How easily we forget. As the world tumbles headlong into the worst economic decline since the Second World War, earlier financial tumult has quickly faded from our memories. The dotcom crash rates a mention because it provides a handy yardstick for how bad things are getting now, but other major market scares have been washed away by a growing tide of bad news from all parts of the globe.
The credit crunch was putting pressure on markets throughout last year but it was the implosion of the venerable Lehman Brothers in September that seemed to break the dam. Less than six months after its collapse, more than 200,000 jobs have been lost globally in the IT industry alone, as even previously untouchable companies such as Google have trimmed their headcounts and entitlements.
IT operations have not been the soft targets for cuts that they once were, having ascended to a more strategic role in many businesses during this decade. Nevertheless, managers of all stripes have difficult choices to make in the face of the downturn, particularly when it comes to their people.
Nobody relishes playing with individuals' livelihoods. But experts say the effective management of staff during hard times can change the prism through which a chief information officer's career is viewed.
When times are tough, leaders step forward.
A look back to the future
Although they may have been pushed to the back of our minds, earlier downturns can be useful reference points for those trying to navigate the current crisis.
It is, for example, easy to forget that just six short years ago, the world got a major health scare that also had a big impact on markets.
Back in 2003, the threat of severe acute respiratory syndrome, or SARS, spread panic throughout Asia.
SARS was a big deal. It was first evident in China, then quickly spread to more than 30 countries. The World Health Organisation says SARS was responsible for close to 800 deaths, but at the time it was thought that the disease could easily put millions at risk.
Authorities and businesses alike scrambled to come up with strategies for dealing with what people, at the time, thought could be a major crisis.
On the IT front, many a chief information officer cobbled together a quick plan to allow people to work from home and keep the lights on if they were prevented from coming to work.
The general business community dealt with SARS as a potential threat, but the airline industry copped a real whack on the chin. It was already struggling to regain altitude after being king-hit by the September 11 terrorist attacks in 2001. SARS, aided by the second invasion of Iraq, crippled air traffic, particularly on routes into Asia.
Qantas felt the blow. In April 2003, the airline announced it was cutting 1700 jobs as part of a plan to save $160 million. Its CIO at the time, Fiona Balfour, says she was asked to cut her IT operation's headcount by 30 per cent.
"We had weeks to do it, not months," she recalls. "I would imagine that some former colleagues who are still at Qantas would be finding this current period very similar to that time."
Balfour, now a consultant, says plenty of people are in for a shock, even if they hang on to their jobs. For starters, pay day is going to look quite different. In the financial services sector, for example, there are people right through to the age of 35 or 40 who have never experienced not getting a pay rise. Bonuses are also very much in the cross-hairs.
As a perennially cyclical industry, and one that is heavily capital intensive, the airline business has long kept a close eye on costs.
Even so, the SARS episode forced an acute re-evaluation.
Balfour says that when it came time to announce the lay-offs, multiple staff briefings were required, due to the size of the workforce involved. Contractors bore the brunt of the cuts and, perhaps surprisingly, the SARS episode left her with a highly motivated team.
"Recessions are periods during which people become very grateful to have work and we certainly did experience that," she says. "Because you had to exit so many people so quickly, the people that remained behind were very highly motivated. They were motivated to help the business succeed, achieve and be successful, even though the period was very challenging."
Balfour was probably fortunate, because in a company under pressure, all kinds of staff issues bubble to the surface. Some may have existed, hidden from view, for years. As a recession bites, problems at home also begin to play out more and more in the office.
Communication is key
Human resources consultant Helen Crossing says empathy with staff is central to helping them through the tough periods.
"Difficult times will highlight where the faults are, so you start to see some more unusual behaviours," she says. "This is where leadership versus management is important. If you have managers with leadership capability, empathy is the important ingredient.
"Empathy allows people to respond to others with a degree of sensitivity, so that they are better able to provide feedback, talk about sensitive situations and measure their communication."
Now is not the time to be aloof, Crossing says. Communication is vital in maintaining morale. Team leaders need to be in close contact with their staff, whether or not they are letting people go.
"It really is important for senior managers to have contact with their front-line people and talk, in simple terms, about what is going on with the business. Talk about what people can expect," she says. "Try to honestly state the position without actually terrifying people or covering up."
Balfour also stresses the need to keep the big picture in view, and communicate it to staff. Concerns may be firmly rooted in the here and now but planning needs to take account of the future. So it's important to know where you want to end up before making decisions about employees.
"Before you work out who is going, you need to work out what sort of organisation you are shaping. You have to be quite strategic in terms of the decisions that you make and know what sort of organisation that you want to be. It is quite important to do that and to articulate that."
CIOs have to know what skills they need to continue to service the business. Accordingly, Balfour says, even if given a ghastly target for headcount reduction, it's better to first work out who is going to stay with the company, rather than who is going to go.
"That way, you do actually come to the same result, but a different way around, and you are actually rebuilding the organisation for the future," she says.
