Surviving the Credit Crunch: How Human Resource (HR) Strategies Can Help

The "Manager of the Century," Jack Welch, discusses the role of HR in business. 
He was named Manager of the Century by FORTUNE magazine in 1999. Then-Chairman and CEO of General Electric Company (GE) Jack Welch was heralded for not only, "anticipating the new world's changes ahead, but for acting on them...". Welch was Chairman and CEO of GE between 1981 and 2002. He also co-authored the book Winning with his wife, Suzy Welch.

Recently I watched Welch field questions during the Jan. 2009 University of Miami Global Business Forum.Their communications director graciously provided HRTools.com with a link to its video presentation that includes a Q & A session with Jack Welch.

First of all, Welch asserted that these turbulent times require new thinking.
Moderated by University of Miami President Donna Shalala, she brought up the topic of HR in Welch’s writings. She referenced his viewpoints about HR managers and their central roles in business-planning strategies. She also asked him to comment about his assertion that HR should be the number-two job in any company.

In explaining his disappointment that HR often isn't the number two job in any company, Welch used the analogy of a football team. He asked the audience who is the most important member of any professional sports team organization?  He answered by saying that the person responsible for fielding the team is the most important position. Welch further explained that HR should be the central part of any organization, heading up leadership development and challenging the key players of the organization.

As an employee of a company that serves as a full-service human resources (HR) department for small- to-medium-sized businesses, I was captivated by his compelling advocacy for the HR profession and its important role in the business world.

OK, so Welch was head of one of the largest companies in the world. How can this thinking apply to smaller businesses? Before I answer, let me add that Welch has also been identified as a leader who ran GE like a dynamic small business.

Let’s take the most pressing and overwhelming problem faced by businesses today, the credit crisis. You may ask, "How in the world can HR strategies help a small business cope with the credit crisis?"

Here are some pragmatic ideas of mine that you might hear from strategic-thinking HR professionals:

1. Be agile and frugal: This approach makes sense during all business cycles. For example, don’t buy an expensive piece of equipment if you can produce your product or provide a service using the status quo. It’s more important than ever today, because we’re competing in a global economy. Many of our global competitors enjoy cheaper labor and more government sponsorship than we do.

2. Dream big, but act bigger: Given this down economy, some huge or bold dreams of the future may have to take a back seat to taking action. For instance, now may be a time to figure out ways to reduce risks and monitor every decision with a critical eye—by asking this fundamental question: "How will this decision or action help me make money?"

3. Be creative and resourceful: If you are selling a product or a service, create heroes within your organization. Internal heroes make great role models, and employees should always be encouraged to create and think about ways to save money on business resources. For example, I know of an Internet company whose customer service associate suggested offering discounts on products that customers want to return by mail. Fewer product returns mean increased revenues. It is important to find ways to keep new ideas alive.

4. Finally, choose the right people to trust. Almost everyone these days is looking for someone to trust. Surround yourself with people who have the courage to do what is right. Whether they are potential investors or customers, people are more apt to buy from or invest in predictable and trustworthy businesses. For example, some businesses are considering the value of minimizing risk and saving valuable time and resources by outsourcing HR services to a trusted third party.

Until small businesses get their "bailout" packages, coping with the credit crunch is no cakewalk. As Jack Welch so aptly put it, HR is more than planning picnics and parties. Strategic HR professionals are in the business of energizing your business and its people by moving everyone in the same direction and reaching the goal line.

Some people may wonder: How can HR strategies help businesses cope in an economic downturn, particularly during a credit crunch?