Human Resource Strategy in Recession - Term Paper Example

Human Resource strategy in Recession Introduction Managing employee relations is a very sensitive issue. Managers especially Human Resource Managers need to deal with the employee’s issue very carefully and cautiously. Gone are the days when employers treated their employees as slaves. Human Resource Management (HRM) has seen tremendous changes in the recent past. The dictatorship attitude which managers or rather the employers had changed with the clutter of companies spurting across sectors all over the world. Anybody with good job skills is one with wings, free to fly to shores that are greener. However, the recent global meltdown or in other words the recession has abruptly changed the employee as well as employer outlook particularly in the aspect of Human resource planning or HRM. So, this paper will analyze how the current economic downturn had a major impact on HRP giving more power to the HR managers when they negotiate with their employees. Human Resource Planning In this globalised world, an economic problem in one country will not get restricted to that country, but gets spread to other countries. The economies of most of the countries in the world are directly and indirectly dependent on the U.S.’s economy and with liberalization happening everywhere, the negative effects in USA will be felt everywhere, with businesses worldwide facing the negative impact on its HRP. Many companies are suffering losses and as a result of it several companies are opting for retrenchment strategy. Cost cutting would have to eventually result in job cutting. British Airways (BA) has said that it plans to cut a further 1,200 jobs after reporting a huge loss of £292 million in the six months up to the end of September. (Hinton 2009). Fewer job requirements and constant lay offs irrespective of the sector made employers to be choosy about the kind of employees they want and more dominant in deciding the compensation package for them. Many reputed organizations have quietly cut the salaries and other fringe benefits to their employees. BBC plans to cut the amount it spends on the salaries of its top bosses by about 25 percent, The BBC currently spends about $129.4 million on pay for its 634 senior managers and nine most senior executives. (Bryan-Low 2009). Managers have upper hand these days and really have become dominant, slightly skewing HRP. Instead of thinking about how to optimize productivity and thereby effectively overcome financial problems, managers look at the easy way out. When negotiating with their employees there are some critical issues that concern both like salary, work timings, leave options, promotions, stiff targets and bench marking etc. In each of the above mentioned areas managers dictate terms to their employees throwing value systems to the wind. Compensation package with several companies were touching the roof before the recession. But, it took a nose dive, once recession started creeping in. In an organization, the workers would do their duties for personal motivations like salary. “Salary strategies and job enrichment strategies were positively related to job satisfaction.” (Arocas & Camps, 2008, p.27). Before recession there was a fear among managers that poor salaries may result in minimization of employee commitment as well as employee turnover. However, now the managers know that if an employee leaves the job he will go jobless as other companies also can’t employee them, as many companies are collapsing. High street names Woolworths and MFI were among more than 3,000 UK firms that collapsed into administration as they buckled under the pressure of soaring costs, falling consumer spending and the credit crunch. (walesonline.co.uk). Flexibility Every HRP based liberty that employees used to enjoy with regard to work timings has gone out of the roof. The concept of flexible timings and work at your own convenient time has been discarded by the companies in the post recession period. As usual employees are given strict timings and also they have to work over time many a days with out being paid extra. “Overworked techies are putting in even more free hours than last year as the recession piles pressure on U.K. companies to do more with less. One in three techies is giving away the equivalent of 34 days of unpaid overtime per year--an increase of two days on the year before” (Thomas 2009). This results in a lot of stress. Organization needs full utilization of their workers to reach their targets and to increase productivity. But, with stressed mind, the employees will be hard-pressed to use his/hers physical and mental part, to work effectively for the organization. “Today, stress-related disability claims are the most rapidly growing form of occupational illness” (Casico, 2005, p.587). But, the fact is, it is not always possible to work in a stress free environment, particularly in today’s recession filled world. Employees for their part also do not favour paid holidays because of the fear that they could be given ‘permanent’ holiday – Termination. , "Recession fears and job worries mean staff are reluctant to cut themselves off from their work," said Paul Callow, marketing director at Lexmark UK. "In the past, holidays have been a great opportunity for professionals to unwind and relax, but the current economic climate means people prefer to stay connected so they feel in control even when they’re away from the office." (lexmark.co.uk). Based on the employees’ performance and importantly on the basis of HRP, job promotions are given. Allocation of rewards, incentives, promotions and also recognition to the deserving and apt employees is an important strategy to keep the motivation and excellence at higher plane. “Provide appropriate financial incentives and rewards, and non-financial praise for the employees’ achievement” (Armstrong, 2004, p.336). Now ever since the recession turned its ugly head on the companies, promotions have also become rare. Employees are given stiff targets which at times are extremely crucial to meet. Apart from cuts in promotions several organizations even scrapped training programs for their