Concerns are rising that low global economic growth will persist for a long time. Even if a lengthy trough does not materialize, a robust rebound cannot be expected soon. Under these circumstances, corporate management is under heavy pressure to keep costs in check, raise productivity and secure new growth engines. For Korean companies, where labor productivity is just 49 percent of that of the U.S., these tasks are especially challenging. To succeed, they will need to reshape how they handle their workforce.

A low-growth period is characterized by limited resources, squeezed profit margins, increased risks and fragile emotions in the workforce. In response, companies need to stress practicality, fairness and vitality. Practicality involves injecting resources with emphasis on tangible outcomes. This will differ from the typical cost-cutting seen in a downturn. Fairness involves fair HR due to limited resources and growing employment anxiety. Vitality stresses the mental alertness and internal communication of a company.

1. Recruitment: Open-ended hiring and looking internally

Strategizing and swiftly responding to demand take on more urgency during a low-growth period. More than ever a company needs to have the proper personnel in place. Thus, waiting for the specific periods to do annual hiring, as largely practiced in Korea, fails to meet ongoing needs. Open-ended hiring should be installed to employ specific talent that otherwise would go elsewhere. This approach will better ensure talent on a timely basis and help reduce the cost and effort to organize mass hiring.

In this open-ended hiring, casting a wide net is advisable. Advanced companies, even in periods of low growth, search for skilled people via “social recruiting” to fill needs in business strategies.

But before a new hire is sought, companies would be wise to actively look internally to fill roles. This requires them to recognize latent skills and talent that an employee possesses. Global leading companies have created teams within the organization in charge of internal open recruitment to find skilled people, while operating an Intranet system. They also utilize outside experts for fair employee selection that is reflected in decision making.

2. HR management: Improving efficiency and fostering leaders

Personnel management needs to be constantly aligned as business strategy copes with low growth. Reassignments and changes in duties need to be done efficiently to successfully execute strategies. Employees should be placed in duties according to work priority and the strategies.

On a same note, it would be important to cultivate leadership in key jobs such as R&D, design and marketing. Leading global companies strategically foster key employees who will lead next-generation industries. According to an annual global CEO survey, CEOs’ most important task in 2013 was fostering key managers. On-site customized training, rather than collective training, would help groom key managers.

3. Evaluation and compensation: Recognition and fairness

In periods of high growth, companies are able to provide uniform salary increases and bonuses. A weak business environment naturally forces companies to tighten their spending. However, management should not forget that recognition and encouragement are highly valued by employees and can reinforce motivation. Non-monetary compensation also can be applied to meet an employee’s desires. For example, someone who is performance-driven can be given education opportunities.

In particular, monetary compensation itself may be insufficient for high-performers so tailored compensation is necessary. Accordingly, companies should offer flexible work time, opportunities for creating business ideas and challenging work, all of which will help keep them stimulated and motivated.

As employees become more sensitive in a slow growth period, fair evaluation is crucial. If employees believe a job review is unfair, complaints will ensue as well as sinking morale and resignations. Thus, it is important to build a transparent employee assessment system, which should lead to more accurate evaluations and fairer compensation. Regular training of evaluators would minimize evaluation errors and help communicate goals for personal improvement. Multidimensional evaluation, including peer review, should be utilized to raise fairness.

4. Organizational culture: Raising vitality and work engagement

A slow economy can have a heavy toll physically and mentally on employees. Workloads and working hours may increase, leading to burnout. Since time becomes more precious, managers must be more precise about work assignments to avoid unnecessary or repetitive efforts. They also should allow employees freedom in deciding the priority and timing of their activities. This would reduce work stress and increase work satisfaction.

Low value-added work should be integrated, eliminated or outsourced to raise work productivity. Pfizer has a Pfizer Works system that handles periphery works for talented workers to engage in key jobs.

It is also crucial to maintain an atmosphere where innovation and creativity are encouraged for sustainable corporate growth. To this end, employees can be steered toward more challenging work. 

5. Empathy: Concern and communication

Companies can expect the mood of employees will be fragile when the economic climate is under stress. Asking employees to take on bigger workloads but without the budgetary strength to increase salaries and benefits will be an obvious challenge to management. Even if employees are understanding, the physical and mental strain of dealing with more tasks and possible feelings of job insecurity can affect work performance. Neglecting employees’ difficulties can result in major costs in terms of lost personnel, experience and productivity.

Companies must be vigilant and take preventive steps to relieve employees’ anxiety and stress. Insecurities and complaints should also be resolved by enhancing communication, by sharing companies’ management status in a transparent manner. Business performance and strategies should be shared with employees, so they can better understand the overall corporate situation. SAS airs live CEO’s management briefings via an internal network, while taking questions in real time and answering. It is also important to strengthen daily communication so employees don’t feel isolated. Internal social network and counseling systems can raise emotional closeness and connection.

Proposals

For a successful promotion of the five HR strategies, a solid foundation should be created in three areas of scientific infrastructure, healthy organization and sound leadership.

First, a data-based scientific HR management system should be built for effective use of personnel, to prevent employee-related problems, which tend to rise in low growth periods, and to prepare alternative policies. Advanced companies actively use big data in HR, micro targeting and deciding solutions. For example, Dow Chemical coped with the high economic sensitivity of its business by using data to anticipate the personnel needed and to minimize loss of talent.

Second, companies should be consistent in applying their corporate values to all facets of their business activity, including code of conduct, criteria for selecting and prioritizing tasks and resource allocation.

Factors that may undermine the basis of the company or upset the internal atmosphere also must be addressed. The risk of corruption rises when business growth stagnates. Also, the work stress and shorter tempers may lead to misconduct such as rude remarks and team selfishness. Management therefore may need to highlight workplace etiquette and ethics.

Third, leaders themselves should reflect on their physical and mental health to lead the organization in a tough period. Leaders should control their emotions in a highly uncertain period and maintain their balance. Leaders who had been creating high performance could tend to lose confidence and be overtaken by fear or frustration. They need to display resilience and flexibility.

The article was contributed by Samsung Economic Research Institute. The opinions reflected in the article are its own. ― Ed.