Weak Economy Creates Opportunities for HR Consultants

By Lin Grensing-Pophal, SPHR Jan 5, 2009

Because the economic downturn of major industries like banking and auto manufacturing has ramifications across virtually all industries, independent HR consultants might find 2009 to be a year of opportunity.

The declining economy and concerns about budgetary issues are likely to prompt companies to seek the expertise of HR consultants for dealing with employee relations issues, restructuring because of layoffs, downsizing and reorganizations. However, those are not the only issues for which employers might seek an HR consultant’s assistance. There are the issues surrounding the amended Family and Medical Leave Act (FMLA) and the growing numbers of employees who are eligible to retire but who might decide to stay in the workplace longer because of their financial situations.

Nonetheless, it is the significant economic shifts companies are experiencing that represent the greatest areas of opportunity for HR consultants, specifically those specializing in organizational development and design, change management, employee relations, strategic planning and communications. In addition, benefit design will continue to be an area of concern during 2009 as companies work to control costs, while training programs are not likely to see increased demand. However, work providing training remains, and with more companies looking outside to fill internal gaps, HR consultants are in position to capitalize on those opportunities.

Aarti Thapar, a managing consultant in PA Consulting Group’s business transformation team in New York, is experienced in organization design and change management. Thapar helps clients design, implement, embed and communicate changes in structure, process and working practices. There are four specific areas of opportunity for HR consultants, she says:

Organization design. Because of the current economic climate, organizations are under pressure to deploy survival strategies, and major firms have pursued huge restructuring initiatives to improve efficiency, increase delivery effectiveness and cut costs. With the implementation of these strategies, leaders are confronted with organization design challenges as they are under pressure to reduce their workforce and continue to deliver exceptional value to customers and shareholders, creating opportunities for HR consultants to work with business heads to redesign organizations.

Change management. Because massive cost reduction programs need to be coordinated, HR consultants can provide clients with expertise to ensure that activities that inspire, enable, encourage and facilitate employees are given as much emphasis as the reasons that are driving change.

Employee relations. Because significant job cuts create employee relations issues across the board, surviving employees are often beset with concerns involving increasing work demands, feelings of guilt and worries about their futures. Therefore, organizations might experience “survivor syndrome,” where those left in the organization are so affected by what is going on that their morale and productivity drops. The opportunity for HR consultants is to work with organizations to manage employee relations issues.

Compensation. The decline of traditional investment banks has created a need for the banking industry to overhaul compensation structures. Investment banks are already changing their compensation structures for top management, and in 2009 that will descend to lower levels of management, creating a role for HR consultants to help define and implement new rewards programs.

Bob Kustka, who operates the HR consultancy The Fusion Factor, in Boston, says that during 2009 there will be significant change across industries and organizations. Corporate and organizational leaders concerned about implementing changes will likely exercise caution in many areas and will turn more to metrics than ever before, he says. In addition, there are two noticeable trends among Fusion Factor’s clients, he says:

Large clients are reviewing organizational structures and total headcounts to determine where it is feasible to either reorganize or downsize, or both. Those clients might have some HR metrics in place, but they are open to other measures, creating an opportunity for HR consultants.

Small clients are reviewing HR metrics—the first time for some clients—and there is a strong interest in developing competency models and performance management systems to manage productivity better and determine more accurately whether companies are getting a good return on investment from their staffing costs.

Nat Stoddard, chairman of Crenshaw Associates, a New York-based consulting firm, says leadership transitions are another area of opportunity for HR consultants. The failure rate of CEOs is more than 50 percent greater than just a few years ago, and performance-related terminations are more than three times what they were 10 years ago, says Stoddard, who is the author of The Right Leader: Selecting Executives Who Fit (Wiley, 2009). A recessionary climate places even greater pressure on companies to select the right executives, he says.

In addition, HR consultants will find opportunity related to FMLA changes that go into effect Jan. 15, 2009, adding additional complexity to an already challenging area for most HR departments. There is the issue of Baby Boomers who are delaying retirement because of the economy and how their plans impact staffing, promotion and succession for organizations.

While layoffs, restructuring and change management will be the big areas of activity in 2009, HR issues in general are likely to remain on the forefront for most organizations regardless of industry or position on the economic ladder. HR consultants in virtually every area of practice, with perhaps the exception of training that cannot be traced specifically to tangible, quantitative outcomes, are likely to see demand and revenues increase during 2009.

Lin Grensing-Pophal, SPHR, is a Wisconsin-based business journalist with HR consulting experience in employee communication, training and management issues.

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