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School of Engineering & Computing
MBA- Engineering Management
M11HRM- Human Resource Management
The global economic recession in recent days shook the developing and developed countries economy and it caused an economic breakdown in organisations. In this economic crisis, the market conditions had changed into a huge extent and created an environment for viability. This global recession has created a challenge for the human resource management team of each organisation to increase the productivity and to hold the organisation sustainable even in these circumstances. The expectation from the HR management is to lead the organisation with new ideas and to face the challenges and create opportunities to remain sustainable. The key areas and issues discussed in the article are, global market stability, coming out of recession, forecast for next recession, effects of recession with regards to employee.
Global Market Stability related issues:
In past few months, the global economy has encountered stresses since the great depression 70 years ago. The stability of the global market is affected by the economic depression and the organisations were unaware of it. The global economy requires firms to transform themselves into global companies that are able to compete with anybody, anywhere, anytime. This imperative means the organisation must excel what so ever the global market stability and to compete to survive. The first negative effect on global market instability will be around people related to the organisation on whom the prosperity of the company reposes.
The global market instability induces a challenge for human resource team to manage the workforce. Companies do whatever they can to reduce the cost by reducing the employee hours, reducing the shifts, taking other steps to affects the employees. Countries are competing with each other for a rare and cherished human resource as if they compete for oil or gold in the past. Frank Smith, vice president of global organizational development and training at Wyeth- Ayerst Pharmaceuticals, said “A big payoff of globalization is the capacity to gather the best talent from anywhere to work on your biggest problems. The war over talent will get worse, not better”. (Charles M. Vance et al, 2006)
I. Strategic Planning – issue
The issue regarding strategic planning,
- Sudden economic depression and global market downturn will lead to reducing their workforce; this in turn affects the productivity and profit of the organization.
- In economic breakdown many organisations have sacked employees from jobs and employed new staffs after the recession.
The possible solutions identified for the issues are companies should keep the experienced workforce rather than employing new people because they are fully experienced and the organisation can utilize their skills all the time. They can also focus on reorganizing the employees to some other units rather than sending out.
Organisations will not lose the experienced and most valued human resource by following this strategic plan. They have to keep the employees in such a position that the employee should feel proud about themselves for working in this organisation. This happens only when there’s a proper job safety and security for their life.
By keeping the employee with a change in their position or unit will retain the experience and keep the organization’s secrets inside and can be replaced back when the recession gets solved. This will also reduce the training time and expenses for a new employee and resources. We also can’t assure the new employee is as skilled as the experienced one.
II. Recruiting new employees – issue
The recruitment of new employee is a crucial part of human resource for any organisation. The suitable solution can be recruiting experienced and multi skilled labours.
Even in the recession company needs to recruit employees to continue the productivity. But the multi skilled labours will need to be paid more likewise the experienced too. So still it causes a drawback in the time of recession.
Countries coming out of recession:
Both the developed and developing countries are affected by recession. Each and every countries economic growth has shown a sudden fall in financial analysis. A comprehensive survey of 3,348 executives in more than 30 European countries and interviews conducted over 90 senior leaders of large corporations have been published. In that survey, 883 executives answered companies (countries) learnt from previous experience have survived the recession soon. The companies with committed employees have done well through tough times is the common result from the interviews and surveys.
I. Extensive training, learning and development issues:
In the recession companies should conduct more workshops and curricular activities to induce and motivate the work force and to have a discussion with the employees to discuss about the recession and proper solutions that can be adopted. The employees also should make use of these workshops by considering these as opportunities to develop their skills and contribute more to organisation’s sustainability.
Thus the organisations develop the ability and improvise on its own by these profitable activities. Thus the organization utilizes some money from the return on their capital to promote themselves. Thus the investment can be compensated in recruitment and training new entrants. To stay competitive and sustainable we need committed and experienced employee.
II. Selective hiring and firing:
Based upon their individual abilities and skills employees are reserved and sacked. So this gives a chance for the retained employees to identify their position in the organisation. The employees causing trouble for the organizational growth can be sacked with the recession as a reason so that no one can question against. Hiring new employees from consultants should be brought legally and the consultants should be reputed and recognized one. There shouldn’t be any trouble for the organisation after hiring them.
