Human resources departments have changed significantly over the past decade or so, as they have become key in the strategic development of a business. But the crisis has brought with it new challenges related to the management of human capital. “During the period of growth the HR department started working more closely with the marketing and communications departments. Now it is not only that collaboration that has improved, but also our cooperation with the financial teams and the support of the IT department,” says Vinciane Istace, Human Capital Partner at PricewaterhouseCoopers Luxembourg. “Solid HR policy can contribute to preserving the competitivity of an organisation. I think this point is still not properly understood in the market.” Istace says HR can contribute to greater efficiency by reviewing information flow, lightening and accelerating processes, and improving internal efficiency while addressing staff costs by finding new ways – supported by technology – to handle certain functions.

Rik Vandenberghe, CEO of ING Luxembourg takes a similar attitude. He explains that the bank has continued to develop its “Easier” project – a series of measures aimed at simplifying both internal and external procedures and communication with employees and customers. “HR has a crucial role in this because it can have an impact on teams or mean that job descriptions may change. They will have to explain that to the employees and to organise relevant training. The crisis has in fact meant that we want to progress even faster on this programme.” Vandenberghe is fully comfortable talking about human resources, because he feels that a CEO should be as involved with HR as possible. “I think it is important because employees are our real capital,” he explains. At ING Luxembourg the HR manager is part of the management board and Vandenberghe expects him or her to provide real feedback. “I expect the HR manager to really challenge me without being afraid. In my position I need someone who will tell me honestly after a meeting what went well and what didn’t, without mentioning who said what.”

At KBL European Private Bankers, head of human resources Bernard Simonet says that although the work his department carries out on a day-to-day basis may have changed, its fundamental role has not. “Human resources is there, above all, to apply the strategy of the management board,” he explains. “HR activity follows the changes that the bank undergoes.” The most obvious cyclical change for Simonet’s department is that since last September, it has stopped recruiting in all but the rarest cases. “The only source we now have to find personnel is our own employees.  If we can only draw upon internal resources we have to be creative. We must ensure that they are well trained and multi-talented so that they can be moved between departments.” This reflects a general trend, especially within the financial services sector, that companies are expecting more flexibility – what KBL chairman Etienne Verwilghen has called “employability” – from their employees. “We have maintained our training budget so that staff can learn new skills,” Simonet explains. However, he says that such a strategy also requires a basic willingness from employees to accept change. “There are certain skills that will disappear, and new ones that will be required. The days of a career where you stayed in the same job for 25 years are over. But that can be very enriching.”

Away from the financial sector, however, employers and human resources managers face a different set of problems. Claude Lanners, director of purchases and human resources at Ceratizit, says that the introduction of chômage partiel at the company’s Mamer facility has significantly changed the day-to-day business of the HR department. Around 40% of the 840 strong workforce are currently affected by the measure, though most of these are on the production side. “Staff have been asking us how it affects them, what their rights are, what they stand to lose. There is no doubt we have had more work since the crisis began.” Extraordinary times call for extraordinary measures, and Ceratizit has asked for all its workers to take a collective holiday during the first two weeks of August as part of its cost-cutting efforts. “Our personnel delegation was not at all happy about that. They want people to be free to take their holiday when they want.” Indeed, Lanners appears to have little time for the company’s personnel delegations. “They have proven to be one of the big problems of this crisis.” But some positive aspects have emerged from the current situation. Ceratizit has expanded its training programme so that employees can gain new skills that will allow them the flexibility to move internally.

Intellectual potential

Indeed, the organisation and structuring of training policy has become an even more vital aspect of the role played by HR teams. “We invest tremendous effort not only in selecting the people we hire, but also in their development, their training, very early in their career,” says Vinciane Istace. “The specific missions we execute means we cannot afford to cut costs in terms of training specific methodology, risk awareness and technical background. The winning formula is to be able to preserve that intellectual potential while finding ways of adjusting costs but without upsetting the positive balance of a safe and sustainable working environment.” Rik Vandenberghe explains that one of the areas ING Luxembourg decided to cut – as part of the cost-saving exercise announced by ING Group at the start of this year – was its training budget. “But that does not mean we have reduced the number of training programmes – we just want to retain the same level but at a lower cost. It is this sort of challenge in the crisis that leads to HR departments becoming very creative in finding solutions.”

Communication is another area in which human resources departments have come into their own during the crisis. Vandenberghe, for example, wants his HR manager to be a real confidant of the CEO. “They know everything that is going on in the company, and that is important because at ING we have tried to install a culture of real transparency. We try to make a maximum of information available as soon as we receive it.” Communication became vital when ING Group announced back in February that it would be cutting some 7,000 jobs out of a total of 125,000 worldwide. “We had to explain that it was a tough decision, but the right one because we had to act – the one thing you cannot do in such a crisis is not act.” ING Luxembourg was in the enviable position of not being affected, and Vandenberghe urged his staff to keep it that way but also added a caveat. “From the beginning we made it clear we are not isolated here in Luxembourg.” Vinciane Istace agrees that transparency and honesty about the present situation, and about the measures the company intends to take, are key to retaining loyalty. “Which means a huge investment in communication by holding meetings and via electronic media,” she explains. “The message we have to communicate is solidarity – that everyone has to acknowledge the situation and take responsibility to act at their level. The sum of all these individual contributions will provide the global solution for the organisation. We have engaged our people and told them that nobody is a victim, but that we are all actors – we have developed a sense of ownership.”

