The biggest challenge facing HR right now is the relentless pressure from management to find new ways of cutting costs.

This is like one of those nightmares where the goal is tantalizingly close but simultaneously seems to be getting away from you. Bad economic news keeps coming; further cuts are deemed necessary; and previous success in cutting costs is quickly forgotten.

The final issue of redundancy is off the table for State-Owned-Enterprises but even for local private companies and foreign companies, redundancy for knowledge workers is definitely a final, final choice.  This is true because with this kind of redundancy the intellectual property and core competence of your company walks out the door to your competitors.

With the fall in demand from the first world countries rippling across to China, avoiding redundancies may no longer be an option. Some HR have made the cut already but most have not had to take such drastic action yet.

As a stop-gap Human Resources staff have cut the contingent workforce; whittled down or eliminated bonuses; introduced a hiring freeze; banned all travel; shortened working hours; forced staff to take outstanding holidays; localized expatriates salaries; introduced car pooling; cut training; cut children’s education subsidies; canceled support for MBA programs; reduced health insurance cover; pushed employee social contributions (4 Funds) back to the employee; and hired interns where they would normally have hired experienced professionals.

Now it seems the only thing to do is to sit tight and hold on but there are more savings that can be found, if great effort is made to face them. With so many options used up already, this can seem like an impossible task.

Game’s Not Over…

A recent study, issued by Wharton professor Jonah Berger and Devin Pope, gives support to the idea that solutions can be found, even when it seems impossible.

The study was based on 6,000 recent college basketball games in the US and the focus was on teams that were trailing by a small margin at half time. Based on statistical analysis, those teams should win only 46% of the time, but the authors found that they won 51% of their games.

Somehow, out of the depths, these teams found that extra ’something’.

The authors suggest that this has lesson for HR. They think that in the workplace employees should be more motivated and thus perform better when they are close to, but just short of, an important goal.

In the present context, this would mean that HR gets the courage and creativity to identify and face the really difficult choices in the cost cutting exercise.

These would include shortened work weeks, temporary plant closures, and unpaid leave. All of these are legal options in China provided you follow the China Labor Law. These choices would always be on the table but they are hard to face because there is such an admission of defeat involved, and a loss of face.

Looking at things from the point of view of winning a basketball game though, maybe they are the equivalent to the three point throw from half-court. It’s a huge risk; it’s takes a brave person to try it but it may be the only way of avoiding actual redundancies.

Tip ‘O the Hat to the HR Cafe