Upgrading in the Downturn


We are a society of consumers who have become accustomed to using something, throwing it away and buying a newer and better version when the whim takes us. We no longer have long-term relationships with our phones, TVs, music systems, cameras, cars, or clothes. Instead we are seduced by extra memory space, extra megapixels, extra wattage, extra horsepower and any opportunity to upgrade. An ever demanding client base forces hotel companies to keep up and to upgrade their product and offerings on a regular basis: HD TVs, iPod dock, in-room Nespresso machine, to name but three. In one area however there is rarely any mention of upgrading and that is in the area of talent. For the most part a company’s employees come and go of their own volition or in a small number of cases due to underperformance or nefarious act. Seldom does a company look at the bulk of its employee population and think “Hmm, have we really got the right person in that role?”

The current economic environment however is providing hotel companies with an opportunity to do exactly that and to upgrade its talent. Organisations which are able to see beyond the next month and ahead to the eventual recovery, whenever that may come, recognise the importance of having the strongest team in place to take them not only through that up cycle but to get them through the down cycle first in one piece.

The majority of hotel companies, whatever their size, have been forced into implementing significant cost cutting measures these past several months. This has naturally led to redesigned organisational structures and job cuts as corporations seek to streamline and introduce operating efficiencies. Reducing headcount is a compelling incentive to making sure that existing resources are used to the optimum. Many hotel organisations have been breaking down silos and increasing the span of responsibilities for the executives who are left. In some cases for example the number of geographic territories has been reduced with the result that a team of regional executives may now be looking after their existing region plus one other. At the large chains, some roles which were previously brand specific are now being made redundant and the responsibilities transitioning to a multi-brand function. As current jobs are redesigned and given greater responsibility and remit, so the need to have the best people possible as occupiers of those jobs becomes paramount.

Redundancies should be less about finally having an excuse to get rid of the expensive baby boomers and be more about retaining the cream of the talent and getting rid of dead wood. Depressed market conditions help to expose underperformers within an organisation as the level of scrutiny ratchets up. Sales, Finance and Operations are three areas where failure to steal market share from competitors, identify and eliminate costs and streamline processes, does not take too long to reveal itself.

In companies’ favour as they assess their internal talent strength is the fact that the pool of available replacement candidates has rarely been richer. More than in past recent downturns where it was typically the ‘B’ and ‘C’ players who were the first to be let go, this time there are a lot of ‘A’ players who have also found themselves victim to the severity of this recession. The job market has been turned on its head in the past 12 months and companies are today faced with an abundance of displaced talent. This results in an enhancement in the quality of recruitment as companies, faced with difficult choices to make between a number of highly qualified candidates, become more demanding in their expectations and requirements. As Paul Devereux, of University College Dublin – Department of Economics, notes in his study ‘Occupational Upgrading and the Business Cycle’ based on empirical evidence from the USA, “Consistent with a job competition model, the education levels of new hires within occupations are higher when the unemployment rate is high . . . The results are consistent with employers responding to a greater supply of educated workers by increasing hiring standards.” Competition for jobs is fierce at present and the impact of this should be a rise in the overall quality level of those who remain in employment.

The level of choice a company now has when hiring makes it incumbent on the hiring organisation to be very clear and exact on what the requirements of the job are, now and in the future, so that they end up only hiring ‘A’s. Sorting the wheat from the chaff when looking at candidates does take more time now but the cost of getting it wrong could be huge. Of course companies may not need to look outside their ranks but to do this they need to be able to accurately assess their in-house talent pool and identify their internal ‘A’ players. In my experience, very few hotel companies have taken the GE approach of sorting their management into A-, B-, and C-players. Now is the time to do so in order to make sure that where possible the As are held onto and that A-players are occupying key roles in the new look organisation.

As companies therefore reengineer their organisations for the current downturn and for the future they should take extra care to ensure they have the right people in the right roles and, where necessary, upgrade. Redundancies, headcount reductions, reorganisations, are never pleasant or painless affairs but if they are necessary then companies should make sure that they use the situation to their advantage and take the opportunity to upgrade their bench strength and invest in their future potential.