Rodney Moses, vice president, Global Talent Acquisition, Coca-Cola Enterprises. (CCE is the world’s largest bottler and distributor of Coca-Cola products.) According to Moses, CCE is a constantly changing environment in which they are rolling out new processes on a regular basis. In fact, change is so frequent, they have developed a Global Change Management Program, including a guidebook. But as far as plans go, even that isn’t enough. “For each change”, says Moses, “we have to have a change plan and internal and external change communications plans. Without those plans, not only is it confusing for everyone but it ends up costing the company money.”

So in order to manage change, we have to have at least one, but perhaps several, change management plans. This was the beginning of the mistakes I made in my scenario above. Since I figured our change would be part of the larger change plan, I did not feel the need to create a separate one for us in staffing.

But because change in an area as vital as staffing affects so many, it really can’t be successfully implemented without a plan. An effective change management plan will focus on many levels, the broad as well as the specific, and will include an emphasis on everything from the organization, to your team, to individuals. In fact, the act of putting together the plan will be enormously helpful because it will not only require identifying who the stakeholders are and who will be affected, but it will also require strategizing about how to approach and engage them in the implementation. Importantly, having a plan will enable you to plan for mistakes, which is a vital and valuable part of any new venture. How will a plan give you the opportunity to make mistakes? Because the cornerstone, foundation, and lifeblood of any change-management plan is perhaps the most vital element in the whole change-management scenario: Communication.

“When we were planning to start up a corporate recruiting function, we engaged people from the very beginning”, says Vicki Perry, director, Strategic Staffing, for Avery Dennison Corporation, the world’s leading manufacturer of pressure-sensitive labeling and other retail, office, and packaging products. “By using focus groups, we not only got people involved who were going to be affected and shared our vision and proposed process, but then we listened and prompted them to help us figure out how to really make this work.”

She adds: “Since this was a new concept for everyone, it was critical to engage stakeholders and then communicate, monitor, and adjust our process continuously. It’s a constant process of educating hiring managers, HR partners, and key business leaders and getting feedback. When communicating we try to mix it up and entertain, so people remain interested. During our focus group meetings we used interactive voting devices to keep the audience engaged in answering questions and giving feedback. In our rollout of the new process we made a video showing the recruiting process in action with a touch of humor to keep it fresh. In our monthly written communication we would hide a question related to the recruiting marketplace and give a prize to the first few people who answered it; we would also use a ‘Myth Of The Month’ whereby we debunk the latest ‘myths’ that have surfaced with respect to the new processes. Through the use of hiring manager and candidate surveys, we are constantly monitoring to determine what is or isn’t working properly, and then adjusting accordingly.”

But sometimes, even that level of communication isn’t enough. “You know that old rule of when you pack for a trip, you lay out all your clothes, and then take away half? I think of change management communication as the opposite of that,” says Aziz Chowdhury, VP, Talent Management, for Baker-Hughes Corporation, the global leader in oilfield engineering services to the energy industry. “No matter how much I plan to communicate with respect to change management, I always take that concept and double it.”

“Here’s why this is important”, Chowdhury continued. “Whatever the change is you’re implementing, it’s not about it being a good or the right idea, it’s about bringing everyone along with you. One of the things people in staffing management often don’t understand is that communications is not just about making sure you and your ideas are heard, it’s about making sure everyone is with you. It’s a bit of a paradox: in order to do what you want to do, you need to focus less on that and more on the communication needs of those affected. Because in the end, that will help you get to where you want to go. You need to focus on what your clients and stakeholders need to hear and know so that they’ll arrive at where you want them to be.”

Aziz’s perspective comes from years of talent acquisition experience in both international and domestic environments, but in particular from his current experience of repositioning the role of recruiters at Baker Hughes from those with a more hands-off, removed “sourcers-only” approach to more hands-on, vested, and partnership-oriented recruiters, with a greater ownership stake in the entire hiring process.

Nonetheless, this underscores yet another mistake I made in my scenario above: I was so focused on communicating my change and insuring I was heard, I didn’t focus on the communication needs of my clients and stakeholders.

However, when it comes to managing change, there is nothing more important than communication. And as with a change management plan, constant communication gives you the room to make mistakes.

In summary, here are some guidelines for leading people through change:

1. Prepare for the change before it occurs
2. Provide a clear description of the change and a picture of success
3. Find and remove obstacles before the change occurs
4. Allow adequate time for people to accept the change
5. Involve affected people in planning the change
6. Provide motivation for people to embrace the change
7. Find and use resources and people that support the change
8. Allow the change to be shaped by ongoing feedback
9. Provide clear implementation objectives for all people involved in the change
10. Continually monitor the change and adjust resource levels
11. Reinforce the new behaviors through formal and informal methods
12. View leading others through change as an ongoing process

So please join us for our panel discussion at ERE Expo Spring 2009 where I will lead Rodney, Vicki, and Aziz in further discussion and detail into this topic and provide more specifics on the above. Between now and the Expo, I know a lot of change management challenges will confront you. I welcome your thoughts and questions about managing change (just post in the comments section of this article), and I will look forward to incorporating them in future articles and in our panel discussion at the Expo.

Remember, though there are a thousand great ideas out there, only when you’ve developed a plan, and successfully executed on that plan (and SARAH has met SALY!) will you have developed perhaps the most important skill there is as a Recruiting and Staffing/HR manager and improved your value in your organization. Happy New Year and welcome to the year of change!