THINK again before you give that much valued employee a pay cut, a human resource consultant says, it may come back to haunt you during the good times.

Kelly Services outsourcing and consulting group senior director and global practice leader for human resource consulting, Lance Jensen Richards, said while it may be easier for companies to execute an across-the-board pay cut rather than job cuts right now, it may not be the right decision for the firm in the long term.

"While yes, retrenchment is a very real problem today, we cannot ignore the longer-term issue, which is, we will still have a shortage of talent, not a shortage of people but a shortage of talent, once the economic crisis ends," Richards said.

He said that companies should execute workforce restructuring programmes with the longer-term view that the current economic situation is a cycle, and that you have to continue to be the employer of choice.

Richards said while a valued employee may not react to a pay cut now, given the current economic situation, it could become the deciding factor which propels the employee to leave the company once the economy recovers.

"This downturn I would argue, is an opportunity to invest in your very best people, hug them tightly, love your knowledge workers, is the message, because you are going to need them even more so, once the economic crisis ends," Richards told Business Times in an interview on Monday.

Having said that, however, Richards acknowledged that governments across the globe have been encouraging organisations to cut salaries rather than jobs to keep unemployment low.

In situations like this, he said, companies had other options such as, not filling in the jobs vacated by retirees, but using the opportunity to develop existing people in the company, or in instances of having to retrench people, it was important for companies to manage the situation well, so that when the economy picks up again the company is seen as an employer of choice.

"You must remember that with a continued shortage of people, and more shifts in technology coming together, its going to create even tighter requirements for the talent. And only a company that manages its workers well now, will come out ahead," Richards said.

(c) 2009 New Straits Times. Provided by ProQuest LLC. All rights Reserved.

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