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HR strategies: Focus on essentials during tough times

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in Best-Practices Leadership,Employee Benefits Program,HR Management,Human Resources,Leaders & Managers,Management Training

by Vic Dayal

A recession has a way of changing the way businesses do business. HR is no exception.

Here are three effective strategies for HR pros to consider as organizations permanently adopt the cost- and time-effective strategies they have embraced out of necessity over the past couple of years:

1. Do what you have always done—but do it better.

Your first step to achieving that: Turn your attention away from day-to-day details and toward strategy. Among the many things that demand an HR pro’s attention during a workday, only a few have true strategic value. Focus on them.

Step away from chores that are transactional. Outsource those functions or set up web-based systems so employees can self-serve. Make your day’s work all about the things that are important to the strategic direction of the organization.

Evaluate every compensation strategy and employee benefit to determine whether those things reflect your strategy and culture.

In order to align comp and benefits with the organization’s strategic direction, HR pros must make strong linkages with the organization’s leaders—and they must show strong leadership on their own teams. Spend time on those relationships.

One exception: compliance. Money is still tight enough that few organizations can afford to deal with a noncompliance judgment.

2. Simplify compensation.

Rule of thumb: Spend the money where it will do the most good.

Spending should result in the behavior that aligns with the organization’s strategy. That rarely happens in organizations that base salary structures, incentive plans, merit pay and benefits on the way it’s always been done.

Right now, organizations have a rare window of opportunity to take a fresh look at every compensation practice and every benefit—even the sacred cows. Don’t take anything off the table. Examine each one for its strategic value.

Refine the way you measure the success of any comp or incentive program. Is it driving behavior in the right direction? Or does it reward employees for doing things that last worked before the recession?

It’s easier to tweak incentives and merit-pay programs than it is to overhaul salary structures. You can change them quickly to reflect the changing strategy of your organization.

Most important: Link pay to performance. Don’t give everyone the same base salary increase every year. Reward top performers more than others. Don’t hand out automatic bonuses; require something from employees in return.

Focus on benefits that are truly important to employees. How will you know? Ask: “Would you prefer a 5% salary increase or a 20% reduction in your health insurance copays?” Be smart about translating the feedback you get into decisions.

3. Use your time smarter.

Look at how you do things in HR—where you spend most of your effort compared to where you get the best return on that investment.

Don’t spend six months figuring out a merit-pay structure for next year if the whole plan could change due to a shifting business environment.

Example: One company linked incentives to specific business units. If a unit came in at 90% of budget, employees got 90% of the target bonus. If it came in at 88%, employees got 88% of the bonus, and so on. HR spent an enormous amount of time calculating bonuses for thousands of employees—all for a difference of 1% or 2%. It was a waste of time.

HR professionals have to be more strategic now than ever.

To young, strategic thinkers who are new to HR, that practice could pay off quickly. Many experienced HR folks have been holding onto their jobs only because of the weak economy. As recovery slowly takes hold, they will be moving on—either to better opportunities or to retirement. Those high-level jobs will open up for young pros who can strategically think their way into leadership positions.

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Author: Vic Dayal is a principal with the HR consulting firm Mercer.

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