Gordon Clark, worldwide partner, Mercer: The western world stands on the brink of recession, while the East continues to grow. We are in unprecedented and uncertain territory, so how is a global multinational organisation to respond?Tough times can make individuals and companies stronger, but they also highlight and punish outdated strategies and thinking. It will matter whether employers view people as an investment to be managed, or an expense to be managed.
Leaner management structures and a global shortage of talent at all levels mean an indiscriminate cutting of headcount may be shortsighted. Recessions typically last less time than it takes to hire and train staff. Last time round, many companies had to pay more to hire back the talent they had let go just a few months earlier. This time they may not be so lucky.
An alternative to the costly and time-consuming “hire, fire and hire” is to focus on the efficiencies to be made in employee benefits, which offer a number of opportunities.
Companies should consider de-risking or divesting legacy defined benefit pension arrangements, where innovation and competition are resulting in a more liquid market in pension liabilities. Also, changes in pension legislation around the world act as a catalyst and an opportunity for change.
Successful global multinationals should turn up the dial on talent management and pay-for-performance initiatives. Accurate identification of the company’s future talent will help increase the chances of retaining it.
The defined contribution (DC) pension arrangement that allows employers to worry less about pension liabilities could now be a concern for staff. If account balances are falling, employers should consider whether employees are well equipped to respond resourcefully or are distracted at a time when companies need focus. Employers should also look to the East. There the problems of attracting and retaining talent are similar, but benefits packages can be quite different. A number of countries permit DC retirement saving to be used for housing, for example. Debt management, housing, pensions and long-term healthcare are the concerns of today’s upcoming and tomorrow’s talent. Help staff to manage these and they will reward you with focus, loyalty and contribution.
Gordon Clark, worldwide partner, Mercer