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Talent Management Perspectives

Published June 2008

While HR Might Face Cuts, Talent Remains a Top Priority

Agatha Gilmore

Facing rising gas, oil and food prices and a faltering economy, people across the nation are looking to cut costs wherever possible. Some turn to carpools, others to environmentally efficient appliances, others to bulk and discount shopping. When it comes to talent, organizations are no exception.

According to a new survey of more than 250 companies by the Institute for Corporate Productivity (i4cp), 88 percent of corporations plan to implement cost-cutting programs within a year. But rather than reducing head count, an overwhelming majority will first cut discretionary spending, improve efficiency or seek lower prices from vendors.

"[It's] the war for talent," said Kevin Oakes, CEO of i4cp. "A lot of organizations are very cognizant that their ability to attract new talent in the future is going to be limited, given all the demographic information and the retiring workforce. I think most of them are looking at other efficiency-based ways to trim costs, other than doing layoffs."

Indeed, 87 percent of companies surveyed said they were hoping to improve efficiency to a moderate, high or very high degree; 71 percent said they would cut discretionary spending to the same degree; and 65 percent said they would seek lower prices from vendors. Only 33 percent said they would reduce head counts.

Despite the good news for workers everywhere, however, talent managers could be in for some additional challenges. While more than a third of organizations surveyed said they would look to HR as a place to cut costs, 70 percent of them said they plan to engage employees more effectively as an alternative tactic for cost cutting. This means in the next year, HR professionals likely will need to figure out how to do more with less.

The upshot of this situation is it presents a prime opportunity for talent managers to prove their worth and business impact to senior executives.

"This is a great opportunity for talent managers to really trumpet what they're doing from an integrated talent management perspective," Oakes said. "The talent managers that are showing some kind of ROI to top-level management, those are the ones that are going to rise to the top. Any CEO asked by a shareholder at an annual meeting would say, 'Our people are our most important asset,' and the talent managers that become the sidekick to the CEO to help him or her implement that phrase become incredibly valuable to the company. The economy is helping talent managers and giving them the opportunity to showcase that."