Investing in people in a recession can lead to significant market gains, and employers should think carefully before making redundancies, according to a paper by leadership advisory
firm Lane 4.
‘There are many examples of the benefits of investing in people during difficult economic conditions,’ says Matt Rogan, commercial director at Lane4. ‘A study by Bain & Company, analysing more than 700 firms during the recession of 1990-1991, shows that twice as many companies made marketplace gains during that year than during calmer periods. You only need to do some research to see that it's precisely during these times that businesses must nurture and retain their talent to gain a competitive advantage in the long-term.’
He added that Southwest Airlines responded to the plummeting airline trade after the terrorist attacks of 11 September 2001 by continuing to invest in people development.
‘The critical importance that Southwest Airlines places on its people is reinforced in the company's mission statement, which identifies a 'commitment to providing employees with a stable work environment with equal opportunity for learning and personal growth' and that, 'employees will be provided with the same concern, respect and caring attitude within the organization that they are expected to share externally with every Southwest Customer,' said Mr Rogan.
Other examples he cited were Dell's continued investment in leadership development following extensive budget and job cuts, and media company Viacom pushing on with training programmes during a recession, even when their own client numbers were falling. All three companies reported improved performance as a result of the investments they made.
Christian Hobson, head of learning and performance at Nomura, is determined to follow these examples: ‘Our people are our business and because we're asking them to respond and perform in tough conditions, we must ensure they remain totally engaged and demonstrate the right behaviours. If we don't, our business performance will suffer.
‘Retaining our best people is vital and it's a challenge that our senior executives continue to focus on. This year it would have been easy for them to cut HR spend, but they haven't. They remain committed to the investment which demonstrates its long-term value.’
www.lane4performance.com