employees. Ryanair for example use one type of plane so that the cost involved in training the staff can be reduced considerably. Managers say when employees are lamenting everywhere with pink slips and escorted out of the office under an hour, the possibility of training is literally ruled out. This clearly shows that HRP is negatively impacted and there is no possibility of flexibility to save the employees. Recruitment Human resource is one of the precious resources of the organization and it has to be managed effectively through an effective HRP or HRM processes. “The HRM perspective stresses that each activity should form part of the whole process of people management.” (Price 2002, p.17). No organization would like to loose its quality employees, instead it should recruitment quality employees who can perform in all circumstance. However, companies apart from removing the employees also outsource the jobs to other countries to cut cost, but in a way depriving indigenous workers. Marks and Spencer sources 90% of its finished clothing products from outside the UK, particularly from countries like China and India. Many organizations even today have not touched the employees’ eviction from the organizations. Managers should be more broad minded and empathetic with the problems of the employees. Salary cuts are okay if the company is considering this option instead of layoffs. HP CEO Mark Hurd announced that its 100,000 employees will all have to take pay cuts to avoid layoffs of employees. (layofftracker.blogspot.com 2009). Managers should also realize that recession is not eternal. Things are going to change in the near future and when things are bright they need bright people. Once the organizations let go the quality people it is never possible for the company to get them back. So it is in the interest of the employers that such ineffective practices should be discarded once and for all. The real test comes at times of difficulty and not when days are shiny. "To gain or keep a competitive edge, managers have renewed their emphasis on innovation, shifting away from relentless focus on controlling costs" (Draft, 2004, p.4). As a manager, being nice to employees at this time of crisis is necessary. Managers should not be mere managers but they should transform themselves as leaders as well as father figure kind of figure. “Tesco has committed to filling its Christmas vacancies with employees friends and family who have been made unemployed during the recession” (Woods). “Recognise their responsibility in humanisation of organisational environment to make the employees feel that the organisation where they work and spend a large part of their working life is theirs …valued and cared for” (Rao, 2004, p.330). So, the most important thing is that managers should not take undue advantage of global recession. Instead as part of the recruitment and staffing process, should help the employees in the organization understand the situation better. Conclusion Unison of workers into teams, with an urge to usher an organization into top echelons will be successful, if the manager or leader is able to optimally handle both external as well as internal crisis situations. External crisis will always omnipresent thing, because these crisis are controlled by various factors. Among the many departments, which constitute an organization, the Human Resource Department’s (HRD) role is omnipresent and crucial, as it can only boost an organization through various strategies. After the recruitment and apportionment of employees is over; it is the duty of the organization particularly the human Resources Department to provide the employees a perfect working environment, in which they will work effectively. Perfect working environment in the sense, HRD with HRP should play their part in arranging the needed resources, allocating the work load perfectly, motivating the workers while they were working and finally rewarding the workers when they achieve the intended targets. If the managers with their effective HRP skills, efficiently handles the crisis scenarios, performance of the organization can be optimized manifold. References Armstrong, M, 2004, How to Be an Even Better Manager: A Complete A-Z of Proven Techniques, London: Kogan Page Arocas, R & Camps, J, 2008, ‘A model of high performance work practices and turnover intentions’, Personnel Review, 37, 1, 26-46. Bryan-Low, C 2009, BBC to Cut Pay, Jobs, Wall Street Journal, A14, viewed November 20, 2009 http://online.wsj.com/article/SB10001424052748703363704574503511727617626.html#articleTabs=article Casico, W., 2005, Managing Human Resources: Productivity, Quality of Work Life, Profits. New York: The McGraw−Hill Companies Hinton, P 2009, BA Announces Huge Losses, and Job Cuts, viewed November 20, 2009 http://britishaffairs.suite101.com/article.cfm/ba_announces_huge_losses_and_job_cuts#ixzz0XQA414Jm layofftracker.blogspot.com 2009, HP goes for salary cuts to avoid layoffs, viewed November 20, 2009 http://layofftracker.blogspot.com/2009/02/hp-goes-for-salary-cuts-to-avoid.html lexmark.co.uk 2009, Dont bank on it – holiday cancelled as UK workers stay switched on, viewed November 20, 2009 http://www.lexmark.co.uk/lexmark/pressrelease/home/0,6930,252735_653271419_1342081838_en,00.html Lomas, N 2009, Recession making techies do more unpaid overtime, viewed November 20, 2009 http://www.zdnetasia.com/news/business/0,39044229,62051726,00.htm Price, A 2002, Principles of Human Resource Management: An Active Learning Approach, London: Blackwell Publishing Rao, T V, 2004, Performance Management and Appraisal Systems: HR Tools for Global Competitiveness, New Delhi: Thousand Oaks walesonline.co.uk 2009, Companies collapse as UK slides into recession, viewed November 20, 2009 http://www.walesonline.co.uk/business-in-wales/business-news/2009/01/02/companies-collapse-as-uk-slides-into-recession-91466-22588878/ Woods, D 2009, Tesco to recruit employees unemployed friends and relations as Christmas temps, viewed November 20, 2009 http://www.hrmagazine.co.uk/News/MostDiscussed/944894/Tesco-recruit-employees-unemployed-friends-relations-Christmas-temps/ . 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