Gerry Treuren

Centre for HRM

University of South Australia

http://people.unisa.edu.au/Gerry.Treuren

Centre for HRMwww.unisa.edu.au/chrm

• Newly established research centre

• Main areas of expertise: – Diversity management– Psychological contract analysis– Turnover and retention analysis– Recruitment approaches– International HRM

UniSA HRM programs

• SA’s only fully-featured HRM programs:– undergraduates (approx 320 students),– postgraduates (approx 130 students), and– research degrees (Ph.Ds, about 10 students)

• 10 full time teaching and research staff (including four new appointments this year )

Key question:

• How are the current decisions of HR contributing to the capacity of organisations to– Recover after the recession?– Prosper after the recovery?

GFC

Recession

Recovery

Key points– Responding to the GFC requires a

short/medium/long term HR perspective– Retention will be a major issue

• During recession and recovery, skill and talent will still be in demand.

• HR’s short term response needs to anticipate and include medium term needs.

– Business-driven workforce planning is HR’s main responsibility

Key issue of the moment

• Global Financial Crisis– Liquidity crisis that is quickly spreading from

the US property market across the global financial industrial political social system

– Quick transmission: US China

Australia

No one really knows when recovery will come– Liquidity crisis of the global banking system

• Limited working/development capital• Banks adopting very tough lending criteria• Collapse in expectations and order books• Desperate attempts to reduce organisational costs. • Organisations making quick and rapid cuts to remain

solvent.

– Recovery requires: – liquidity in the global and domestic financial markets– Substantial improvement in investor, consumer confidence

How is it affecting us in Adelaide?• Several different mechanisms:

– Direct liquidity problems – no working capital

– Reduced revenue through loss of consumer and investor confidence

– Reduced investment with downstream implications…

Different effects on • Large scale manufacturing in Adelaide

• New smart manufacturing

• Essential industries

• Highly capitalised market reliant businesses

• Public sector

Short-term issue• Many organisations are cost-cutting

– Direct response to reduced revenue/ bleak forecasts

• What informs the staff reductions? – Last on, first off?– Popularity? – Talent ranking system/ succession planning?– Analysis of organisational value-creation?

Perhaps a tidy up…

• And some businesses are using the GFC as the justification for implementing unpopular measures

Medium term issue: how are we preparing for recovery?• The recovery will come…

• How well is your organisation positioning itself for recovery?

Lessons from the past: downsizing in the 1990s• Best to plan beforehand…

– Some were made redundant then rehired as consultants to fill gaps.

– Voluntary redundancies – snapped up by the High Potential (HiPo) workforce, leaving the deadwood.

– Who is going to do the work? Is work intensification sustainable?

And what about those who remain? • Poorly managed redundancy rounds can

damage those who remain…– Survivor guilt (affecting 70% in one study)– Erosion of attachment to the organisation– Those with market appeal may look for a

more secure environment;…leaving the organisation with a higher percentage

of core staff of anxious under-performers.

Search for workplace efficiencies• Unwanted HiPo turnover is a very real possibility/ Early

signs of inter-employer HiPo competition in US

– As businesses face the recessionary marketplace, they will want:

• To keep their productive employees• To fill any vacancies with productive employees

– Coupled with the need for recruitment firms to maintain their solvency

• Increased competition for HiPo employees

More efficient after recovery• Businesses are likely to be more efficient

– They have reduced costs

• But efficiency does not equal productivity– Efficiency gains can reach a plateau and can

decline– Productivity is the result of process

improvement, better technologies and better human capital

• Increased demand for skill and talent

Decade-long productivity slide

• Productivity growth determines medium to long-term business success and community living standards.

• Labour productivity has declined in Australia over the past decade (about 4% pa in 1998, to 1% pa from 2006)

Long term issues

• Global/national-level issues– Change in focus of global trade system– Return of regulation– Higher average levels of taxation– For many businesses:

• Productivity and innovation will be crucial• Efficiency based strategies offer no competitive

advantage

And the other issues still remain…• Environment:

– Access to water– Overall quality of life as the climate changes– Emission trading systems

• Demographic changes– Changes in demographic mix– Rise in immigration

• New Industrial Relations framework

Meanwhile, back in Adelaide:

• Our underlying skill shortage– SA/Australia’s demographic shift

• The sources of growing labour demand– Mine-related– High-tech– Water and energy-related– Emissions trading systems-related

Examples – By 2011, 42% of the SA public sector will be over

50 (2007 numbers)– Growing demand for aged care facilities/ personal

care workers due to the aging population– People needed to build/manage desalination

plant(s)– SA – major supplier of renewable energy – Downstream effects of Olympic Dam and

Prominent Hill

The big HR issues:

• Finding and retaining suitable labour,

skill and talent – workforce planning as a routine part

of HR practice

(Senior Manager buy-in already: see, for example, AIM VicTas and Hudson reports)

Attraction

• Relatively well-understood area – Employer branding– Employer of choice models– Realistic job previews– Search for new pools of potential labour– Employee referral schemes– Alumni networks/better use of networks– Web 2.0

Retention – less well understood

• HR Management’s choices: – No retention strategy– Retention strategy– Retention + attraction

strategy– Business-driven workforce

planning of retention + attraction strategies

Retention management

• Why do people stay?

