The Quintessential of Human Resource Department: An Overview about the pros and cons of HRD in the downturn of economy - Essay Example

? The Quintessential of Human Resource Department: An Overview about the pros and cons of HRD in the downturn of economy ID: Course: Professor: Word Count: 2,242 Outline Introduction It is beyond doubts that; the importance a 'heart' holds in a human body is precisely similar to the importance of Human Resource Department within a company. From recruiting the efficient staff, monitoring, controlling, training, motivating and encouraging them; HR department in a company has its own quintessential responsibilities. My main objective in this proposed methodological essay is to study the importance of this very department in an organization and what possible contribution it can offer at the time of financial collapse or what burden it can lay upon a company when it is hit by any misfortune. To attain the objective of this methodology, I have divided this study in to three important chapters, they contain sub topics to further enhance the discussion and carry forward the research towards its purpose. The first chapter offers an understanding of the role and responsibilities of HRD and the contractual obligations of an HR Manager within a company. It is followed by the second chapter which is the focal point of this discussion; it includes an impartial analysis of advantages or disadvantages that HRD can offer to its company at the time of an economic breakdown. Weather it is acceptable for an organization to continue with the HRD Budget at the time of a bad phase; is a question that propels in between. Followed by this analysis, few case studies and the conclusion part offers the summary of this research and also the consequences derived upon this quest. What is Human Resource Development To develop an organized group of people who handle the recruitment and training processes has been a preferred option for government and organizations in the early 20th century. Human Resource Management was widely being used through out the world post technological advancement like Internet. It is evident that the workforce of a company is like a backbone; the employees are the assets of a company and not just a functioning 'part' in an office (Kaizenlog). The key duties of this Management group is to hire talented people who are efficient, to plan the strategies according to the unpredictable world market, to contribute in the growth of the company, to motivate, train and asses the employees in their respective work. It is also important to mention that their main aim is to ensure that the motive of the company is fulfilled, in doing so, they are required to engage themselves in the over all development of the work force ("Buzzle"). HRD and its Contractual Obligations - The most important role for HRD is to ensure the requirement of a skilled personnel who abides by the criteria set by the company for a competent and potential employee.HRD conducts a psychometric evaluation and interviews to test the decision making abilities of the candidates. Recently a growing trend among big company’s have been to inform the public about their recruitment and to post a list of questions which are filled by interested candidates, through this; HRD can easily evaluates the scope of those people who might well download the firm’s norms and can live by the quality standard of the company. An example of one such company who practices this is- Tesco Ireland. They can also conduct motivational programs and rewards schemes. In short their objective is to ensure a healthy atmosphere in the company and mutual understanding of the top management with the work force (Amit ). Involvement and Contribution of an HR Manager: The duty of an HR Manager is centered on the workspace. According to the analysis of this document ("Buzzle"), his duties are unlimited, some of them may include- To understand the needs and concern of an Employee To have positive verbal communications with workers for better performances To recognize the drawbacks of employee and accordingly organize training programs for better efficiency To determine their personal purposes in lives and merge them with the company's objectives so as to encourage them to accomplish both. Plan out methods strategically to achieve targets of the company. To map out their performances in accordance with set standards/parameters. To help them with their personal traumas or stress which might effect their performance Recognitions and appraisal in performance is also very important To grant promotions to efficient performers All that and more, an HR Manager is like an 'Anchor' when the workforce is concerned. A well organized and proficient Manager is a boon to a company. His role is of a leader who directs its people towards the right direction. With these responsibilities; any company without an HR Manager is likely to suffer even more when already tacked with an economy downturn. He can prove to the best feature for the face of any company (seema). Economic Catastrophe and HR Department The global recession that started in December 2007 continued with a severe downfall of economy in September 2008. It started in USA particularly, and started affecting the whole world, it took Europe in its grip in 2008.It was then followed by the European Sovereign debt crisis. The European country which first came in to this financial trap was Denmark, and then it gradually started affecting the rest of the countries in the continent. A study depicts the fall of 1.9% in the Industrial production of the Euro zone, 2008.While the fall of European car sale was 7.8% in May and the retail sale was also affected hugely by 3.1% in June from the previous year. The downfall of economy trapped almost all the Industries namely banks, corporate and retail. People used to stand in queue to withdraw money from the bank and the corporate lost their sleep over the sense results ("euro stat euro indicator"). The argument of whether or not to cut the expenses of HRD at this crucial time; has been doing the rounds in every department. As, we cannot ignore the fact that, the economic crisis is a hard time for any company to face and to survive, yet it will be important to analyze as to how HRD can help the company to face the challenges that it brought by such catastrophe, it will be interesting to discuss this through some case studies. Endowments by HR department at the time of Crisis- When the ship is hit by a storm, only a captain can move it towards the right direction, and sail through the tides. We shall discuss in a case study as to what measures a firm took in order to face the hard times. An example of a US based entrepreneur Benjamin Sayers is a perfect example of intelligent methods adoptions by HRD. While the biggest fault by them was to recruit several people which almost doubled the number of staff pre recession. His company VoIP supply LLC suffered a sales drop of $1 million in 2008 while he had a considerable success history of 4 years. His business was to sell internet phone services to companies in Buffalo New York, when the recession hit; he and his team instantly decided to not only cut down the number of employees working for him but also cancelled the luxurious perks attributed to efficient