An Economic Slowdown – What does it mean to HR?
As we look ahead to 2008, many pundits are trying to predict the direction of the US and world economy. Today we see that the US unemployment rate ticked up to 5% and the job creation rate (18,000 for December) was at its lowest level in four years. The unemployment rate is affected by many factors, but the job creation rate clearly shows one thing: a business slowdown.
The industries most hit, of course, are construction, financial services, and related building-related goods and services. If you are in these industries, you are likely seeing the impact of the slowdown now. As we review our research agenda for 2008, let me discuss a few thoughts about how enterprise learning and talent management will likely be affected by an economic downturn:
- Programs that reduce costs will take on higher priorities. In the last economic turndown (2000), organizations continued to invest in training and other talent initiatives, but much of the underlying motivation was cost-reduction. For example, much of the tremendous growth in e-learning was driven by the business’s interest in reducing the per-employee and per-hour cost of training. We have truly seen these savings take place – today more than 30% of all employee training is consumed online, and the total amount of training (hours) continues to go up.So if you are looking at buying and LMS, implementing a performance management or recruiting system, or revamping a succession management program, think about the cost reductions it will create — not only the top line benefits.
- The “war for talent” is likely to become a bit easier. Over the last several years we have seen a tremendously tight labor market in many areas: technical professionals, sales and service personnel, financial professionals. As the economy slows, these forces will shift — so your energies can focus more heavily on carefully recruiting the “right” talent. While this has always been the top priority for talent acquisition, I think HR professionals can spend more time going back to the basics again – looking at critical competencies, pre-hire assessments, and other tools to improve the selectivity of your recruiting efforts. We are starting a formal sourcing & recruiting research program this year to help you in this area.
- The focus on multi-generational learning and collaboration will continue to be critical. If you are in a business which may be slowing, you will still focus heavily on maintaining your leadership pipeline and absorbing young workers. In fact if the economy does slow, many of the older people who were not planning on retiring yet may in fact doso, changing the dynamics of the aging workforce. In our upcoming High Impact Learning Organization research we will show you how dramatically organizations’ needs have shifted toward the “networke learning” model — almost 40% of the organizations we surveyed told us that they have a “significant challenge” in absorbing and training the “under 25 year old” workforce. These problems will be solved through internal social networks, mentoring, coaching, and other forms of non-traditional learning programs.
- E-Learning investments in corporations are going to take on a new focus in 2008. Our research shows that despite huge investments, most organizations are still frustrated with many elements of their e-learning programs. If we do have a slowdown, in the interest of cost containment, organizations will continue to transition their “course-based” e-learning programs to more “learning on demand” programs. We will be highlighting best practices in this area at our upcoming research conference, IMPACT 2008: The Business of Talent, on April 22-24 in Florida. (Please do join us.) Watch for a major research study in this area coming in the next 60 days.
- Driving business alignment in learning and HR will become even more important. When the business is slowing, line managers have less patience than ever for “generic HR programs.” They want your help solving specific business problems: reducing headcount, reorganizing and training teams, improving performance of individuals and groups, and possibly restructuring compensation to deal with lower budgets. The “new performance management program” or “new succession management” program which is probably on your list for 2008 must be “recast” in words and values that sell its value to line managers. This is nothing new, but it will become more urgent if your business slows.
We have many important research programs underway right now, and we should be able to see the realities of this economic shift in the next few months. We welcome your comments and feedback: what is the economic slowdown doing to your business and how is it affecting the programs and strategies in your organization? We look forward to hearing from you.