The Role of Human Resources in Crisis Management

Jennifer L'Estrange
April 13, 2020

The Human Resources function has a key role in change management projects and, in particular, disruptive change and crisis management. They manage the employee lifecycle and are responsible for delivering key messages as part of the communication plan. They also own some of the cost control elements of the plan in that they are likely to be the people responsible for running alternative scenarios for changes to the compensation plan.

We will briefly outline the Human Resources processes that are likely to be impacted in a crisis and should be addressed in a business continuity plan.

Talent Acquisition

If your organization is in crisis management mode, you may decide to freeze hiring until you are on steadier financial footing. At times, however, we do see companies that are managing a crisis on one side of the business and continue to actively hire and develop talent on another. The division may be along geographical lines or by business unit for larger companies. 

Either way, if you’re in an environment where you are hiring and firing at the same time, prioritize your communication planning and execution so that your impacted population understands not only what’s happening, how it’s being managed, and why it’s happening (to them).

a. Employer Branding

Employer branding is the marketing collateral that communicates who you are as a company and the kind of employees you look to hire – and how they learn and grow with your organization.

b. Recruiting

Recruitment is the process of sourcing and selecting candidates for specific position requirements. While there are common components to every process, be sure to design a process that fits your specific company culture. 

In our work with clients, we are seeing more and more technology in their process design, including assessments and online pre-recorded video from partners like SparkHire.

c. Onboarding 

Onboarding is no longer just the first day paperwork process for new hires. It is the 30/60/90 day process that’s designed to communicate values and culture, help new employees be effective in their jobs faster, and articulate performance expectations clearly proactively.

Organization Development

Don’t forget about organizational development just because you are navigating a change or managing a crisis in your organization. In fact, the OD team in your human resources department may need a boost with some strategic consulting support to guide some of the organization and job design questions that come from business transformation projects. These experts can also guide you through implementation, ensuring that people are selected for new roles in a way that is non-discriminatory and meets business needs.

a. Performance Development 

Performance Development refers to the regular conversations and planning meetings that take place between a manager and subordinate to review progress in the role, development opportunities and career aspirations. During periods of crisis and disruptive change, the temptation is to sidebar these conversations for ‘when we’ve moved past this’. 

We would advise the opposite: now is the time to hold regular meetings with your people as an opportunity to both give and receive feedback on what’s working and what’s not. We recommend quarterly development conversations with a written writeup. If your change program involves substantial risk, then hold these meetings more often and they can be shorter. Do not neglect the writeup however. If you have performance issues later on, you will want to refer back to this documentation – even if it’s as simple as an email with key takeaways.

b. Learning and Development 

Learning and development ranges from formal classroom based training to the information on-the-job development that comes from taking on new responsibilities or a stretch assignment in the current role. Change programs are ripe with opportunities for on the job development, so start by looking at how you can enrich the current role or expose team members to learning and coaching moments while you are working through the change. If you are navigating a crisis, and especially one where there may be layoffs, we advise against formal training that requires a large investment of time and money. It may be perceived as tone-deaf to the organization impacted by the change.

c. Succession and Career Planning 

Succession and career planning simultaneously looks at who are the potential successors to leadership positions in the organization and how to prepare those successors to take on those roles in the future. Change programs are crucible moments for future leaders. You will have opportunities to observe future leaders in action. Do they exemplify the behaviors that you want to see in your leadership team? How do they react under pressure? 

From a career planning perspective, use your change program or crisis to coach future leaders through the confronting conversation that they will need to master before taking on a role of increasing responsibility.

d. Organization and Job Design 

Organization and job design is the foundation of an organizational change program. Once the business change is defined and we know what needs to change to support the overarching goal, then the next step is figuring out how the organization and individual job roles need to change to support that. It can be complex work and is a merge of top-down and bottom-up analysis of job tasks, responsibilities, accountabilities and purpose driven analysis of the organization design to meet business needs. 

In a crisis, it is sometimes helpful to take this work into a specific, dedicated work session (offsite if possible) where key leaders and subject matter experts can brainstorm alternatives and develop a solution that meets the future needs of the business, addresses cultural norms for decision making and accounts for essential job functions and the required behaviors, knowledge, skills and experience needed to deliver results.