workers. Further, he sold off his second business venture of interactive voice response bureau. In total; he was able to save almost $5 million by cutting down additional operational expenses. Despite these measures sales dropped in the following months and the HR took a major step in cutting salaries of the top management as well as of the employees. While sayer's salary was cut to 90%, CEO got a 50% low and 20% cut for the employees. The next major step they took was to refocus on the initial ambition of his business when it was incepted in 2006 that was to sell voice-over IP hardware. In his own words "We retracted to what made us successful to begin with”. He and his staff collectively gave centered attention to remained customers and worked on to provide them according to their requirement. The result started showing, by 2010 the annual revenue rose to $18 million, and net income of $110,000.In 2011 the monthly sales was expected to earn $2 million. He believes that the forced retraction of the business was the turning point to overcome the time of crisis (Jane ). Other companies that won over the crucial times may include- Yahoo!; Company’s profit raised from $113 million to $186 million which was possible by back to basics strategies. The pharmaceuticals Pfizer, also successfully raised the net profit to 2.88 Billion by cost cutting. DuPont, a chemical manufacturer also received almost 11% rise in profit which rose to $409 million, it was done through cost deductions and increase in Production. All these examples reflect that a well planned strategy adoption by an effective team of HRD can prove helpful in economic downfall (James 1). It is also relevant here to include some excerpts from bacetti’s work- During these times of economic stagnation, the company quickly gets “back to basics” using a sales-monitoring system to ensure that its sales people engage all potential prospects and to ensure that senior management knows how all sales activity is proceeding, providing clear accountability for all aspects of the sales team’s performance. An accurate sales forecast based on a realistic evaluation of its sales pipeline given a changing economy is paramount (Baccetti, 2011). Lessons learned from the above Case study: Leading the team with confidence Effective communications Recruit Intelligently, clear the excess baggage of employees Strategically planning out the cuts in useless expense, perks and salary Provide the personnel with training to handle the trouble times Treat your customers with care ("TDR") Afflictions by HR department at the time of Crisis: The best period to test the efficiency of HRD is at the time of crisis. A capable professional or HR Manager can refocus the entire company successfully; on the other hand a weak strategical plan by an HR Manager will cause the company to fall disastrously. One such example of a failed HR plan is of Toyota Motors ( HCA ). Firstly they concentrated more on sales and productions making the employees lure over the rewards or recognition that followed but they ignored the importance of safety methods in manufacturing which ultimately caused them failure. Secondly they had the training program focusing on plan/do/check/act, ironically they didn’t gave importance to the last two which could have had information on external safety. Thirdy, the recruitement was severely wrong; they failed to map out potential candidates who could prove beneficial to the company at the time of crisis. Fourthly, they seemed to ignore the problem areas and highlighted only the information that was positive. Fifthly, they failed to assess the risk, they missed to notice that the employee’s faults could heavily result in poor revenue, employee turnover and eventually this was all because they had a poor HR Manager. Lessons learned from the above Case study Sound recruitment of efficient people; fire those who are highly priced and good for nothing. Focus and refocus on the Company's Objectives or the key training programs. Innovations in plans and willing to take risk, Identifying failures and acting upon them not ignoring them. Stop the production of new products; examine the drawbacks in the existing ones (Bruce 1). Conclusion: In this research we learned about HRD, What effects the presence or absence of HRD in a company can cause ;solely depends upon the performance of HRD team .Lack of HRD could lead to increased problems for a company whose workforce performance was once based heavily on company initiated training. Customers who are accustomed to receiving a high level of care by knowledgeable employees can tell the difference when HRD programs cease. The result can be a loss in business as customer satisfaction drops. Yet, loyal customers are highly valuable to a business, providing business referrals, increased revenue, predictable sales, and lower costs (Gremler & Brown, 1998). Maintaining HRD as per company’s budget allows a company the ability to address the causes of financial trouble through focusing on employee effectiveness. Instead of seeking to remove HRD from the company, a strategic assessment of the current practices in employee training helps to streamline the process and increase the ROI. Figure 1 and Figure 2, where the former depicts a well organized system of training new and existing personnel where as the latter focuses on strategies adoption and its results. Figure 1.0(India) Figure 2.0 (Peter 129) Apart from this, it is important to note that a strategic plan is not the only solution, what would really make a difference is ‘Motivation’; following are some methods by which an inspired and motivated team is expected to deliver better results particularly at the time of ‘Recession’(Bruce 1). To make them believe and trust upon the 'motto' of your company i.e. - what it stands for. There should be trust and unity Decision makings should be a consistent approach One should understand the worth of each individual in the staff It is very important to hear an employee’s voice Involve them to help and find solutions Do not forget to say ‘Thanks’ to your employees This motivation will not only help them to participate in fighting recession but it will eventually ensure a loyal workforce for a longer time even after the recession is over. References Kaizenlog, "The Historical Background of Human Resource Management." web pro news. web pro news, 06 2006. Web. Web. 22 Nov. 2012. . . "Functions of Human Resource Management." Buzzle. Buzzle. Web. 22 Nov 2012. . Amit , Bhagria. " Roles And Functions Of The Human Resource Department." young HR Manager. young HR Manager, 30 2012. Web. 22 Nov 2012. . seema, rao. "How do Managers (Leaders) Contribute to an Organizations? more at http://www.citeman.com/19881-how-do-managers-leaders-contribute-to-an-organizations.html . "Industrial Production down by 1.9%." eurostat ero indicator. eurostat. Web. 22 Nov 2012. . Jane , Porter. "How the Recession Saved One Company." Entrepreneur. entrepreneur, 31 2011. Web. 22 Nov 2012. . James , Quinn. "US companies fight back against recession with strong results." Telegraph. 20 2009: 1. Web. 22 Nov. 2012. . "7 Human Resource Strategies to Use in a Recession." The Daily Recruiter, 06 2009. Web. Web. 22 Nov. 2012. . HCA , Online . "How HR caused Toyota to crash." HC Online. HC Online, 04 2010. Web. 22 Nov 2012. Read More