• Why do people leave?

• Everyone has the answers but what is the reality for your organisation?

Several recent examples• A well-managed organisation specifically recruited for

entrepreneurs…a disproportionate number who then left to

(i) set up their own business

(ii) take better jobs• Another had negligible turnover (which was

dysfunctional) and lots of complaints because the workforce could see no better jobs around.

• Elsewhere, a workforce hated the organisation but loved the work…turnover was high amongst younger workers, low amongst the older.

Why do people leave? Current thinkingTraditional account of turnover Unfolding Theory of Turnover and

Job Embeddedness account

• People leave a job because they are dissatisfied and have a job to go to.• Only about 15-30% of actual turnover explained

• Different triggers prompt different pathways out of the organisation • Job and organisational embeddedness can dampen the effect of dissatisfaction or shock• Management can improve or weaken embeddedness

Different triggers % Different pathways out of the organisation

Dissatisfaction + Job Alternative 26.0 The traditional explanation for turnover

Dissatisfaction + No Job Alternative 7.7 Job is so unbearable – just had to leave

Shock + Job Alternative 29.4 Pulled towards a better job

Shock + No Job Alternative 14.9 Pushed out of job

Planned leaving 22.4 Was going to leave when…

Why do people stay?Job embeddedness

• There are forces – personal, economic, professional – that attach people to their jobs and their outside work life. – These forces vary between person, job, economic

context, stage of life, business, etc.

• These forces can help/hinder the decision to stay. Management can influence aspects of this.

Job embeddedness and turnover…

Minimising potential causes of turnover• Two steps:

– Identify the organisationally unique form of employee embeddedness

– Implement appropriate policies to alleviate barriers to embeddedness

How?

• Management can work out organisational job embeddedness, through:– Job embeddedness and pulse surveys– Exit interviews

• This data can be obtained from: – Existing workforce planning processes– Staff satisfaction/employee engagement

studies

Diversity management: soon to be commonplace• Demographic changes will necessitate the

adoption of retention strategies recognising diversity:– Increased and changing female participation– Work-life balance– Older workers– NESB/migrant workers

• These policies are aimed at achieving fit of these groups within the organisation.

Immigration-based attraction and retention• One big and under-utilised source of

labour, skill and talent is the vast supply of migrant labour:– India/Pakistan/China/South America/Africa

• Slow employer uptake on non-Caucasian labour– Big four accounting firms establishing

international student recruitment schemes

Workplace planning as a routine activity• All HR managers are involved in

workforce planning (even if they are not aware of it)– Either in an ad hoc way or through a Grand

Workforce Planning Process or through a regular process

• The practical question is: how far and how detailed is the planning?

Demystifying workforce planning• At its simplest, workforce planning is gap

analysis:– How many people do we need? (A)– How many people do we have? (B)– Gap = A-B

– How will we fill the gap if A-B > 0?– What do we do if A-B < 0? (etc)

Routine workforce planning• Starts off with answering the gap question,

then moves to more detailed questions:– Quality of labour (training, development,

mentoring)– Turnover and retention (and thus managerial

practices)– Recruitment approach and sources, etc…

…identify and then implement a solution.

Business-driven workforce planning

– Organisation develops clear overall business strategy

– HR undertakes gap analysis (to whatever level of detail needed)

– HR implements the resulting plan– Revisited regularly with continuous evaluation

Business-driven workforce planning

Business strategy

HR gap analysis Implementation

Evaluation

External environment

Retention and attraction

• Business-driven workforce planning will necessarily emphasise:– Retention

• How do we keep the knowledge and skills we have• How do we maintain the productivity we already

have?

– Attraction • How do we find the knowledge and skills we want?

Business-driven workplace planning as a regular activity• This process will quickly (and routinely)

identify problems with current retention and attraction arrangements

• This will lead to the search for appropriate solutions for your organisation.

Workforce planning

• This process should be driven by senior HR:– Who else can:

• identify the key issues?• negotiate the resources? • engage with senior management?

Takeaway points

1/ GFC is prompting restructuring– Short-term: Cost-cutting/layoffs– Medium-term: Managing for productivity and

retention– Long-term: Managing around labour, skill and

talent shortage

Takeaway points

2/ In past recessions, employers have worried primarily about short-term cost savings at medium-term expense

3/ Clever employers will manage their recession strategy to maximise their post-recovery options

Takeaway points

• Retention will be the key medium-term issue

• Workforce planning is the responsibility of every senior HR manager and the principal tool for HR planning

Thank you.

Questions?