Compensation and Benefits

Crisis management will sometimes require changes to pay plans, either to stretch out the company’s cash reserves or to adjust for changes in job roles. Don’t attempt to make changes to compensation before looking at the organization and workforce planning first. 

As a rule of thumb, Compensation strategy is designed to support the Organization Design strategy, which in turn supports the overall Human Capital and business objectives defined as part of the change goal. In a nutshell, compensation influences behavior and compensation comes last.

a. Base Pay

Base pay refers to the fixed salary or hourly wage rate that is paid to an employee on a regular or occasional basis. Changes in base pay are almost always related to changes in job roles.

b. Variable Pay 

Variable pay refers to any form of compensation that is ‘at risk’. This can include commissions, bonuses, short- and long-term incentives, and a range of equity programs. We recommend some form of variable compensation at all levels of the organization because, when designed, implemented and communicated correctly, it influences behavior more directly than base pay alone. During periods of crisis, variable pay programs can be suspended to stretch out cash. Another reason we love them.

c. Benefits

Benefits range from group healthcare to time off (paid and unpaid) and are the collection of advantages offered to employees by their employer. Be sure to design your benefits offer in a way that is sustainable to your organization – once they are offered, they are very difficult to remove. 

It’s always better to start small (for example with paid vacation) and then add more as you grow. In a crisis or period of disruptive change, look for benefits that require little to no additional cash outlay and that improves employee wellbeing. Show them you care, but don’t drain your cash.

d. Perquisites (or Perks)

Perquisites are the cash and non-cash advantages that are considered ‘part of the job or organization. These can be as substantial as a company car or as simple as company sponsored lunch. These should be selected to match the company culture and ways of working. We worked with a small company in NYC that had a candy closet in the office filled with everyone’s favorite treats.

Employee Exits

Whether voluntary or involuntary, it is important to handle all employee exits well, especially when managing disruptive change in an organization. Voluntary exits, or resignations, are difficult because it means we are losing talent that we didn’t intend with timescales that we cannot control. Involuntary resignations are challenging because we are managing both the employee that we are asking to leave the organization and the perceptions of the retained organization.

a. Resignations

Resignations are the voluntary cessation of employment by the individual. Typically, there is no severance and while the individual can apply for unemployment benefits with the department of labor, they are generally not eligible to receive compensation. We recommend conducting exit interviews for all voluntary exits in order to determine why the employee decided to leave and evaluate whether something needs to be changed internally to keep it from happening again. With the vast majority of employees giving only 2 weeks notice before leaving, be sure to capture as much information information as possible as part of the handover process and manage the exit process in such a way that you can reach out to critical employees after they leave.

b. Terminations 

Terminations are the cessation of employment for an individual reason. This can either be performance or job related. Sometimes there is a severance package offered, accompanied by a separation and general release agreement. Employees can apply for, and are often eligible to receive, unemployment benefits.

c. Layoffs

Layoffs are the cessation of employment for either exempt or nonexempt workers for a business related reason. All benefits are terminated and employees can apply, and are eligible, for unemployment benefits. If your plan involves an employee restructuring plan with layoffs, we strongly suggest that you start by consulting with an employment attorney or external expert who can guide you through the process.

d. Furloughs 

Furloughs are temporary layoffs. They are typically used for salaried exempt workers and can be either a partial or complete furlough. A partial furlough is a reduction in salary. A complete furlough is one where the employee is not paid at all, but remains on the books.

Furloughs offer the advantage of being able to keep employees enrolled in company sponsored health plans, if the benefits provider agrees. In both cases, employees can apply, and are eligible, for unemployment benefits.

Human Resources expertise and the support offered across all phases of the employee lifecycle are a critical part of an overall change management plan – especially when navigating a crisis. Sometimes an outside perspective can help. 

Red Clover offers structured consulting services, interim management, and rapid response interventions to advise and support organizations as they navigate change and transition. Get in contact with Red Clover for more information on how we can help.

Written by Jen L’Estrange

Learn more about Jen on LinkedIn.

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