HRM in Economic Recession Period - Essay Example

Running Head: Human Re Management Human Re Management Economic recession presents a period of low investment ,low demand due to low the cash trapped consumers who may have little to commit to consumption or may be saving due to the fear of the future and it’s uncertainties .Due to the low consumption which is limited on necessities ,organizations experience low sales and thus low incomes .in such times most organizations diversify their products ,freeze on employment ,cut on non demanded lines of production or even lay offs only to mention a few. In such times firms engage in strategies to minimize intake of employees, or rather such strategies to ensure that strict filtration is employed to obtain the most necessary talents (Punnett, 2004, p. 155). Human resource planning is the process in which the organization determines and lays strategies to acquire, and maintain the right quantities of human resource pool, in the right ratios of skills ,character and knowledge to fit the organization demands at current and in the future .In a period of recession the strategies employed largely depend on the mission, vision as well as its strategies and functions .Organizations will in most times plan in anticipation of a recession .most organizations result to more efficient utilization of the available human capital especially in states in which large payoffs are required in cases of lay offs .It is inescapable to lay off in cases of large loss making sessions as has been experienced by ZAIN mobile company which operate in parts of Asia and Africa (Punnett, 2004, p. 155).. The other strategy is diversification of product lines to produce more demanded goods such as consumable goods. Companies usually take a thorough evaluation of their product or services and take note of their potential risks .survey conducted in over 130 firms in Europe and America including Microsoft corporation shows that firms engage in revenue generating rather than cost cutting strategies ,this however is common to small startup firms with large widespread firms engaging in cost cutting strategies such as low investment thus cutting on new recruitments .In response to their new skills requirement they result in hiring on contractual basis ,and limited to specific skills .Generally during recession most firms engage in short term human resource planning due to the uncertainties associated with recession ,a good example is the General motors company (Storey, 1999, p. 130). It should be noted that firm sizes affects their response to human resource planning which is largely based on firm size and its strategic planning prior to the recession ,large firms enjoy economies of scale in production and thus minor changes in production will not affect productivity of the firm to a larger extent ,Such firms have sufficient capital for divestment to more demanded lines of production as in case of Nokia mobile manufacturer .Small firms on the other hand will suffer more in the event of an economic meltdown and thus may result in layoffs or strictly short term human resource planning. Organizations that can afford some level of flexibility will acquire those employees that are laid off but are expertise in certain fields that the hiring institution considers important .or that such skills are expected to experience scarcity when the situation normalizes (Taplin, 2007, p. 184). Flexibility in organization behavior in response to an economic recession this refers to the ability of the organization to change in any of its aspect to be able to exploit the opportunities in the environment or survive a threat in the environment that threatens their survival. Flexibility depends on the size of the organization especially for the geographically expanded or branched organizations. This could be in their production, service delivery, marketing or any aspect of their organization. This depends on several factors such as the trade the organization is engaged in ,size of the firm, procedures and processes of the firms operations, the uniqueness of the organization as viewed in line with the mission ,vision and other unique aspects of the organization ,only to mention a few. To many Organizations responding to change is a complex phenomenon that depends on the inherent cause of recession .The managerial attitude towards change will largely depend on their response to an economic recession (Hendry, 1995, p. 370). To small organizations their response to change may be faster and more effective due to their simplicity in decision making, If such organizations are more of entrepreneurial nature such firms engage in divestment which saves the employees the painful layoffs as they are trained on a different more reliable line of production and thus the organization can survive in the period of recession, however to the risk averse type of management or inflexible firms result to layoffs (Zanko, 2005, p. 45). Large firms usually have diversified approach to economic recession, some firms can afford to slow down and wait and this only eats away only part of the profits, in most cases this is done without laying off workers .However those firms can experience difficulties in decision making especially if the geographical distribution of branches cannot enable uniformity in policies and procedures in such a way that the various businesses in different regions have to make separate and independent decisions. Firms however employ several strategies depending on their experiences and the character of their management styles these include asset reduction; this involves selling part of the investments of the organizations, this obviously leads to layoffs or loss of employment (Gratton, L. 1999, p. 50). The second approach involves cost reduction ,which