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What every HR director should do in a downturn

With many house building, commercial property development and major infrastructure projects on hold as a result of economic turbulence, human resource directors in the sector are in unfamiliar territory. By Matthew Hunnybun

With many house building, commercial property development and major infrastructure projects on hold as a result of economic turbulence, human resource directors in the sector are in unfamiliar territory. The vast majority of their recent experience relates to the people management issues associated with times of growth.

Currently, a significant amount of the workload revolves around dealing with distress – much of that as a result of the loss of jobs driven by cost-reduction programmes.

Circumstances are forcing these directors to make their decisions very quickly and as a result it is more difficult to identify and retain their most talented people. Inevitably, there will be people who have gone that, on reflection, organisations should have kept.

Companies need to work very hard to make sure they keep the right people in the business to ensure they are ready for the eventual upturn. Sometimes this means making internal transfers from quiet to busy areas – construction business involved in large-scale, publicly-funded projects is a good example of this in practice.

Further complexity comes from structuring redundancy arrangements correctly from both legal and tax perspectives – to ensure compliance with the law and, if possible, explore any advantages to be gained by tax planning. 

Some firms are very clear on what they want to do regarding tax, so that it will be beneficial from a cost and cash-flow perspective for them and the employees – others are making the wrong assumptions.

There are also planning opportunities around employee benefits and reward which can, where done correctly, reduce employment costs as well as increasing net take home pay for employees. Construction has been quite slow to embrace these but there has been increased interest lately with the pressure on costs. 

External and internal communications are critical and construction industry employers have had mixed success in this respect. HR has to respond to corporate requirements very quickly – which makes it easier not to pick up on all the vital communication issues at stake, and which can make the difference between perceptions as to whether a redundancy programme has been well or badly handled.

Clearly, construction has suffered enormously in the downturn – there is a lot of pressure on wages and issues relating to migrant workers have been well documented.  But there is an underlying confidence it will eventually bounce back. Construction’s downturn is largely related to the events in financial services and the wider economy, so it is unlikely that those who are forced to find work in other sectors during the recession will turn their back on the industry forever. 

Matthew Hunnybun is a partner at PricewaterhouseCoopers

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