The legendary Dutch football player and coach Johan Cruyff once said: “Before I make a mistake, I don’t make it”. He meant that if one is prepared for a crisis and one has done everything to minimise any negative effects and secure one’s profits one will not be affected by that crisis. But how? It is easier than one might think.
From a cost point of view the answer is flexibility. Back in 2009 Volkswagen could reduce its headcount very fast and very easily at no cost because it had a flexible employment solution in place: temporary staffing. We had companies in Slovakia having to lay-off 1,000 persons from their fixed headcount, and at an average gross salary of €1,200 they spent €6,000,000. Volkswagen spent zero. That is the power of flexibility. In this way the drop in production has a limited impact on the profits of the company.
So HR offers you a great deal of flexibility in your headcount, which pays off for each and every kind of company that faces uncertain economic times. In the Netherlands you can hardly find a production company which employs its entire production staff by itself, on its own payroll. Between 10 and 20 percent of the production staff is on the company headcount, while 80 to 90 percent is employed through temporary staffing agencies. They understand the necessity of a flexible headcount.
Also, payroll can be easily outsourced and thus your payroll costs can also be 100-percent flexible. The fewer staff you employ the lower your costs are. Furthermore, as having payroll outsourced is usually cheaper than having it insourced this option helps companies to increase their flexibility and lower their costs. In Western countries 80 percent of companies have outsourced their payroll and this is a trend which will most likely happen in Slovakia too.
A subsequent and crucial role in which HR can help avoid a crisis is Talent Management and Talent Acquisition. The previous crisis changed the economic environment and the result was that companies (and their staff) need to do more, do it faster, do it better, and at a lower cost for a more and more demanding (and spoiled) customer. This challenge can only be managed through state-of-the-art HR techniques. Departments have to be reduced in size but more work must be done and you can only do this with talented, bright and motivated people. So the search for talent on the labour market is increasing. Excellent Talent Acquisition strategies and actions are required. Once you have all this talent on board you will have to have great Talent Management tools with the focus on intensive training programmes to prepare your staff to meet constantly increasing requirements.
Another important factor in Talent Management is managing the state of mind of your staff. It is not the crisis as such which is harmful for your company but wrong actions, or a lack of action necessary to overcome or avoid the crisis. If one person tells you that you look horrible while you really look great in your new clothes you might ignore this. But if everybody you meet that day tells you this you will believe it (even if it is not true and they are playing a practical joke on you). It is the same with crisis and constantly watching, reading and talking about crisis. If crisis becomes the mindset of your staff they will act accordingly. And this brings your company into crisis: real crisis, as you will be faced with a loss of revenue and declining profits.
Einstein once said “the mind which creates the problem cannot solve the problem”. It is the same with your staff: if the main mindset is in crisis mode you cannot come out of this crisis with your staff. As they are the problem they cannot solve it. HR has the tools to manage this properly, but… the leaders of the company have to set the example and show how the company can benefit from the crisis. A crisis offers opportunities. Big opportunities. This is great for those who are willing to take advantage of it. And as for those who are in a crisis state of mind? Well… it is a pity for them, but this is the way the world is organised. Some win while others lose. n
Gerard Koolen is Group Managing Partner at Lugera & Maklér.
For more information about the Slovak labour market, HR sector and career issues in Slovakia please see our Career & Employment Guide.