Have you ever played Jenga? That’s the game where you build a tower with wooden blocks about 4 inches long by half an inch wide and high and then try to take blocks out without the tower crashing down around you. The Human Resource area resembles that game in many ways.
The Impact of Change
Human Resources is made up of many different areas like staffing, compensation, benefits, employee relations, training, labor relations, employee recognition, development and more and when you make a change in one area, it will almost certainly impact another area. And, if the change is significant, the whole tower (organization) could crumble. For example, if you are forced to give your employees a significant increase in pay due to a contract, legislative change of simply market supply, and your profit margins are slim with no possibility of an increase, then you may be looking at closing down your production because it is no longer profitable.
Responding to Change
So how do you plan for or respond to those changes. The answer is the same for all scenarios – make sure you have a good strong HR professional helping you manage your HR processes. You may not have total control over some of the changes like legislative changes or market supply, but both of these impacts show indicators or trends that can be tracked and planned for so that your organization can be ready for them. Also, your HR professional will be able to show you how to minimize the effect of the change and plan out which areas of HR will be impacted. More importantly, your HR professional will help you understand the breadth of the impact of the change. A minimum wage increase does not simply impact compensation. As it drives up compensation levels, it also increases CPP and EI contributions and any education and health taxes based on compensation. It also drives up the cost of benefits and the resulting premiums. In essence, your training and development, sick time, vacation time and statutory holiday costs have also risen due to the increased compensation. On the positive side, you may have become a little more attractive in the labour market and hence reduce your costs of hiring etc.
Jenga can be a fun game, but your business is not a game. Protect yourself from having that tower collapse around you. Get to know the intricacies of human resources and engage an HR professional to help you navigate the mine field and ensure that you are planning for the changes and preparing your business to deal with them and continue to be successful.