Manage Costs. Invest in Talent.

How to do both and succeed in today's environment. The current economic crisis has changed the employment landscape. A major struggle is the effort to manage operating costs while investing in talent to maximize performance. There is heightened pressure to execute business strategy and meet goals, but the first move most companies make during a recession is to cut costs by reducing their workforce.

A significant driver of success is human capital: people. In fact, according to a study by the Aberdeen Group, 58% of organizations surveyed rated people as having the greatest impact on executing business strategy. This finding isn't surprising. After all, people produce products, deliver services, process paperwork and communicate with customers.

As the business environment begins to improve, organizations will have to develop a more flexible workforce and keep fixed costs low. Many will rely more and more on external talent or contingent workers — temporary employees, contractors, outsourced workers and consultants — to achieve business goals in a more strategic way.

As the economy stabilizes, market conditions rebound and demand improves, rebuilding a company’s workforce with contingent staff can be a smart strategy. It's particularly beneficial since many contingent workers can transition to permanent staff, reconstructing a workforce with minimal risk as conditions demand.

As the economy improves, challenges will continue. Businesses have to remain agile. Cost savings is one of the most critical aspects of managing in today's environment. Based on the latest data from the Bureau of Labor Statistics (June 2009) wages and salary account for approximately 70% of employers' costs while benefits account for the remaining 30%.

Source: Manpower Inc, 11/2009