Corrections or additions?
This article by Kathleen McGinn Spring was prepared for the July
25, 2001 edition of U.S. 1 Newspaper. All rights reserved.
Don’t Downsize, Opti-Size
What a difference a year makes. When
took over as director of human resources 13 months ago at Frontier
Systems, a 150-person IT consulting firm based in Edison, IT guys
were gods, giving the nod to a lucky employer only if the salary
in front of them was well into the stratosphere. "Last summer,
the atmosphere was still very bullish," Kumar says, "very
upbeat. The dot-coms were still around. Recruiters were having the
toughest time of their life."
That was then. This is the summer of lay-offs and renegotiated
Employers, and not just IT employers, are on top of the mountain
Should they gloat and slash, or maybe do something smarter? Kumar
offers some answers when he speaks on "Human Capital: A Strategic
Asset or a Cost to be Contained?" on Thursday, July 26, at 4 p.m.
at the Courtyard Marriott in Princeton at a seminar sponsored by the
New Jersey Technology Council. Other speakers include
of Princeton Softech and
Kumar, who holds a bachelor’s degree in science and an MBA from IIM
in India, spent four years in human resources with Royal Dutch Shell,
working in London and in India. Then, just before he was recruited
by Frontier, he spent a year building Careerage.com, a recruiting
website that was started to become competition for the likes of the
Kumar has seen the IT wave crest, and then crash. He points to an
article he wrote for TheNewspaperToday (www.thenewspapertoday.com)
in May. In it he set down the pain of Indian programmers, enjoying
flying families over to the States to see the sights last summer,
and packing up to go home this summer. He says that those fortunate
enough to have jobs, no matter what their nationality, need to settle
for hourly rates that are a good 30 to 40 percent lower than they
were last year.
"Basically, it’s gone to the other side of the spectrum,"
Kumar says. "IT has taken a big hit. A lot of projects have been
canceled or deferred. There are a lot of IT professionals available
in the market."
The same could be said for telecom or banking, for any number of
caught in a whiplash economic turnaround. Inventories are up, projects
are down, and workers, nearly impossible to find just one year ago,
are once again available for many positions.
This can be a golden opportunity for employers, says Kumar. But those
seeing it as just a chance to cut costs could be left behind when
the economy revs up again. Here is his advice for turning the downturn
into a positive by implementing smart human resource policies.
blindly," says Kumar. Many employers, he finds, just say "`How
many people do we have to cut?’" In his view, the question needs
to be turned around. "It should be, who should stay? Not, who
should go." The idea should be to become more fit, not just more
lean. Using a comparison familiar to any dieter, he says, "You
can lose weight, and lose weight, and become anorexic, but you will
not be more fit." Same thing with a company. Indiscriminate cuts
can leave it weak, in no shape to climb out of the downturn.
size, and that, he says, is what companies need to strive for in a
downturn. This may be the only chance a company has to snag that
programmer or visionary R & D professional. When the economy is
it is tough to sign on even the second or third string. Now it might
just be possible to recruit — and win the long-term loyalty of
— outstanding talent.
"In some critical areas, perhaps design, R & D, and customer care,
this could be the time to be upsizing," says Kumar. "These
are the people who could provide you with the mechanism to come out
of the downturn earlier and stronger." Getting and keeping this
talent is what differentiates great companies, "in good times,
and in bad times."
companies have downsized three times, four times," Kumar says.
"That is not good. It is bad for those who stay behind."
morale, he advises, and lay out all the bad news at one time. "You
have to decide in one go," he says.
cut, but salaries are being frozen. The workers who remain behind
may accept this, Kumar says, if their employer is honest with them
and keeps communicating. "You need to prepare employees well,"
he says. They need to know what is happening with the company, how
they will be affected, and whether lost raises will be made up in
the future when the economy turns again. The tone could be set by
a talk beginning something like this, says Kumar: "This is what
we were forced to do. Now this is what we are going to do moving
Keeping the best people boils down to a matter of trust, he says.
optimist, is looking for a pick-up in an activity during the first
quarter of next year. But he cheerfully admits that "there are
as many opinions as people you talk to."
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