may be characterized by reducing investment ,or cutting costs on areas that do not bring direct income to the firm .this also may involve cuts in allowances and freeze on part time activities The third strategy may be to concentrate on revenue generation strategies to survive the harsh period .In this the firm engage in activities that will generate income quickly or within the shortest time possible to be able to meet their current expenses and thus ensure their survival in the economic down turn .It has however been agreed by both researchers and practitioners that large firms benefits from economies of scale ,their diversified production and their ability to predict the future as they can afford the cost of a thorough research .Small firms on the other hand utilize their flexibility to divest and thus survive a recession .Flexibility in the operations of an organization helps to save employee layoffs (Noe, 2000, p. 19). Recruitment in a period of recession recruitment refers to the whole process of identifying, ascertaining and acquiring the required human resource pool. In a period of recession recruitment is done strictly on the needs of the organization at the time, the character of the management especially its approach to change ,and their view of the future .At this time the firm concentrates on hiring experts, or distinguished talents that fit the job in question .firms engage in acquiring other firms experienced employees who do not require training and will bring an impact on the firm instantly .Firms at this time freeze on costly employee training .school leavers are avoided by majority of the firms ,but those from the most distinguished colleges are taken through a rigorous interview session to ensure only the competent ones are selected. Bars to entry into the organizations are raised as a caution to keep off job seekers .One of their strategy to recruitment is talent search which may be short tem or long term, short term involves utilizing every talent that comes their way, while long term involves creating a completely differentiated brand of employees from the rest in the labor market (Harzing, 2004, p. 303). Recruiters are professionally trained to achieve the desired talent search or meet the specific needs of the organization thus trial and error is highly discouraged in such recruitment .many organizations in such periods create a pool into which they can consider if the situation improves when every firm will be looking for the same talent .Organizations that enjoy some level of flexibility usually take advantage of the employee laid off to boost their labor resource pool as well as to blend their human resource skills requirement which can help in diversification .In such a period of recession the rare skills in the market are obtained at low cost compared to the cost at normal times assuming the law of supply and demand and supply apply to the labor Market . To conclude it would be of paramount importance to point out that in period of recession there is usually a lot of lay offs thus in most cases the labor market is flooded with skilled and experienced human resources .firms respond to economic recession in varied ways depending on the strengths or weaknesses of the firm whatever the firm chooses to engage in has an impact on the employees either directly or indirectly ,direct effects can be ,lay offs , but indirect effects are the possible cuts on firm expansion which limit future promotions (Gold, 2001, p. 122). Human resource planning in a period of recession is only short term ,for optimistic managers this is a period of acquiring the rare skills in the market and arming oneself for the period when the economy recovers fully ,to the perfectly flexible market the employees are insulated against job loss by diversification ,in this the firm engages in short term survival tactics .large organizations usually reduce expenditures on areas as research and development sales among others (Clark, 1999, p. 210). Recruitment on the other hand is left on the hands of highly skilled professionals who actually knowledgeable on the needs of the organization at the time .Most jobs advertisements require experts in various fields or those with experience in their respective fields.Hawever researchers are in agreement that both small and large organizations almost behave similarly when faced with similar economic challenges. .However, small firms can turn around more quickly. Firms can behave in a variety of ways of ways AIG the largest American insurance company has already laid off thousands of its workers, it is planning to merge its African investments thus more job losses while Ecobank is expanding in Africa at an alarming rate. References: Clark J. 1999, Human resource management and technical change, Mahwah NJ: Praeger, p. 210 Gold, J. 2001. Human resource management: Theory and practice, London: Routledge, p. 122 Gratton, L. 1999. Strategic human resource management: Corporate rhetoric and human reality, Oxford: Oxford University Press, p. 50 Harzing, A. 2004. International human resource management, Mahwah, NJ: Praeger, p. 303 Noe, R. 2000. Human resource management: Gaining a competitive advantage, New York: McGraw Hill, p. 19 Punnett, B. 2004. International perspective on organizational behavior and human resource management, New Jersey: Wiley and Sons, p. 155 Storey, J. 1999. New perspective on human resource management, London: Macmillan, p. 130 Taplin, R. 2007. Outsourcing and human resource management: An international survey, London: Routledge, p. 184 Zanko, M. 2005. The handbook of human resource management policies and practice in Asia-pacific economies, London: Routledge, p. 45 Hendry, C. 1995. Human resource management: A strategic approach to employment, New York: Greenwood, p. 370 Read More