Business Performance Improvement Is Important in Downturn
SHANGHAI, July 10 /PRNewswire-Asia/ -- Hewitt recently released the 2009 HR Monthly Watch report. The economic crisis that enveloped the finance industry in the past 18 months has now clearly started to impact other sectors and markets around the world. Despite the doom and gloom, this is an opportunity for many companies to take a breather from the rapid growth of the past five years and do some "spring cleaning" in their organizations. While companies may immediately look at rationalizing their product lines or markets, consolidating IT resources, or streamlining their supply chains, such improvements are no less relevant than the significant investment in how people are organized, utilized and managed.
Hewitt's May 2009 HR Monthly Watch, based on the responses from 218 participant organizations, reveals that the impact from economic crisis has decreased by different degrees in all industries except hi-tech (excluding Semiconductor and Electronics companies), which seems to be getting worse month by month. The once badly hit industries like auto, semiconductor and electronics have demonstrated a stable trend to get better. And things in the chemical industry are not optimistic. In May, it has become the most impacted together with the electronics industry. In terms of geographic location, it is exciting that the impact from the economic crisis on the 1st tier cities declined for the first time in the past several months, though they continue to be the most badly impacted. The situation among the 2nd tier cities is improving as well, especially in Chengdu, Chongqing and Yangtze River Delta.
By the end of May, actual/forecasted salary increase was 4.3% for 2009, slightly lower than the result of last month. Still about 70% of the participants have plans to control workforce, which is much higher compared with that of companies with plans to control working hours; however, there is a decreasing trend. Among all the measures taken, recruitment freeze for the whole company and headcount freeze (recruitment only for replacement) are still the most prevalent.
Organizations around the world are facing the unenviable challenge of coping with the economic and financial crisis. The fact that this crisis is unprecedented means that there is no easy way to help us all navigate through it.
Hewitt's Business Performance Improvement (BPI) consulting team is currently working with clients confronted by a mix of performance issues linked to the economic downturn -- in particular organizational efficiency and sustainability.
Jenny Li, general manager of Hewitt China, commented: "We are seeing a sharp increase in clients searching for ways to achieve short-term cost reduction without impacting their ability to grow in the medium term.
"Business Performance Improvement is about making the link between our investment in our people and the bottom line impact of that investment. We look at efficiency and effectiveness, and we look for variation in these over time or between multiple operating units. We look for areas where, in the current economic climate, clients can maintain performance but at a lower investment, or boost performance for the same investment."
In the context of the economic crisis, Hewitt is advocating three key people-related business performance improvement streams:
1. Alignment of structure
The three key issues here are where are the company's market opportunities in the coming 3-5 years, how aligned is our current organization structure to these opportunities, and how efficient is our overall organization design (e.g. number of layers, spans of control, speed of decision making).
2. Aggressively manage utilization and redeployment
The three key issues here are identifying areas where the business is over staffed or under staffed, whether staffs are focusing on the "right" activities, and how efficient is the company at delivering its basic processes. In this respect, BPI makes the link between resourcing levels and effective utilization against the outputs of the work produced. By identifying and quantifying these issues, better decisions can be made on where to reduce staff (or in fact where to build up staff), and how work can be better delivered.
3. Extract maximum value from HR Programs
The three key issues here are developing a clear picture of where we invest HR budget spending (which programs are offered, utilization of each program), how effective current programs are as regards impact on business results, and ultimately how a company can improve the cost vs. benefit of programs (remove redundant programs, look for lower cost delivery methods for others, redesign programs to be more focused on business needs, or look for new programs that more directly improve people and therefore business performance).
About HR Monthly Watch
To track the impact of the economic crisis on businesses in China, Hewitt has launched HR Monthly Watch, a comprehensive study of how companies are, from an HR perspective, managing their business in the downturn. The study captures data points and insight around sales growth, working hours, compensation, benefits, training, performance, and a host of other factors. HR Monthly Watch provides up-to-date insights on dynamic market trends, and serves as a timely reference to guide decision-making.
The information in this report represents the views and opinions of 218 companies collected in May 2009.
About Hewitt Associates
Hewitt Associates (NYSE: HEW) provides leading organizations around the world with expert human resources consulting and outsourcing solutions to help them anticipate and solve their most complex benefits, talent, and related financial challenges. Hewitt consults with companies to design and implement a wide range of human resources, retirement, investment management, health management, compensation, and talent management strategies. As a leading outsourcing provider, Hewitt administers health care, retirement, payroll, and other HR programs to millions of employees, their families, and retirees. With a history of exceptional client service since 1940, Hewitt has offices in 33 countries and employs approximately 23,000 associates who are helping make the world a better place to work.
For more information please visit http://www.hewitt.com .
