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Secrets of Human-Capital Management 【September 2022】

Living your values in a recession

By David Creelman

 

We are hearing talk of a recession and HR should think ahead about how that might affect delivering on the promises the company has made to employees. I recently spoke to an HR leader whose company had lofty ambitions for being a wonderful workplace but all that went out the window when profits tanked.

 

It’s easy to deride a company that doesn’t live its values in tough times, however, it’s more realistic as a business professional to know that some things are possible in good times that are not possible in hard times. We sometimes talk about “luxury beliefs”; those are beliefs that are desirable but only the rich can afford them. Oftentimes a company’s promises about the workplace fall into that category of luxury beliefs. They deliver them in good times but quickly forget them when times get tough.

 

So what do we do?

 

It seems to me we have two reasonable options:

  • 1. Avoid luxury beliefs, and don’t commit to any values you cannot deliver on in both good times and bad.
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  • 2. Set high aspirations, hope you can live up to them, and apologise with a transparent explanation if you need to drop them due to hard times.

 

None of the events guarantees a big change in reporting on human capital, however, they are strong pushes for ongoing, substantive improvements. I’m not expecting rapid change, but after years of not much happening, I now think it likely that we’ll see a slow but sustained movement to better and better human capital reporting.

 

There is a lot to be said for choice one, only saying things you truly will deliver, but it’s hard to be that realistic. Aspirational messaging in your brand is hard to avoid. This means that like it or not, you may end up with option 2, which means apologizing when conditions change.

 

Perhaps it’s easier to focus on what not to do:

 

  • 1. Don’t pretend that you never made aspirational promises about the workplace.
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  • 2. Don’t change the employment deal without apologizing.

 

There is also the issue of a concept raised by Professor Ronald Heifetz: disappointing people at a rate they can accept. You probably don’t want to suddenly withdraw a whole range of perks and benefits along with a huge raft of layoffs. On the other hand, you need to avoid death by a thousand cuts where every week some fresh bad news comes out. You’ll want to prepare your employees for coming changes to lessen any shock, but when you do make changes pull off the bandage quickly.

 

Thinking about how you will react to a possible recession now will make your life easier should one come about.

 


 

David Creelman is CEO of Creelman Research. He is best known for his workshops on People Analytics, Evidence-based Management and the Future of Work.  You can connect to Mr. Creelman on LinkedIn or email him at dcreelman@creelmanresearch.com

 

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