Core HR issues at top of political agenda - NTB HR Head

Delivering a public lecture on “HR Challenges in Turbulent Times”, jointly organised by the OPA and IPM Sri Lanka, Head of HR, Nations Trust Bank C. Hewapattini said that HR could play a major role in helping their organizations emerge in a position of strength as the economy recovers by seizing the unexpected opportunities-whether acquiring undervalued assets or recruiting talent which has hitherto been beyond their reach.

“Never in the history has a US President made lengthy references to the ethical aspect of executive pay arrangements in a presidential address as President Obama did when he spoke of the AIG’s retention bonus of US$ 165 million, despite a bail out package costing tax payers US$ 170 billion.

Similarly, the recently concluded London Summit has unanimously endorsed the implementation of tough new principles to establish sustainable compensation schemes.

One could rightly argue, that this situation arose because the HR fraternity has failed to exercise due care in introducing pay arrangements that reward risk which seem to have led executives to take undue risk towards short term gains. Whether we like it or not, in time to come, we can expect greater state intervention in executive remuneration “ he said.

Positive fall out

Referring to a survey carried out by the Time Magazine, Hewapattini said that from a HR perspective, one positive fall out from the present economic crisis is that with the fall of stocks and housing, people have begun to turn their attention back to work.

“The flagging economy has set us straight on how valuable our work. The challenge for HR professionals is to keep it that way even after the economy recovers in full” he said.

Tense global workforce

“The global workforce is understandably tense, fragile, and worried. No one under the age of 75 has faced this degree of uncertainty in their life time. Already, there are over three million job losses in the USA and two million in the UK. According to the Asian Development Bank (ADB), Asia was hit harder than other parts of the developing world because the region’s markets have expanded much more rapidly.

When a sense of insecurity prevails in a workplace, it obviously creates huge morale issues resulting in decreased productivity and lower worker engagement”.

Back to basics

“The current economic downturn has taken us back to basics which in a way gives us an opportunity to take a fresh look at our cost base and to remain lean.

If the business environment does not permit us to increase revenue, the obvious choice is to control cost which is more predictable. Personnel cost is as much as 40 percent of the total operating cost and therefore any cost cutting initiative calls for a detailed look at this important cost compornent.

A serious study will reveal the colossal wastage in many organizations. This is the time for restructuring and re-engineering. It does not necessarily mean job cuts.

Some local companies that were doing extremely well in the past, paid scant regard to market trends when it came to executive pay.

The executive remuneration package offered by them was way above the market and was unwarranted. Little did they realise that the doomsday would occur so soon and when it happened, they were the first to lay off some of their staff including some CEOs.

A point to remember is that your remuneration package should be sustainable even in times of a crisis. It does not pay you to be the best master in the country. Most of the multinational companies for whom the affordability is not an issue prefer to avoid this title”, he said.

Lay-offs should be the last resort

“Any retrenchment scheme causes anxiety among employees. Of the world’s 100 most admired companies, in December 2008, 81 indicated they are not downsizing while the balance 19 said they are but only as the last resort. Besides, such lay-off schemes need to be handled with utmost caution as you are likely to lose your best performers.

After all, they are the ones that will help weather the storm and drive the recovery. We should be aware that the recession is not here to stay permanently”.