Enter the Zombies

Tim Palmer and Mark Thomas

The Evaluation Centre

18 March 2010

HR people need to prepare their companies for a new reality of half-alive banks, governments, consumers and companies, warn PA’s Tim Palmer and Mark Thomas.

HR professionals are threatened by a new world in which their organisation will have to overcome the powerful force of half-dead, half-alive zombies. These zombies – not-quite-dead banks, governments, consumers and companies – are staggering along, struggling to function in the new world, and will ensure business does not return to usual for at least several years.

This is according to PA Consulting’s new book ‘The Zombie Economy: Preparing for an uncertain future’. So what is a zombie economy? It includes:

• Zombie banks whose balance sheets are too weak to support sufficient lending. Banks may be declaring huge profits but their recovery is partly an illusion. Losses of $3.4 trillion in the financial system have still not fully unfolded.

•  Zombie governments whose finances are too stretched to sustain expansionary policies. Highly expensive government intervention means debt-to-GDP rates are set to rise to levels not seen outside wartime.

• Zombie consumers whose wealth is too depleted to allow them to consume. Because of the state of the economy in general, and bank lending in particular, US consumers are spending 5% less of their disposable income – they will be unable to act as the world’s ‘consumer of last resort’.

• Zombie companies who are saddled with debt that they cannot comfortably service, impeding growth and investment. UK corporate insolvencies are now at record rates.

These zombies have not existed simultaneously before in the working lifetime of any HR professionals and so their impact for HR cannot be overstated.

Employees are feeling the effects of the new economy – salaries have been frozen, working hours reduced and promotions delayed. The threat of redundancy has made staff feel expendable, and a tougher working environment has created a threatening negative energy within the workforce.

HR leaders must act now to assess the impact of the zombie economy on their organisation and to energise their staff to help overcome its threat.

Securing your future
With limited monetary incentives, prospects or development opportunities, many organisations will need to work hard to keep their staff engaged. The zombie economy will divide the business world into winners and losers. The winners will be those who focus on energising their staff to ensure they have a well-placed workforce for recovery. Four actions HR leaders should consider taking are: 

1. Energising conversations. Businesses must engage employees in conversations about the business and their individual roles. Leaders and managers must speak honestly about future obstacles facing the company.

2. Tackling shared challenges. Invite employees to own the problem and develop the solution. Involving staff in problemsolving will generate a sense of being valued and trusted.

3. Being part of a movement. Identify a common cause or community issue, which is operationally relevant to the organisation, to unify the workforce. This can reinvigorate and improve the way your company works.

4. Transforming innovation and learning. Build the skills and ingenuity needed in the workplace to survive and thrive in a zombie economy. Employees need to be engaged in finding new and better ways of doing things – whether a process,
   structure, relationship, product or service.

• HR & Payroll Software Evaluation Centre Expert Tim Palmer is a member of PA Consulting Group's management group and heads its HR sourcing consultancy business. To send Tim an email, click here. Mark Thomas is head of strategy and marketing consulting at PA Consulting Group. To request a copy of ‘The Zombie Economy: Leadership in times of uncertainty’, please visit here.