Managing Talent in Troubled Times

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HEC School of Management, Paris and the CEMS (Community of European Management Schools) were selected by the editors at the Harvard Business Review to contribute ideas and international practices for managing workforce reductions during economic downturns.  While such reductions might be an inevitable occurrence in today's business environment, they probably have a negative effect on the attractiveness of working for a firm and on the general level of employee trust in the company.  Therefore executives must balance the need to survive a recession with the need to retain and attract top talent.  It is clear from the tag cloud on the left, generated by content from a popular business magazine, that this issue is not yet on executive radars.

Two hundred CEOs met during the summer in the United Kingdom to discuss this problem.  You are contributing to this debate by offering your experience and advice.  The results of the US and European surveys be featured over a series of articles on the Harvard Business Review website. We invite you to follow the series and to download the final report.

Thank you for offering us your ideas and advice.

 

Bookmark this page to return for the current responses to the principle questions of the survey later this week.

 

Among the demographic questions respondents were asked to indicate their level in the company hierarchy, their level of perceived responsibility for setting and executing company business policies, and their authority or influence regarding common human resource decisions.

 

Three questions were asked to estimate the general level of trust in society.  These are scored and graphed.

 
Seven questions were asked to estimate the general level of trust in the firm.  These are scored and graphed.  Apparently the respondents trusted in the general society more than in their own firms.

The two measures of trust had different possible scores.  We measured trust in the boss using a set of questions validated by many years or research that is based on 7 to 35 scale.  We measured general trust in the society, again using a set of questions validated by many years of research, that is based on 3 to 15 scale.  We standardized these scores so they could be easily compared and plotted them below.  The results indicate that the majority of respondents trust a stranger more than they trust their boss.

We also asked a series of questions asking respondents how interesting it would be to work for a company described in a typical company profile.  We manipulated one variable in the description, the level of international diversity among the top executives.  Respondents were randomly presented with a level of international diversity of 10%, 35%, or 70%.  The level of international diversity among executives made no difference to firm's attractivity to recruits.

 
We offered respondents four typical profiles of employee and we randomly made one of the options of foreign-born person.  All had consistent performance ratings of either average, good, or excellent.  Two were in their early thirties, one in mid forties, and the last in late fifties.  Their salaries also varied from low to high.  Below are the choices of whom to fire by the respondents.  The two profiles most at risk were the average performers with the older of the two the clear choice for layoff.  Whether the choice was a foreign-born person or not made no significant difference.

We analyzed the initial responses (nearly 1,200 respondents) to determine if their national origins influenced their choices of whom to fire.  Interestingly we found that culture creates a strong set of biases which led respondents to fire different employee profiles.  For example, the Latin group (French, Italian, and Spanish managers) were more likely to fire an older manager, even one with excellent performance.  Their rationale was that managers near the end of their career spans could take an early retirement and, because they were generally well paid, their salaries could save the jobs of two younger managers.

If we look at the overall results of the HBR-HEC Trust and Firing Survey we can discern three concerns managers must consider when responding to serious market downturns. 

One concern, maybe the first for most CEOs, is saving the shareholders by controlling costs.  This generally means that people will be fired, either individually or as a result of restructuring where some business units or subsidiaries are closed or sold. 

Another concern, typically coming from the HR department and executives in charge of business development, is to maintain the attractivity of the firm so that it can continue recruiting the necessary talent during the downturn or be able to start recruiting again on the economic rebound.  Firms that downsize too aggressively risk earning a bad reputation among graduates and other employees in the sector. 

A last concern, especially for line, sales, and HR managers is to maintain the attractivity of the firm to retain its current talent.  This group of managers wants to avoid the scenario where good quality employees become fearful that will be next on the layoff list and preemptively leave for more secure jobs elsewhere. 

Click on the graphic below to give your opinion about which concerns should be the most important.

This will take you to a new form on servers at our partner Chinese University of Hong Kong.

 

Bookmark this page to see complete results as they are processed or watch our blog at HBR.

 

Latest HBR posts on HBR.org

How Europeans Do Layoffs

European Layoffs: Choosing Between the Young, the Weak and the Old

 

Note for journalists and researchers:  You may copy any of the charts on this page to use in other publications. You must attribute the chart using the following citation.  Segalla, Michael. How Europeans Do Layoffs.  Harvard Business Review Website. June 9, 2009.