The present state of
recession in the IT Industry - as a Human Resource Manager how are you going to
undertake Human Resource Planning at Macro Level to tide over this crisis
Answer:
Human
resource management is responsible for how people are treated in organizations.
It is responsible for bringing people into the organization, helping them
perform their work, compensating them for their labors, and solving problems
that arise. Recession presents a very difficult time for any existing organization
in today’s corporate world and no company is exempted from this truth. The
biggest challenge for companies and especially Human Resource in this economy
downturn is to survive and to remain competitive, companies reorganized and
reengineered to reduce waste. Recession poses unique challenges to the HR
department. Human resources professionals often struggle to obtain the
resources they need to effectively manage people in the workplace, and the
difficulties that they face are augmented when economic conditions worsen. It
is essential for every company to know how to implement the right metric set
for this very trying period.
I. Introduction
In today's arena the most common word we come
across is recession. Recession is a general slowdown in economic activity over
a long period of time. A recession normally takes place when consumers lose
confidence in the growth of the economy and spend less. This leads to a
decreased demand for goods and services, which in turn leads to a decrease in
production, lay-offs and rise in unemployment. Investors also show less
interest which affects the capital and financial flows, import - export and
overall Gross Domestic Product (GDP) of an economy. Human resource management
is defined as a strategic and coherent approach to the management of an
organization’s most valued assets – the people working there who individually
and collectively contribute to the achievement of its objectives.
Human Resource Management is one of the most essential
responsibilities of each and every manager in an organization. It purely
involves people for getting things done through them in an organized manner.
This comprises a list of activities and one important factor among them would
be placing right person for the right job, recruiting and training them in
their specialization and also assisting employees for benefits, rewards and
other policies. Human resource plays a bigger role during tough times than
during periods of prosperity and growth. In co-operation with management and
the leaders within the organization, the HR department has to implement sound,
consistent strategies to help everyone through the recession lows. The first
order of the organization would be to calm down everyone and prevent from
panicking as much as possible. Scrambling and hurrying to slap some sort of
message to the organization might be more counterproductive than helpful.
II. HR Challenges Caused By Recession
There are a lot of studies on human resource
management but very little on human resource management at the time of
recession. Recession gives lots of challenges to Human Resource management. In
addition to the challenges they face when general economic conditions are poor,
HR managers are confronted with many problems when souring market trends
directly impact their companies.
Few of the Challenges can
be listed as:
Freeze in the
recruitment process:
The recruitment freeze is the first challenge
of HR department to be affected by the recession. As the top management has to
keep the cash flow under the control, the recruitment freeze is the first
logical decision. After the recruitment freeze the organization has to clearly
decide about its priorities as the organization does not carry additional
people on its payroll. The top management has to decide about the new strategy
and the management is allowed to hire just the missing skills and competencies.
Reduction in the strength of the organization:
Layoff is the temporary suspension or
permanent termination of employment of an employee for business reasons, such
as the slow-down or interruption in work. It is another challenge that has to
be faced by the top management. It takes all of a management team's resources,
including both business acumen and humanity. The extreme difficult decision is
who must be laid off, how much notice they will be given, and how far the
company will go to help the laid-off employee find another job are given less
than adequate attention.
Cut down in training and development programme:
The training and development is another HR
Process to be affected by the recession. The focus of organizations must be on
reducing costs and training may be one of the functions where budgets may get
impacted majorly. The management has to decide about the cuts in the
investments and Human Resources have to find a way, how to keep the knowledge
in the organization. The company can survive without training and development
for a limited period of time. The cost savings can be huge and the organization
feels no impact of the lower training budget. But the period has to be really
limited as the organization does not lose the talents and the internal know
how.
Re-design in compensation and benefit schemes:
The compensation and benefit schemes are also
heavily affected by the recession. Compensation is payment to an employee in
return for their contribution to the organization, that is, for doing their
job. Benefits are forms of value, other than payment, that are provided to the
employee in return for their contribution to the organization, that is, for
doing their job. The recession makes a huge pressure on the overall costs of
the organization and the compensation strategy can easily change the position
of the organization on the pay market. HR managers may find it difficult to
design compensation programs that adequately provide employees with an
equitable level of compensation and an incentive to perform effectively.
