The Game-changing Potential of HR

How efficiently the human resources department manages the impact of the economic recession could decide the fate of their firms in these tough times. Rebecca Goozee takes at look at what is happening in the top HR performing organizations and the role it is playing in keeping employees motivated and ensuring talent stays put.

“This pause has allowed us to step back and look at some of the areas we need to improve to ensure that our HR organization can continue to play a role in helping with business”
-Gwen McDonald, NetApp

Whether or not the economic recession is behind us there is no doubt that many companies are still experiencing the full effects of a damaged economy in every function of the firm, including human resources. While tackling the previously unknown challenges of a recession, the HR department is also charged with ensuring that employees stay inspired and motivated even in today’s tough times.

While some aren’t doing so well, others are rising to the top, as demonstrated by the companies on this year’s Fortune’s 100 Best Companies to Work For list. So just how and what are these companies doing differently? Well, according to Fortune, culture continues to be the most important aspect of what makes a company great. And topping the list was NetApp, the San Francisco-based data storage and management company that has been steadily rising on the list for the past six years running, and continues to grow revenues while boosting employee morale.

NetApp’s SVP of Human Resources, Gwen McDonald, believes that HR will continue to play a pivotal role in assuring that employees feel that they have the ability to continually be motivated and productive during the current downturn. “We continue to focus on effective communications so our employees understand what’s going on with the business and what we still need from them in terms of driving our business forward,” says McDonald.

By keeping employees engaged and communicating with them, it keeps them motivated suggests McDonald, who has been working in a number of ways to ensure that employees feel valued at NetApp. First of all is the quarterly meeting that is facilitated by CEO, Dan Warmenhoven, and COO, Tom Georgens, which gives an overview of accomplishments the quarter before and focuses on priorities for the upcoming quarter.

“We have also been creative in looking at social media,” explains McDonald. “We have in place what we call NetApp Live, which is an opportunity for employees to ask questions and find out what’s on their mind. We also have video on demand where various leaders talk about business opportunities and address key areas for employees. Also our intranet keeps top of mind on critical areas, from business to HR and marketing. We’ve found various levels of communication that keep our employees engaged and continue to focus on how effective we are at communicating.”

Nick Mutton, Executive Vice President of HR for Four Seasons Hotels and Resorts maintains that programs that recognize the best employees in both customer service positions and “heart of the house” positions are a mainstay of employee morale. “We also recognize the special efforts of those employees who go out of their way to resolve guest or fellow employee issues,” Mutton says of the hospitality giant. “At a time of slower promotion opportunities, we encourage our employees and managers to cross-train in different positions to expand their skills and adaptability.”

Changing priorities
While historically, NetApp has seen double-digit growth in terms of both revenue and the number of employees, and the economic situation has meant that, from an HR perspective, it has been possible to stop and look at the company’s transformation. “This pause has allowed us to step back and look at some of the areas we need to improve to ensure that out HR organization can continue to play a role in helping with business and change readiness,” explains McDonald.

For Judith Edge, Corporate Vice President of Human Resources at FedEx, the recession highlights the business benefits that the function can bring to the business. She believes that HR should be a strategic partner proactively collaborating with different business units and operations. “We work closely with legal, finance and other teams so that we are able to analyze data, spot trends, identify risks and opportunities and then help develop action plans to address those opportunities,” explains Edge. “We also work to ensure that HR priorities are aligned with key business strategic objectives, whether that’s recruiting, performance management or employee relations.”

Edge goes on to explain that the economic crisis has created new priorities in human resources at FedEx. She sees much more emphasis now on performance management and on technology to deliver training or information. “There’s more emphasis on the leadership pipeline because even though we have this economic crisis, we still have a large generation of baby boomers who will eventually retire. They may have delayed retirement for a year or two, but eventually they will be leaving the job market and we still have a high focus on growth, especially internationally, so I do believe that those new priorities have been highlighted by the current economic situation,” she says.

Going on to explain how the company are working on the value of leadership and performance management as priorities, Edge reveals where the company are looking to step up. “We’re pushing the visibility of executive leadership teams and we’re increasing recognition for employees and ensuring an open channel with employees,” says Edge. “And it’s not that we didn’t have that before, but it’s just that we have recognized the importance of having these things in place now more than ever before.”

Edge goes on to say that she sees many companies struggling with performance management tools that are perceived to be effective at distinguishing performance across an array of different levels. FedEx have had a performance system in place for a number of years and is currently undertaking a full review of it to see if there is a better way to structure performance management at the organization. “We want something that provides leadership with a visible dashboard that those leaders can look at it and monitor on a monthly basis to see how their objectives are cascading down into the organization and how those employees that have input into the accomplishment of strategic objectives are contributing and progressing towards completing those deliverables.”

Mutton agrees that new priorities have emerged during the downturn and admits that the Four Seasons are focusing on learning and training in these tough times, despite a reduction in training being among the seven most popular actions companies are taking in this recession. “We aim to be a learning organization,” he says. “We continue to make training priorities top of our list and are constantly reviewing our programs to find efficiencies to ensure they are relevant, job-specific and create measurable outcome.” Mutton goes on to explain the importance of e-learning at the company, pointing out how effective and relatively inexpensive the program has proven to be. “We are also continuing our middle and senior management learning programs in anticipation our continued and rapid growth,” he adds.

