The new HR dilemma

The past few years have had a positive impact on HR work:

New work culture, digitalization, NewWork, diversity, flat structures, agile mindset, new learning formats, GenY, democratization, value-based leadership – and, above all, a positive external employer image geared towards recruiting markets. However, the last few months indicate that an old spectre is returning: restructuring with staff cuts. Two factors are accumulating in particular: the economic cycle coming to an end – fueled by trade conflicts, the first real victims of digitalization in higher-skilled administrative professions.

At the same time, however, the shortage of skilled workers – driven by demographics – shows no signs of abating. And digitalization is still thirsting for IT experts.

For the first time in history that I know of, there will be quite a bit of simultaneity in the general weather situation: Downsizing with a simultaneous skills shortage.

Really a dilemma?

I see a dilemma for HR in many respects:

In earlier phases, we had HR work in restructuring phases on the one hand and HR work in growth phases on the other.

In restructuring phases, employment law set the pace: no vacancies, intensive, conflict-laden communication. And the atmosphere was sometimes depressive, sometimes busy, the work was very tactical and goal-oriented – the lawyers in the company had the upper hand. People were on first name terms. The doors of the HR department had to be locked. A ‚conversation with the HR manager‘ could cause downright panic.

HR work in growth phases looked completely different: Understanding growth strategies, strategic HR planning, talent fairs, interview days and applicant management, new recruiting tools, the battle for the best brains, moving into new offices, competence management, new working and learning formats, lots of trial and error, creative consulting tools such as design thinking, SCRUM, bonuses and bonus programs, trainee programs, management development, flexible forms of work, trying out new tools, image work for the employer brand. The climate in many HR organizations was and still is: a spirit of optimism! Works councils are becoming partners, HR staff are experimental, energetic figureheads in the battle for the best. And internally, they are creative facilitators of growth, personal coaches or moderators of change. I love this phase!

Many of the new HR managers – themselves mostly Generation Y – have only really experienced HR work in this one positive growth phase. And they usually see themselves in the second role.

Can they really restructure when it comes down to it and the future of the company depends on it? I don’t just mean professionally/technically, but also in terms of their own role, the form of collaboration – the slightly different climate.

A new simultaneity

I believe that the massive simultaneity of downsizing and the battle for talent is initially contradictory – on completely different levels:

Employer image: How does this go together in an increasingly transparent image market of downsizing – and at the same time being an attractive point of attraction for people at all levels of the company?

Values, attitude, culture: A willingness to change, openness and a willingness to experiment, being allowed to make mistakes requires a very special attitude, certain values. How credible are these if, on the other hand, there are lists of criteria according to which people have to leave the company? How authentic is a project for more ownership – if the right to terminate is in force in an organization?

Competencies: We have already talked about the restructuring skills of HR staff. But what about that of managers? German employment law recognizes the specific role of line managers in restructuring phases. Who then dares to slip into the role of SCRUM master – or team member? And what if important employee skills are no longer primarily called ‚agile‘ – but ‚job-relevant qualifications‘ again?

Structures: What if structures such as job descriptions, job classifications, departmental affiliations, formal qualification levels or attendance, measurable performance criteria can decide who stays in the company?

Restructuring processes are hellishly bureaucratic. How is this compatible with flat, agile organizations?

Is there a way out of this dilemma?

The dilemma can be defused strategically at various levels.

Parts of the company can be legally and communicatively separated into innovative and more complex ones. Siemens and the energy companies are currently doing this. Or the approach of restructuring very quickly and then quickly returning to a positive culture. If that really works. In many cases, interim managers are used as ‚bad guys‘ to ‚protect‘ their own managers and HR managers. This also has limits on credibility as a whole.

There is also some tactical experience from M&A integration projects on how to solve the balancing act between simultaneously leveraging synergies – while still looking ahead together – in the project approach and in terms of communication.

Strategically, competence management is once again the key: in terms of downsizing, employment law is primarily concerned with jobs that are lost. Moving away from this and thinking in terms of skills that will be needed in the future creates a different solution-oriented approach. Where are the employees‘ hidden skills? Where can they still be used? Where can people be (quickly) upskilled?

All these approaches help, but do not solve the fundamental contradiction.
Although labor law does not really recognize the need for growth and restructuring at the same time, it is basically completely normal in phases of change. The goal would be to shape one’s own culture and values in such a way that they promote both a willingness to change and openness and thus generate external attractiveness, while still giving an organization the legitimacy to separate.

In my opinion, the real test of how credible this culture and values really are would be to design a staff reduction in such a way that it does not damage the positive values of an organization. For me, this would mean moving away from fair-weather slogans and consciously confronting this dilemma as a management team.
How can we as an organization authentically stand by our ‚agile‘ culture and still be allowed to deliver critical messages?

This requires a transformation journey and a corporate narrative that is authentic and does not ignore negative aspects – but rather confronts them. Otherwise, leadership ideals copied from management books are quickly exposed. Does our open culture also work in bad times? Even if labor law effectively forces us to remain tactically silent?

The HR organization depends on the management team being clear at this point. And it then needs room to maneuver. The leeway not to have to extract every last cent in separation negotiations. The leeway not to be measured by the processing of ‚hit lists‘. The leeway to keep an eye on the company’s interests and still be able to meet the individual needs of employees. For example, if an employee could leave in a year rather than now. Or needs very specific support on the path to self-employment.
Creative, amicable separation formats and exit scenarios that can even create a win-win situation are possible with a little ‚agile‘ awareness and a little more budget for the time factor.

This is where we have to weigh things up:

How much more time, money and flexibility is it worth to us to avoid major damage to our corporate culture? Do we really have to pull out all the stops in terms of labour law – and accept polarization (including with the works councils)? The prerequisite for this would of course be that the organization does not have its back to the wall economically. Or is measured by purely quantitative KPls from the distant corporate headquarters – or is remotely controlled by external consultants. HR managers need a lot of empathy, creativity and mediating skills in addition to knowledge of employment law and strategy.
I am convinced of this:
There is an appreciative separation culture that can even increase the attractiveness as an employer marke and does not have to be in conflict with a human transformative work culture.

So there are ways out of the dilemma.