By Abigail L. Ho
Philippine Daily Inquirer
First Posted 00:22:00 June 06, 2009
MANILA, Philippines - The economic downturn is forcing businesses to cut costs here and there, sometimes going to the painful extent of letting people go.
While this may make sense at the onset, enterprises should think twice, thrice, 10 times before doing something that drastic.
The People Management Association of the Philippines says businesses should focus on strengthening their human resource if they want to be able to ride the recovery wave when it comes.
In a presentation at the Philippine International Franchise Conference and Expo 2009 last week, PMAP president and Corporate Executive Search managing director Grace Abella-Zata said the best route was to combine “buying, building and borrowing” talents.
"Buying" means scouting for new talents, "building" means further honing the skills and knowledge of existing employees, and "borrowing" means outsourcing certain company functions to outsiders.
Striking a balance among these three may be a bit difficult, considering the crisis, she says, but this is the best way to go if businesses want to come out stronger when the recession ends.
"There's a need to mix these three when managing talents. They can be our biggest competitive advantage," she says.
Pros and cons
Before deciding what to do, she says it is important for businesses to consider the pros and cons of each talent management technique.
Companies should consider “buying” talents when their internal talent pool can no longer meet urgent operational requirements for critical positions.
This has a number of advantages. For one, it takes less effort and a shorter timeframe to see through.
For another, the talent that will be acquired will be ready to deploy, sans the need for any orientation or training.
On the flip side, businesses should also consider that this may negatively impact the morale of homegrown talents and possibly “dislocate” the compensation patterns of the company.
There is also a possibility of encountering culture fit and retention problems.
When "buying" talents does not seem to be the right way to go, Abella-Zata says companies can opt to "build" their existing talents. However, this is good only if there are enough resources and time to train people.
Assuming that the budget is there and that the company is not in a rush to have its employees acquire or enhance particular skills and knowledge, the "build" route offers several advantages.
Companies can tailor-fit skills to their requirements, ensuring that employees will be equipped with the right skill sets for the firms' functions.
Also, talents will be able to better imbibe the organizational culture.
Being given an opportunity to enhance themselves professionally and even personally can also improve the odds of employees staying in the company longer.
However, armed with new skills, employees also become more marketable and prone to “piracy” by other companies. Conducting training programs will also cost companies a huge sum of money, with the returns not expected to be seen in the short-term.
Another strategy that companies can explore is talent “borrowing,” she says. This is good for well-defined functions that are not part of a firm’s core business.
Some of the advantages of “borrowing” talents include alleviating the workload of existing employees and having more flexibility in terms of service termination since outsourced workers do not have fixed contracts.
On the other side, outsourcing may sometimes prove to be more expensive than getting permanent employees. Also, outsourced talents may encounter culture fit problems and even pose a security risk to the company.
"In a recent survey we conducted, most of the respondents said they would rather build talent. But if the need is urgent, then you can’t do this," she says. "On borrowing talent, you can’t outsource if the position is critical."
A crisis situation such as this one makes the need to strike a balance among these three strategies even more crucial, she says.
No matter which route a company chooses, she says it is important that employee training and development be given much weight, and that training budgets, or at least training hours, are maintained even when the economy is down.
For companies that feel the need to cut their training budgets, they can opt to conduct activities that will still enhance employee skills without breaking the bank too much. Longer on-the-job trainings, for example, can be implemented.
If there is some room to move, companies can choose to increase their training budgets and re-focus their training programs to enable them to take advantage of opportunities in crisis and prepare for the upturn.
"People are our greatest assets. Don’t kill the goose that lays the golden eggs. Those that prepare for the recovery will outperform others during the upturn," she says. "During times of crisis, it is important to think long term. Nurture a good relationship with your employees."