CHALLENGES OF HRM TO THE CORPORATE SECTOR

IN THE ERA OF GLOBAL RECESSION

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CHALLENGES OF HRM TO THE CORPORATE SECTOR IN THE ERA OF GLOBAL RECESSION

Introduction
In today’s arena the most common word we come across are recession and downturn. Recession
or crisis is the part of the normal cycle of business. It is certain that they will sooner or later occur.
Therefore, it makes just as much sense to plan for recession or downturns as it does to plan for good,
economic times. The management people and employees may experience anxiety around a number of
issues during an economic crisis or downturn. In this recession period HR play an important role to make
the industry sustain and the entire economy flourish. This paper expresses the challenges of human
resource management in the global recession situation.

What can HR do?

HR needs to be proactive and come up with early interventions as for any organization to survive
during recession; the ability to retain its best people is must. During these days, HR people sometimes
even take the harsh decision of reducing the numbers and land up at downsizing. The word downsizing is
even taken as rightsizing and optimizing but we may not know or ignore the fact that neither the bad
situation nor the good conditions lasts long.

Downsizing process

• Revised leave structure for all employees

• Reduction in the different component of pay packages

• Identify the non-value added activities and resources

• Threats to employee emotional engagement

When the going is tough, it is a must for HRM and its managers to Challenge the Challenges and the only
remedy is just not mere downsizing however downsizing the dignified way.

Be Creative

Now is the time to implement new ideas, to change the HRM processes and to change the
procedures. This has to be done in a way that it cuts costs and motivates people. HR can focus on the
following things i.e.

How to increase productivity and efficiency in the corporate sector?

How to reduce the benefits costs?

Redesign compensation structure?

How to retain and develop high potentials?

How to minimize the employee costs so as to avoid retrenchment?

During these uncertain times, corporate will realize the importance of having competent skilled
workforce which will ensure that focus stays on trainings but there may be a major reduction in training
budgets. In this time any decision taken by the company impacts each individual personally rumors float
around. Its top management’s duty as HR is to ensure that the communication channels are kept open,
transparency is maintained. We also need to ensure that accurate communication happens on time in full,
instead of employees hearing things with details from the grapevine first.

Provide adequate support to leaders and managers in terms of people management processes.
Find ways to keep up the motivation levels of employees. If the corporate plans to retrench the workforce,
counsel not only the employees who will be staying back but also the employees who have been asked to
leave, be fair with them.

Setting the context

Human Resource Management functions are performed in many organizations by different

functional heads independently. The most important challenge in recession period is revolutionizing the
Human Resource systems to identify, maintain, develop and utilize talents across the organization to their
fullest capacities. An organization may claim that it has the best of the systems to identify talents across
the organization.

HR has now a chance again to prove their value creation role in the corporate only if it
understands what it needs to do now. Some of the basic strategies should be followed by the corporate
managers i.e. reduce administrative and establishment costs, hold large bonuses and reward payments,
create participative forums for dealing with the difficult times ahead, retaining top talents should be
emphasized by the HR managers to the management and HR managers need to network with fellow
managers to find out how best to visualize the problems and try to solve them.

Challenges

¨ No longer living under virtuality but has started living in realities

¨ To pay heavy costs for workforce livings

¨ Making a paradigm shift towards reality

¨ A large scale change of the Human Resource systems

¨ Fine tuned to make a shift or ready for changes

¨ Continue to outperform, excel and remain a leader

Present Challenges of Human Resource Management

¨ Corporate reorganization

¨ Sustaining company’s position and growth

¨ Changing demographic workforce

¨ Knowledgeable and multi skill workforce

¨ Changing mindset of workforce

¨ New industrial relation approach

¨ Society based corporate responsibility

Human Resources – Perspective

The popular emerging perspective of Human Resource is integrating. Human Resource delivery
system processes into Human Resource enabling system and to achieve high levels of mutual
commitments. Mutual commitments is according to the three tiered institutional framework at strategic,
functional, and workplace levels.

Strategic Level

¨ Supportive business strategies

¨ Top management value commitment

¨ Effective voice for Human Resource strategy making and Governance

Functional level (HR – Policy)

¨ Staffing on stabilization

¨ Investment in Training and Development

¨ Contingent compensation

Work place level

¨ Selection on high standards

¨ Broad task design and team work

¨ Employee involvement in problem solving

¨ Climate of co-operation and trust

Role of HR

When the corporate is in turbulence zone, HR can put its categorical best in ensuring that he
guides the corporate successfully. HR needs to be very powerful in such situations because they not only
have to maintain the people motivation level but has to increase it using non-monetary tools. There are
certain points that HR can opt for in such a situation where people are insecure about their job. HR can
pay attention to develop the people on key skills and enhance competencies.

HR has to play an active role in refrain the top talents, act as a caring mother while top performers
punished with being rewarded for their performances, get people aligned and developed to fight with this
critical situation, develop people on cross functional skills to balance the surplus and shortage of
workforce, help the corporate to raise the people performance bar, ensure the fair evaluation of people
performance, play an active role in control of communication flow, pass the onus of making the corporate
lean, review its minor low cost benefits and contribute to enhance the value addition per employee by
maximizing employees inputs.

Sustaining HR’s Role

There are many more possibilities of sustaining HR’s increasing role as not only growth catalyst
but sustaining business through greater employee engagement. Therefore, HR professionals needs to
tighten their belts and get ready for some challenging yet meaningful activities which will help to change
the perception of HR forever. The economic crisis is forcing to separate some employee and there is no
way around. No problem! Do it, but avoid creating a panic around, in employees, in investors, in market
and in country by crying loud about the recession.
 HR’s task is also great, if the HR manager creates conducive environment through his
professional approach in achieving productivity of course, with the support of all teams which is the need
of the hour. Business has experienced different dynamics that pose many challenges. HR and
enforcement authorities together strive for achieving the common goals like compliance and adherence.
HR makes all efforts to create and sustain an employer and employee friendly atmosphere and
responding to the current needs and challenges.

HR’s Responsibility

In today’s economic meltdown where job cuts, loss, pay reduction, last come first go, insecurity of
employment atmosphere prevail, HR has special responsibility to create ease environment to the affected
by counseling, displaying care and concern, preparing them for multi skill task, engaging and deploying in
other required areas of functions like security, crisis management team, etc. HR should engage in more
positive side, making and helping employees to reform, perform and transform which will ultimately make
a solid impact on business. This will display the great and real engagement of Human Resource
Management.

Conclusion

Human Resource Management must be able to address the right kind of demands related to
Human Resource functions during the recession. 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. During this global recession, Human Resource Management is facing
the many challenges and changes in organizational level, workplace and HR department level itself. The
challenges can be faced by HR Managers effectively if proper strategies are implemented. The recession
is the temporary economic climate of the business world. It will be changed through more productivity at
minimal cost and maximize profit at moderate price of products in business.

Reference:

Emerging issues in Human Resource Management by Pramod Vernia publish

and IBH publish (p) Ltd.,

Human Resource Management by S.S.Khanka

Indian Journal of Industrial Relation Vol.35 No.1 July 1999

Human Resource Development News letter July 2006, Vol.22 issue

The ICFAI journal of organizational behavior October 2006

Management trends Vol.2.No.2.April2005- Sept. 2005.

Role of HR during recession, HRD News Letter Jan’09 Vol.24.iss.10 p.22

HR has to Challenge the Challenges, HRDNews Letter Jan’09Vol.24.iss.10 p.22