Bernard Simonet admits that communication can be difficult if the long-term future is unclear. But he acknowledges its importance during a crisis when rumours begin to spread and the media is constantly reporting negative stories. “Communicating directly with employees is the only way to ensure clarity. It is much easier to approach employees and tell them exactly what the situation is, and also what it is not, and to explain what direction we are headed, with the proviso that the market can change.” KBL has also retained its summer party for staff – with a budget reduced by 40% – because the bank sees it as an important opportunity to communicate with employees in an informal setting. “It allows our president to make a speech in which he can clearly explain the situation of the bank and how the group is performing. And employees get an opportunity to pose questions.” Simonet will hold meetings with staff if an employee decides to take up an offer of part-time work or to “purchase” additional holiday days – measures that are becoming increasingly popular as a way of saving costs and allowing employees to recalibrate their work-life balance. “This means that we can give our employees something in exchange for the extra effort we are asking of them, and that provides an important value.”

Agile and adaptable

Similar flexi-time and holiday purchase schemes are in place at PwC, where Vinciane Istace says that “working time is a clear adjustable variable.” Staff can also opt for a career break, available in three-month slices, for which they receive some financial support. “Our message is that we are positive about the future even though we are going through a difficult period whose end is not yet determined,” Istace explains. “So we have to be very agile and adaptable. Any good performer in this company is still wanted – we cannot afford to lose them.” Indeed, the crisis has allowed RH managers to introduce a fresh attitude to working hours that can benefit both employees and employers. Rick Vandenberghe, for instance, is keen to communicate to his staff that part-time work opportunities should not seen as something negative but as something positive ING Luxembourg could offer its employees. “I also stressed that it would not have a negative impact on the career of those who choose to take up the offer.”

But negative attitudes still persist in some areas. “One thing I have noticed since the crisis began is that the youth of today don’t come to work to work, they come to earn money,” Claude Lanners says resignedly. Even though the government has announced plans to increase from 80% to 90% the share of salary received for those on chômage partiel who take training courses, Lanners finds the unions are still not satisfied. “They say they should get 100% because they still have to give up their time.” Are such attitudes local to wealthy Luxembourg? Other Ceratizit production centres are suffering just as much – the crisis is, after all, a global one – but Lanners has heard from his Austrian counterparts, for example, that personnel delegations there are cooperating much more closely with management. On the other hand, Lanners is satisfied with Ceratizit’s retention rate at management level, although he says that workers on the production plant would “leave if they can earn one euro more somewhere else.” But there is another problem that Lanners faces in trying to retain quality engineers, for example – the starting salaries and job security offered by the state. “We lose one or two good employees a year, and quite often it is a Luxembourger who leaves to work for the state or a communal service. That is our biggest problem.” Personnel development in a civil service career cannot match the potential career path at a private employer such as Ceratizit. “If they are really good, they can do much better here than with the state,” Lanners insists. Indeed, engineers with potential and eager to climb the corporate ladder at Ceratizit are placed on a general management training programme, which comprises a two- or three-year plan involving three or four international training sessions per year.

Reports vary within the financial services sector about career expectations during the crisis. Bernard Simonet says that career development has not been blocked, but admits that it is difficult at the moment to satisfy those with ambition to climb the hierarchical ladder. “But by offering them training and a chance to improve and broaden their skills, there will clearly be a time when they can move vertically,” he says. Indeed, he is confident that when the bank emerges from the crisis it will be able to retain its most important people. “There was no exodus when we emerged from the last crisis in 2003-04. I think we have communicated frankly with our employees and I think they will be thankful that they have retained their jobs and their salaries during such difficult times.” Rik Vandenberghe says that internal promotions at ING Luxembourg have not been put on hold, but are just not happening as fast as before the crisis. But Vandenberghe in any case thinks that in some working cultures, and even at ING Luxembourg before his arrival, people in top positions were moving too quickly. “This is also important to instil confidence in management. If they are there for a long time they will do things differently than if they know they will be moving on again after two years.”

Vinciane Istace says that PwC Luxembourg has been far more selective this year. “We are still promoting, but promotions at the higher end of the pyramid have to be supported by a strong business case.” She explains that PwC Luxembourg is working on three different scenarios as part of its planning for the next two years, and that the HR department is closely involved in that planning. “When you can supply very reliable forecasts to your top management of your percentage rotation for the two coming years then you can really support and illuminate the decisions they have to take.” That seems to sum up the changes that have occurred in human resources over the past few years – changes that have perhaps been accelerated by the crisis. Vinciane Istace has the last word. “HR was often seen as a transaction service, but now it can be not only a facilitator but also a contributor.”