At NetApp, McDonald has also been reviewing training and is looking at different methods in terms of how to deliver training, given how critical the function is, particularly in tough times. “We’ve looked at how we should continue to deliver training, but we’re also trying to balance out costs and our ability to stay within budget. We’ve seen a drastic reduction in face-to-face classroom training and we’ve spent more time looking at e-learning and web-based learning. Employees absolutely need to continue improving their skills, particularly around project management and cross-functional boundaries, leadership for example is key for us to sustain but we’re simply looking at alternative delivery models.”

“There's still growth going on and I'm sure that's true of many companies out there, I just don't think it's as intense as it was”
-Judith Edge, FedEx

Leadership
Over at FedEx, Edge considers there to be two main training categories: critical training like leadership development and continuous training that is important but that is not necessarily critical, such as presentation skills. In terms of the former category, Edge is keen to continue delivering it, and while not in the exact vehicle she would like, she has been utilizing technology so employees can have access to training online, which is a lot more economical than traditional classroom learning.

“I do think it’s important to maintain our critical programs like leadership development, and as such we have maintained two of our critical programs, Purple Pipeline and Excel. The first is a development program for high potential managers who we want to develop and move up in the organization, and the second is targeted at the vice president level who are looking for promotion and to move up in the organization. So we have taken action to use different delivery methods for our important training, but we have managed to maintain what we would call our critical or essential training.”

So what impact does this focus on training have on employees? Well, Edge believes that employees appreciate the continued focus on leadership development. “During these tough times we’re asking people to do a lot more, so when you recognize an employee for a special program like Purple Pipeline or Excel, it’s flattering to be nominated for that because not just anyone can go into those programs and it’s a way for us to recognize top talent while continuing to develop their leadership.”

Edge goes on to explain about the online system at FedEx called SkillSoft that delivers 2000 different training courses that are open to all employees from home or at work allowing them to continue developing their skills. “Employees become more marketable and are always able to continue developing their careers at FedEx so I think those things have gone over in a very positive way,” adds Edge.

Challenges
Beyond training are a number of challenges that the economic crisis has highlighted including tough decisions regarding a reduction in the workforce. With the unemployed count going up daily in the US this is an especially tough challenge, particularly when you consider that how companies handle this tricky situation will also reflect back on them. Last December at FedEx Edge had to reduce the number of personnel and the number of work hours at FedEx Express and FedEx Freight networks in a number of locations. By streamlining information technology systems and making pay reduction it was possible to minimize the further impact to employees across the enterprise.

But, in March, FedEx was forced to take another employee action. While it impacted less than one percent of the workforce it was still a tough decision. “We’ve been able to ensure highly competitive severance packages, outplacement services and opportunities to apply for other positions at FedEx and I think by taking those actions, we’ve been able to preserve our culture while addressing the challenging issues that face so many different companies today,” says Edge.

NetApp also faced an employee reduction earlier this year. In February about six percent of the global workforce was cut. McDonald cites the global economic crisis as the driver behind evaluating several areas in the company that were not performing adequately. “We looked at balance in terms of how we continue to look at cost and the move to lower cost areas like India,” she explains. “The second area we are looking at is around emerging markets and how fast you get into those markets given their solvency, which is vital given the current situation.”

Recruitment has also been an issue as companies are unable to recruit as they normally are, suggests Edge. She reveals that while FedEx are committed to reducing costs they are not willing to compromise on service and so the organization are still working to ensure FedEx’s position in the long-term with expansion plans. “FedEx Express just improved its international domestic services into Mexico and in China we began operations at our new $150 million Asia-Pacific hub,” says Edge. “There’s still growth going on and I’m sure that’s true of many companies out there, I just don’t think it’s as intense as it was.”

As the strategic partner in the business, dealing with all other arms of the company, the HR function will always be under pressure to ensure that the firm as a whole is working to the best of its ability, and keeping employees motivated and giving them opportunities will always be a big part of how well the firm is working. It is critical that HR is visible with employees. With a high degree of influence over key decisions made in the company, it is also integral that HR take a leadership role in driving performance management through the organization, particularly regarding the current state of the economy.

Top 10
Even in the current recession, some companies are going out of their way to please employees. As Google slips to number four, 2009 sees a new number one.   

1. NetApp
2. Edward Jones
3. Boston Consulting Group
4. Google
5. Wegmans Food Market
6. Cisco Systems
7. Genentech
8. Methodist Hospital System
9. Goldman Sachs
10. Nugget Market

Top of the pile
You’ve topped Fortune’s 100 Best Companies to Work For list. What does this mean to you as a company?

Judith Edge, Corporate Vice President of Human Resources at FedEx: “It really is our report card because a lot of the selection is based on an anonymous survey so it’s a real affirmation that our leadership team is delivering and it’s a signal to us that we’re continuing to do the right things, even though it’s a difficult economic time.”

Gwen McDonald, SVP of HR at NetApp: “It’s reinforced the reputation of the company. We believe that we have a company that is unique and that our culture is our critical differentiator and being number one is a validation and a confirmation that our employees have a great experience.”

Nick Mutton, Executive Vice President of HR at Four Seasons: “We are honored by this kind of recognition. It validates our efforts and we are thrilled to have achieved this status in many countries around the world.”

Frank Rudolph, Executive Vice President at Devon Energy: “It’s great recognition internally that we are doing the right things for our employees. And I would say that it’s nice to get recognized for doing the right things, especially in the climate that we’re looking at today.”