As much as possible, the thinking that led to the decisions needs to be shared with staff. "It's really important to approach solving that problem in that manner," Balfour says. "The workforce are highly educated, highly capable people, and you have to respect that and treat them in a rational and consistent manner.
"You describe the target that you have been given, you articulate what the organisation is going to look like in six to 12 months' time and you explain to them how you are going to get there."
Crossing says that by getting engaged with staff, managers will have much better data on which to base decisions.
"You can learn so much by analysing the numbers in the business. You need that information to analyse what is going on with the people,"she says.
Having that information will also help in dealing with problems when they arise. Managers who are well acquainted with their workforce will, for example, be in a much better position to judge whether a person's behaviour stems simply from the stress of the situation or is symptomatic of a greater problem.
"That's part of the diagnostic skill, being able to say whether a problem was there from day one or whether a person was performing well but is now, for some reason, overloaded and can't cope."
Iron fists and other mistakes
Australian organisations tend to be relatively bad at training managers to deal with people issues and have a habit of throwing new leaders in the deep end, Crossing says. What little training is provided often tends to be theoretical, with little practical advice.
For IT professionals from technical backgrounds, the soft skills of management, and the communication required during difficult periods, can be a struggle.
Under pressure and left to their own devices, inexperienced managers can revert to an autocratic style to get things done. But she cautions that the iron fist is a limited weapon that often causes more problems than it solves. Edicts are issued and communication shuts down.
"It might get instant results but it will also create problems in the longer term," Crossing says. "It's not the way to manage professional staff, that's for sure. My advice to anyone would be that if you find yourself starting to use that approach, stop and think."
There are plenty of traps for inexperienced managers trying to guide their teams through difficult times. Handled badly, staffing issues can easily damage a company's brand, says Murray Kellock, a partner at law firm Mallesons Stephen Jaques, specialising in industrial relations and employment law.
"I think the real challenge is managing your brand," he says. "In some industries, there is the risk that people will cut too deeply and therefore you'll not only damage the company's brand but also cripple the company's capacity to respond when things come good."
Kellock says Mallesons is seeing a steady rise in the number of people suing their former employers after being dismissed as a result of the downturn.
"A claim that we have been dealing with for some time is one based on discrimination on the grounds of age. That's arisen in the context of a number of people occupying the same position, and that person being selected [to leave the company] as opposed to others."
Organisations need to make sure that, if people have to go, the selection process is not discriminatory and that the decisions are backed up by clear and thorough documentation, he says.
"If they are challenged, ideally, you've got some sort of paper trail to back up the basis of your decision to refute the allegation that you have been discriminatory," Kellock says. "If you don't have the paperwork and don't have the processes in place, it does leave you somewhat exposed."
How to make cuts
Similarly, Crossing stresses the importance of not letting prejudices cloud your thinking when dealing with staff issues. It's a mistake to apply personal values, rather than corporate ones, she says.
"What you see is people resorting to their own values, rather than remembering they work for an organisation, that there is a specific culture and that the organisation has a specific purpose."
Broad cuts that rely purely on getting the numbers can also do more harm than good. "It's very damaging for the organisation because they lose their good performers as well as their not-so-good performers,"
Knowing who is performing and who is dragging the chain is part of the widespread information-gathering process that managers should be engaged in when they speak to staff.
"I think companies are very bad at recognising who their poor performers are and how to move them on when times are tough," Crossing says. "They don't always have that information.
"The skill in handling that is very important. I can recall one organisation where a whole area remembered a very badly handled headcount cut that had taken place some years back. It became embedded in the organisation's culture."
The focus during a difficult economic climate is often negative, but there are steps managers can take to keep the enterprise on the front foot.
In addition to being clear and direct in communication, they also need to ensure that staff still have goals to work towards, even if those goals have had to be readjusted.
"In turbulent times, it is probably opportune to sit down with your people and clarify goals, reset some of the goals, think about where you are going," Crossing says.
Whenever an organisation is in a state of flux, people appreciate being informed of expectations and what part they need to play in helping the company succeed.
"Now that half the team has departed, what are your roles and responsibilities? What are the expectations placed on you now?"
Crossing says. "That type of conversation is very reassuring and grounding for people."
In the course of talking to staff, managers will find that problems can start solving themselves, she says. People not only start airing their grievances, but also begin to come up with a variety of solutions. "The manager can then start implementing those solutions," she says.
Need to know
Communicate openly and clearly: this is no time to be an aloof manager, so keep people informed.
- Start at the end: if you have to reduce headcount, begin by identifying those you need to keep.
- Avoid the iron fist: laying down the law is a short-term solution that will only create more problems.
- Don't let it get personal: keep your decision-making focused on corporate values, rather than your own.
- Be selective: the broad brush is best avoided because you will lose good people along the way.
- Set new goals: take time to let people know how changes have altered their roles and what is expected of them. MIS Australia
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