Barriers in the working environment:
During a recession, a reduction in available
resources can significantly affect a company’s strategy for the design of jobs
and working environment. When a company cuts labor costs through either a
workforce reduction or a reorganization of its operating structure, there is a
change in the tasks and responsibilities associated with a number of positions.
This has various effects on a company, including increased risk that employees
may not possess the skills and knowledge requisite for completing their
assigned tasks, uncertainty among employees regarding their roles in the
organization, and the potential for overwork of employees as they take on more
assignments.
Effective Performance
Management:
A company’s performance management process is
affected during a recession primarily by the same factors that influence a
company’s job design, training and development, and compensation processes.
Performance management in recession needs utmost care by HR department as it
gives many challenges not only to employees but the top management are also
under pressure to seek some new opportunities to meet expenses. At the time of
recession the stakeholders’ value is also in question. In such situation the
challenges for performance management increase drastically. When employee needs
become more volatile and their motivations change, employers must adjust their
methods for assessing employee performance and providing feedback to match the
characteristics of their jobs.
III. Framework to Meet the Challenges of HRM in Recession
An economic recession can have many
significant effects on HRM processes and on its HR managers’ ability to
effectively govern them. A Framework to meet the challenges of human resource
management at the time of recession
IV. Strategies to Be Adopted During Recession by an HR Manager
The recession is an opportunity for HR
professionals to step and contribute strategically. Human Resource Management
must play a more strategic role in the success of an organization. However, by
utilizing an approach based on maximizing the benefits received from HRM
spending, companies can implement practices that will enable them to not only
survive an economic downturn but to develop unique, strategic positions and
gain a competitive advantage over other companies. The following are the
strategies that can be followed by a HR manager during the recession:
Human Resource planning:
The HR managers should give greater priority
to succession planning than to their broader aggregate planning initiatives
because such an investment allocation will provide greater returns. A company
that plans for succession effectively will more quickly identify the
developmental needs of top performers which will lead to better job design and
more effective training and development programs. In order to effectively
improve its succession planning processes, a company’s most senior managers
should dedicate more time to updating succession plans. Though aggregate
planning is less crucial than succession planning during a recession, strategic
HR managers with sufficient resources can take an innovative approach to
identifying potential gaps in talent based on the organization’s predicted
needs. A company can employ unique strategies for recruiting that enable it to
gain advantages over other firms when hiring both during and after a recession. In connection with workforce reduction new
work places design is needed. Some jobs will be canceled, some added and some
will be put together. The employee has too Obtain new skills, and usually work
load is higher. Putting some jobs together force human resource department to remake
career plans.
Focus on long term investment:
The most critical and most difficult
consideration that a company must make when managing employees through a
recession is how to balance its current need to cut costs with its long-term
desire to achieve strategic results. The first step that HR manager should take
in managing a human resource investment is to recognize that not all
investments are created equal. A HR manager has to estimate the returns for
each functional area of the business unit and review both how the company is
allocating its aggregate resources and how each function is contributing to
overall investment returns. Alternatively, the company may identify an area
where returns are poor but a greater level of investment will foster an
increase in scale and ultimately efficiencies. Periodically, the HR manager and
top management should discuss about the strategies for improving overall
returns through a reallocation of funds. The ultimate output from these
discussions should be a strategic plan for increasing the return on the HRM portfolio.
Retention of talented Employees:
It is no secret that the high talented
employees or multi-skilled employees are most critical to a company’s success.
Companies can find one way to decrease recruitment cost is to have
multi-skilled employees. Retention of multi-skilled employees help to reduce
manpower dependence, and the overall sum of all the multi-skilled employees is
greater than the same number of equal number of specialist. The advanced
knowledge, experience, and skills that such employees have represent the most
viable strategic competitive advantage that a successful organization has.
Talented employees continuously need new challenges and goals they can achieve,
and a continuous supply of information and resources they can use to solve
business problems.
