Changing for Good

How recruiters can protect profitability while implementing business change

Within the dynamic international recruitment sector there continues to be a flurry of mergers and acquisitions. Alongside this many companies are implementing changes in response to market conditions, technological advances and the demands of their clients. However, these changes don’t always result in increased profitability. In fact, in some cases, change damages the bottom line and leads to a reduction in profit.

This tends to happen when a business fails to understand the real costs of the change implementation, or doesn’t fully assess the costs versus the benefits of the proposed change. Others attack the costs so aggressively that they lose sight of the revenue.

So how can you manage change effectively and successfully? I have eight tips I believe every recruitment professional should be aware of when it comes to protecting profitability through a period of change:

1. Holistic thinking

Don’t decide on a change plan and then cut the resources allocated to implementing that change. It sounds obvious but we’ve seen, far too often, that the people or projects needed to implement cost cutting are then subjected to cost cutting themselves.

A common example of this is when contractors are hired on day rates, rather than taking on interim executives. As recruitment professionals your role in helping the company is to ensure they understand the real costs of ‘quick fix’ recruitment rather than a longer term recruitment plan. Whilst, the strategy of day rates can appear to save money in the short term, freelancers will still need a touch point with whom they can co-ordinate their input and feedback on a daily basis. Any project undertaken needs to be properly planned and fully managed until the very end – and this includes the people.

When discussing cuts, drive the conversation towards the bigger picture as well as the wider impact of subsequent changes. Including factors, aside from costs, can have a more long term benefit to the company.

2. Set appropriate Key Performance Indicators

Every change project should focus on growing revenues and profits – regardless of its initial motivation. To do this you need to set fair and reasonable KPIs – and these must be in the best interests of the company as a whole, not just individual parts of the organisation.

Focus your KPIs on revenue and profit increase – not cost cutting. You will find that instead of the conversation being built around bonus structures and salaries as a way of reducing costs, it will be centred around a positive dialogue exploring ways to expand and increase revenue. And this brings
us to…

3. Incentives and remuneration

Everyone needs to be pulling in the same direction within a company. To achieve this remuneration and incentive policies need be coherent with the new vision of the business. The only way to ensure this to include the HR team, management, employees and shareholders in the conversation. If anyone benefits (or is perceived to benefit) at the expense of others a resentful culture will be created and people will move towards ‘looking after number one’ rather than working towards the good of the entire organisation. 

Bonuses and remuneration is an area where HR teams can bring real added value in the change process. When dealing with remuneration and incentives, ideally base around 80 per cent of the monetary reward on overall company performance, with only 20 per cent towards individual performance. This can help to prevent a competitive culture while encouraging a positive, cohesive working environment.

4. Recruiting external help

Shift the focus away from the cost of the project and towards the potential benefit. A single-minded focus on price can see a steep decline in quality and, ultimately, value. Directors need to take a step back and consider the potential value that can be gained from a change project – before they then look at the costs. Once the value is understood it is easier to allocate a sensible budget. Recruiting a dedicated person with specialised skills in this area can bring in a much needed outside perspective. Think in about different ways to enrich your output, rather than just reduce your costs.

5. Working on, not in, the business

Every senior manager/business owner needs to stop for a moment and consider the strategy for their business/department. It is very common and far too easy for managers and CEOs to get stuck working in the everyday needs of the business, rather than on its future growth. This can lead to a loss of perspective and result in a lack of clear aims and objectives. A great way to mitigate this is to organise regular strategy away-days. These can create a more coherent and cohesive culture where staff feel supported and appreciated.

6. Remember your customers

Change projects often ignore the impact on the customer. While looking at ways to cut costs, the customer experience is forgotten – and this can quickly lead to a reduction in the value of the business.

Comet is a good example of this. The company was founded in 1933 as Comet Battery Stores. Its sole service was recharging batteries for customers’ wireless radios. Since then it has undergone several successful transformations. By 1975 the Comet chain had 50 outlets.

But, as the pace of changed increased in the early noughties, Comet was unable to keep up. Wal-Mart entered the UK market and took over Asda, forming the world’s largest retailer with the ability to drastically slash prices. Then came the global economic crash of 2007 resulting in increased levels of unemployment and lowered disposable income. Finally, to add to their troubles, online retailing took off damaging many traditional bricks and mortar businesses.

However, some managed to survive – so why didn’t Comet? The answer lies in their customer experience and feedback. In response to the combined force of these market pressures Comet slashed prices. However, this was done at the expense of their customer service. Looking at reviews on sites such as Trust Pilot it’s clear that customers were dissatisfied with the level of service. To get people through the door they needed to transform their consumers’ experience; they needed to make them feel good about buying at Comet. Ultimately, it was this failure that led to Comet’s demise in 2012.

The lesson? Make sure your customer’s views are always incorporated into any changes you plan to make within your business. Consider introducing a feedback form with every purchase or carrying out a comprehensive market research survey. Never forget that your customers are, essentially, the most important stakeholders in your business and it is their opinions and views that matter most. 

7. Innovation

Innovation is an essential part of growing a brand and ensuring it prospers. Any successful business must continually seek new ways to innovative and develop. The best way to do this is by having a clear strategy with a focus on learning and development. HR teams and recruitment specialists can add significant value in this area by organising training that ensures each individual sees the benefits of innovation, has the skills to think creatively and develop solutions for problems, and knows how (and to whom) to pitch their ideas within the organisation. 

An example of this lack of ability to innovate is Borders. After decades of phenomenal success, the bookshop was finally closed in 2009. Originally the company was run, managed and supported by a team of book lovers. But in 1992 it was bought by Kmart – a discount department store. This saw most of the senior management leave the company. As the world turned digital Borders was simply not able to adapt as it had lost the people who really understood the book business and could see into its future. Instead of adopting a cohesive change management strategy, based on innovation, they lurched around reacting to problems rather than looking for long-term profitable solutions. This lack of a clear, balanced approach led to a series of miscalculations and inadequate responses and their ultimate closure in 2009.

8. Make your staff happy

The workplace should be fun. This is not just a ‘nice to have’ – it is a MUST. Far too many employees are being abused in today’s workplace; suffering from low wages, long hours and poor leadership. This leads to disillusioned employees who see work as ‘the boring bits between the weekends’. As HR and recruitment experts, pull out the stops to help staff feel empowered, inspired and appreciated. Incorporate social events, birthdays and perks in your company calendar. This doesn’t have to mean splurging the budget – it doesn’t cost a lot (if anything) to make people appreciated, but it can have a huge impact on your change plans and your profitability.