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30 April 2009 8:19am

Australian HR departments are struggling to meet the challenges created by recession-driven cost-cutting with fewer resources and less control over decision-making, a new study confirms.

Two in five HR directors feel they have less autonomy than a year ago – almost 10 times the number reporting an increase in control, the survey by Kelly Services has found.

“More control, more information requests, and more centralised decision-making” summarises the responses of many HR directors to the survey, which asked 56 members of the International HR Directors Forum about cost-containment measures and the GFC’s impact on the HR function itself.

One HR director notes that these demands make HR “much more reactive: you can’t be proactive when you are constrained by centralised control”.

The greater scrutiny has also led to a “speeding up of operating rhythms” – from quarterly to monthly reporting, and monthly to weekly – which inevitably leads to a greater workload.

Parent companies’ expectations of their Australian operations are “overly influenced” by what is happening in their home market, the report says, with the parent – in most cases – having a more severe view than local management about the cost-reduction measures needed.

Cost-cutting measures
Virtually all respondents to the survey have already implemented cost-cutting measures, with the most common being reduced use of contractors (74%), hiring freezes (70%) and headcount reductions (66%).

Australian subsidiaries have been required to take steps even where the GFC hasn’t yet had a noticeable impact on local operations. This is despite the report noting that, “given the state of the key US and European markets, Australian revenues (typically around 2-5% of global revenues) are hardly likely to be a decisive consideration in global cost reduction decisions”.

Reducing accrued annual leave entitlements is another strategy being employed by many of the respondents, with one director pointing out that pressure to reduce this liability on the balance sheet is “inevitable” and another saying, “it’s not just a financial issue, it’s a wellbeing issue. It’s not healthy for people not to be taking adequate leave breaks, so we are pushing this angle in our discussions with affected employees.”

Almost half (43%) of the respondents have reduced their training expenditures, but some companies have made a firm decision to keep investing in this area.

One director acknowledges the need to continue to upskill and invest in employees in order to meet business objectives, adding that in circumstances where bonuses and pay rises are out of the question, “we can at least educate and develop our people”.

Only “an exceptional company indeed” would have considered salary reductions 18 months ago, the report says, but now almost one in five employers (17%) is considering this move in the next six-to-twelve months.

This is arguably one of the most unpopular cost reduction measures and, given the need for employees to agree, the most difficult to achieve, the report says.

Added pressures
Among the added pressures HR directors report being subject to are:
more scrutiny of new hires – there are “more hoops” to go through to get new staff on board. In other cases, HR’s involvement in recruitment has been eliminated in favour of line managers contacting agencies directly, leading to a higher risk of hiring employees with poor cultural fit;

falling morale and engagement – nearly 60 per cent of HR respondents have noticed their company’s responses to the GFC having a moderate or significant effect in this area. HR is now faced with a “changed organisational psyche”, when employees realise for the first time that their company faces the same hard realities as everyone else; and workers who no longer feel in control of their careers, creating a “prison mentality” where employees who aren’t happy don’t feel confident to leave;

diminishing returns on the communications investment – communication (almost to the extent of over-communication) has become a more important task to resource, and HR has identified a need to “communicate the same message in many media: some like email, others prefer face-to-face, and others like to have opportunities for discussion”. The drain on HR’s already limited resources is proving problematic, the report says;

employees in need of support – the HR role is now more about providing reassurance and support for employees, with respondents noticing more cases of personal trauma such as financial problems, stress and relationship breakdowns; and

reduced resources – some 60 per cent of companies are attempting to meet these challenges with less HR resources than they had a year ago. Only one company reported an increase in HR funding.

http://www.hrdaily.com.au/nl06_news_selected.php?act=2&nav=1&selkey=1141&utm_source=daily+email&utm_medium=email&utm_campaign=Daily+Email+Article+Link

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