Compensation and reward strategies:
Compensation practices should be revised
during a recession so that they are adjusted with the needs of employees. Where
the incentive based bonuses may be too costly for an organization to pay they
can use other strategies. The companies can implement flexible work schedules
which not only provide a desired benefit to employees but may also reduce the
costs of the company. Investment in healthcare benefits can allow a company to
achieve a competitive advantage that it can sustain after the recession,
enabling the organization to more easily attract talented employees when labor
demand improves. Stress management may also help an employer to reduce its
long-term employee medical costs. Such strategies that can both maximize
employee return and decrease employee cost will provide significantly improved
returns on HRM investments.
Motivational training
and development programs:
HRM professionals should give strong
consideration to increasing resources allocated to training and development
during a downturn. The managers should design training and development programs
that are in line with employees’ needs and the skills required to perform job
tasks. This can be more easily accomplished if managers first ensure that
workers and their associated job roles have the appropriate fit as previously
recommended. Lack of motivation in employees will not improve organization’s
business in any way. Motivation can be either intrinsic which is self-generated
that will influence the employees or extrinsic which is all about rewards,
promotion and so on. Effective training and development programs will also
consider how each generation of employees uniquely prioritizes its needs. An
employer should utilize training and development programs that improve the workplace
flexibility of its managers as well.
Continuous communication with employees:
Communication should definitely be one of the
focus points during the recession metrics. Open communication should be
administered because without this, the informal grapevine would then be the
ultimate source of the company. Communication minimizes rumors, which if not
managed properly, can lead to grave consequences. The face-to-face
communication such as briefings by managers and small group meetings is a more
appropriate technique for dealing with a subject as traumatic as downsizing.
Maintain relationship with employees:
Employee Relations involves the body of work
concerned with maintaining employer-employee relationships that contribute to
satisfactory productivity, motivation, and morale. Employee’s relations can be
encouraged to reduce the overall cost of the organization by involving
employees. It is important that how HR manages the relation with employees so
that employee should feel proud and gain a sense of ownership. In order to get
through the rough times and keeping the right people actively engaged,
performing well, and keeping them on board requires business owners of all
sizes to use all the tools at their disposal.
During recession, HR manager has to act as a democratic leader.
He should also try to combine the organizational and employees interest and
adopt situational leadership style as well as humanistic approach for leading
the employees to achieve the organization goals. Following are few recommendations
for HR Manager to deal with employees during recession:
1. The HR managers should focus on the succession and
contingency plans.
2. Maintaining employer-employee relationships that contribute
to satisfactory productivity, motivation and morale.
3. Rewards and recognition is one of the best tools to motivate
employees.
4. Flow of Communicate should be from top to down that will help
in making conducive atmosphere within the organization
5. Identifying the real key employees and focus on the continual
development of employee knowledge to retain them.
6. Human Resources have to be ready to provide necessary data to
the Organization, solving the initial problems with the recession.
7. Design new efficient HR policies, processes and procedures to
ensure that they are purposeful and contribute directly to the success of the
company with minimum cost.
8. Consistent and committed leadership helps employees overcome
organizational change caused by downsizing.
9. Increase brainstorming sessions with top management and
contribute in their strategic planning.
10. Review the employee performance evaluations to determine the
key people that the company cannot afford to lose.
V. Conclusion – Preparing For Recovery:
Human Resource Management must play a highly
proactive role in managing the issues of global recession by helping
organization to enhance their abilities to learn and collaborates, manage
diversity, ambiguity and complexity. Human Resource Management is responsible
to manage the human resource of the corporate to maximize the productivity,
efficiency at minimal cost and maximize profit. Recession has threatened the
corporate to hire in bulk and have wide bench strength. It has also tightened
the measures for human resource management. At the time of recession and post-recession,
the things become complicated for corporations. However the challenges of human
resource management differ from industry to industry and firm to firm. The
recession is the temporary economic climate of the business world. The
recession is a good opportunity for Human Resources to introduce the changes to
the organization. It will be changed through more productivity at minimal cost
and maximize profit at moderate price of products in business. But the reaction
of HR has to be quick as the internal opposition has no chance to form their
forces.
