The real problem isn’t sub-prime: Watson Wyatt

The real problem isn’t sub-prime: Watson Wyatt

 

By ANNA TEO

 

(SINGAPORE) For all the doomsday musings about the US economic and financial woes, things aren’t quite as bad from the human resources standpoint, says the global head of Watson Wyatt’s human capital group.

 

The labour market remains tight, there’s no decrease in attrition ‘and business seems to be doing okay’, says Paul Platten, VP and global practice director at the human capital consulting firm, citing feedback from clients worldwide.

 

‘What I’m hearing is that things at the moment are not as bad as everybody makes them out to be,’ he told BT during a recent visit. ‘They’re not seeing at the moment any tightening (of business conditions), they’re not seeing any loosening of the job market. They’re still waiting, if you will, for something to happen.’

 

Dr Platten, who is based in Boston and who met clients from the US, Europe and Asia in recent months, added: ‘I’m not saying there’s not going to be a slowdown. I’m just saying that I think it’s overdone.’

 

He explains: ‘If I were an HR person and have spent a lot of time and money and energy over the past 4-5 years recruiting, building an employment brand, making sure I retain my people and engage them, to now listen to the press and say, ‘it’s all going away, I’ve got to get rid of people and everything’, I would be very nervous.

 

‘So I’m advising HR people to make plans but don’t do anything yet. I’m not sure that it’s going to be as bad as they say it will be.’

 

That said, there are a number of things HR folks should be thinking about for the mid-term, he reckons. ‘Again, they’ve made all these investments in their employment brand, putting mechanisms and networks in place to attract people. They’re going to need those in the mid-term; don’t abandon those. Pay attention to them.’

 

In his view, some of the sub-prime recession concerns and employment issues are masking a far bigger problem that will loom over the next 5-10 years.

 

‘I think this recession, if it happens, will be fairly short-term,’ he says. ‘The real issue is going to be inflation, and the answer to inflation is going to be productivity.’ Hence, HR managers should ‘prepare for a downturn’ – by not overhiring, by reviewing their severance policy, for instance – ‘but don’t overly expect one’.

 

Have plans, says Dr Platten, ‘but don’t get obsessed with it, because the real issue is going to be wage and commodity inflation, and the real challenge that HR managers will face in the future is going to be productivity’.

 

But while companies refrain from overhiring, seeking talent and key skills remains among CEOs’ top concerns at the moment, he concedes.

 

‘There’s still a lot of turnover,’ he says. Regional banking clients he met in Singapore cited a shortage of people with key skills. And while some employers use sophisticated retention techniques – a mix of compensation and talent management, for instance – ‘others just use money as a blunt instrument’.

 

And CEOs in Asia, particularly, are grappling with the challenge of just keeping up the growth pace.

 

‘I think people will tell you that a lot of growth can hide a lot of sins,’ says Dr Platten. ‘If you’re growing very fast, trying to fulfil orders, trying to keep up, you don’t always have time to build up good solid systems.’

 

Managing talent is as critical in a downturn as in boom time, the human capital consultant says.

 

‘The better companies that you think of, the ones that have the best employment brands – the Microsofts, IBMs, GE – they’ve always had an employment deal based on talent management,’ says Dr Platten. ‘You always knew, even in a downturn, what your career path was, what your earnings potential was, what skills you should have. They are always sending people for training.

 

‘Now, in bad times, sometimes there’s not a lot of money to expand the programmes or try new things. I remember a time when bad times come and you cut training. I don’t see that attitude as much any more.’

 

Says Rajan Srikanth, Mercer’s head of human capital, Asia Pacific: ‘Talent management is critical whenever capability gaps are either present or anticipated.’

 

In a boom time, the risk is that the company’s needs are evolving so rapidly that supply cannot keep up. The focus of talent management then becomes one of developing capability, and matching it against need effectively and efficiently, he tells BT.

 

‘In a downturn, on the other hand, the risk is that actions driven by short- term business considerations end up destroying capability that is needed long term.’

 

The focus, then, must be to preserve and rebuild capability for long-term needs, Mr Srikanth says.

 

‘So, in a nutshell, talent management is critical in both boom time and downturn – but the emphasis of what you must do shifts.’

 

Source: Business Times

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