A Corporate Katrina? Change is in the Air and Things May Never Be the Same Again

Unstable markets, wildly fluctuating prices for commodities and finished goods and increasing doubt about the future role of fossil fuels is causing some business leaders to wonder what the future of doing business looks like. Cancelled sales, postponed projects and hiring freezes are now common. For many companies, the current crisis feels like an economic version of hurricane Katrina, difficult to predict and even harder know how to prepare or react.

At a recent HR conference, I met an HR Director who said these words, “We have been doing the same thing for fifty odd years. It works for us.” I had mixed reactions. Part of me appreciated the confidence in her voice and the sense of stability it conveyed. The idea felt warm and safe. If something isn’t broken, why fix it, right?

At the same time, I knew that for any company to believe that doing nothing, either because of or in spite of our current economic instability, just isn’t wise. There are too many other factors involved and ignoring any one of them might prove to be a fateful, and possibly fatal, decision. We do not need to hunker down and ride out the storm; we need to take action.

Let us consider some of them.

In the past year, there have been numerous exposé articles about the highly paid senior management of underperforming organizations. Historically, we have been able to conceptually separate the individual performance of executives and the other factors which affect the performance of organizations. There is always more going on than a decision from the corner office.

The CEO is responsible to the board and the board members know what they are doing, don’t they? Ultimately who is responsible for the success of an organization? The board is elected by the stockholders. The buck gets passed once again and no one seems to really know just who is responsible.

We seem to be entering an era that applies different meanings to the words accountability and responsibility. Taxpayer, and therefore, voter anger and resentment over the government bailout of the failed banks typify this shift. Corporate America is confronting its definitions of leadership.

We are learning lessons that a few CEOs have known for a long time. The true success of an organization depends on how that organization functions as a vibrant entity, a living organism, inclusive of its work culture, its business processes, its ethics and its role in the lives of the people who work there.

Evolving technology changes the way we do business almost on a daily basis, yet we are often unprepared to adjust and respond to those changes. We no longer have the luxury of time to figure out how to use new technology to our best advantage. The decision making processes that have given us 20 years, for example, to fool around with variations of e-learning no longer apply.

The baby boomers are going to retire whether we like it or not. Businesses have received yet one more reprieve from the brain drain of boomer retirement since retirement accounts have once more suffered record losses. This time, however, boomers are not in a position to simply add another ten years to their careers like they did the last time around. They no longer know what retirement will look like and as a consequence, our leaders are less able to predict the composition of our workforce.

This crisis begs another nagging question. We have democratized the stock market with on-line trading and we have placed the responsibility for planning for our retired workforce in the hands of individual workers. Defined pension plans are all but non-existent. The future of Social Security always seems to be in doubt. And, now individual retirement accounts have been gutted by stock-market instability.

We have taken the planning responsibility away from corporations and placed it in the hands of individuals without providing adequate education. They have had to rely on questionable sources of public information, the “advice” of investment sales people and on 401K administrators who legally can provide only the vaguest direction. Combine uneducated decisions with a volatile market and we have people who are now looking at their government for help since their employers have washed their hands of them.

Where do we expect the government to get the funds it will need to help them when the traditional source of income, the lower to middle income tax base is tapped out? The corporate voices who wanted to eliminate the predictable expense of defined pension plans are now hearing what may well be their raucous corporate swan song. Whether or not we see direct taxation or simply the loss of tax breaks, we might predict that the job of the CFO may grow considerably more difficult. In hindsight, how viable was our decision to change our retirement planning strategies?

The issues revolving around the multigenerational and multicultural workplace are increasing in complexity. We attend seminars on understanding the different generations but what do we do with that information? Organizations are struggling with engagement, diversity, inclusion, recruitment and retention. They are faced with the pending retirement drain on experience and skills and their organizations will soon be in the hands of those less experienced and far less self-sacrificing.

Economic crisis only exacerbates these issues. Increasing unemployment makes people available but there is a gap between the people who are available and the people we think we want to hire. Every recruiter I know, both corporate and independent, reports being inundated with the resumes of people who are considered unqualified. What is wrong with this picture? Are there simply no qualified people or are we setting our hopes on finding a super hero?

Rather than fretting over the difficulty of finding the right person to fit the job, we may have to rethink the position. The problem is if you change one job description, you may have to change five more. Does your company enjoy the level of engagement and commitment that will adjust to these changes or will you need to hire two people to fill one position? Which of these alternatives is really the most expensive in the long run?

If we are honest, I have not pointed out anything that is completely new. We simply do not like thinking about these concepts. We would prefer, like that HR executive at the conference, to continue to do things the way we have always done them.

While we still have time, we are going to have to endure the discomfort of change yet again and focus on building and nurturing a work culture that not only embraces change but maintains the engagement, commitment and accountability necessary to sustain the organization no matter what the economic climate.