The employees losing the job shouldn’t be left behind; they should be given the incentive security as per the law. They should be given proper reason why they have been sacked; recession can be given as one of the reason. They should be equally considered and not sacked on the basis of any discriminations or personal identities. Before staff lay off the company should consider all the alternative measure to cut the cost, that should be considered as an last measure for survival.
Forecast for next recession:
Economists think next recession will occur in this decade. There is an enormous amount of assumption over the recession’s end. There is an unbalance in the rising unemployment, consumer cost-cutting with rising commercial profits and equity prices. Companies slashing the cost, employees and anything that isn’t essential for the operations to run and productivity. We need cash cows of BCG matrix to run the business successful and keep the organisation in the market in the upcoming recession.
I. Productivity and Resourcing:
Organisations should continue to produce at the same level and measure the level of decrease or increase in productivity and also money flow in each and every step to keep up the pace. The alternative measure to keep the company in pace is to out sourcing to reduce the labor cost and some more additional costs which contribute a burden in the recession period.
The resourcing of an organisation falls under two categories producing on its own and outsourcing from the suppliers. The solutions provided may give hand for the competitive advantage of the organisation but it is not a cost effective measure. Thus implementation of these kinds of solutions needs to be revised.
Organisations, methods, systems, technologies, processes must be mutually designed like a chain. Harmonisation boosts the company’s competitive advantage and provides the necessary freedom, flexibility and ability to react in tough times like recession. Positive Human Resource work, i.e. learning increasingly rigorous qualitative and quantitative requirements, while keeping to the huge or small budget.
The greater flexibility and capacity is produced by the changes as the result of unity which requires harmonisation of heterogeneous, process, systems and data. Methodical cost alignment of the company will yield better results in economic breakdown. This systematic cost efficiency can be achieved by harmonisation of heterogeneous IT backgrounds i.e., adaptation of platforms, relevant processes and organizational structures.
III. Cost effective management:
The organisation’s current status and future scope lies on the cost effectiveness of the organisation. When we say cost cutting the first thought to strike our mind will be labour costs. Reducing the labour cost is not only the actual measure for any organisation to yield cost effectiveness. That should be kept as a last option and should be kept as a cut throat option for any large or small scale industries. We can also reduce the costs in the buying and out sourcing areas; the bargaining power of the organisation will give more competitive advantage and cost efficiency.
The resulted facts from the past economic breakdown is,
- the knowledge gained by the management how to reduce cost
- the human resource team learned how to improve the HR strategies
- how to manage people in tough situations
- How to plan and execute a new idea in terms of cost effectiveness.
These are the learning outcomes which resulted from the recession for every HR team of an organisation.
Effects of recession over employees:
The term performance management means “A strategic and integrated approach to increasing the effectiveness of organisations by improving the performance of people who work in them and by developing the capabilities of teams and individual contributors . A continuous process involving reviews that focus on the future rather than the past”.(Baron and Armstrong, 1998, p 38 – 39)
To keep the employees together with them in the recession period, organisations have encountered few steps to survive in tough times,
Status differentialsx Status differentials – Changing their positions either promotion or demotion. The promotion will motivate the employ and also induce the others to put in all efforts to achieve that level. Demotion will let the employee know his/her work in the organisation is not sufficient and needs to improve.
Employee differentiation – The employee can be differentiated on the basis of their works and skills. Not based on the position they are in but it depends on the ability and skills they hold.
Job rotation – The redeployment and change in the departments will always yield a benefit to use those multi-skilled employees in the tough times and crisis.
Employee involvement and voice – The management opening the ears for employee’s voice will receive more profit than the one which doesn’t. The employee involvement and recognition will always give the expected growth and output.
Motivation – It is an essential need for every human to be successful and continue to be. Employee motivation should be considered as a part of the strategic objectives and it is an extremely complex process which needs proper attention.
Appraisal – They encourage managers and employees to build the relationship and trust which helps them to work together to achieve their respective goals. This provides a layout, structure and serves as a feedback process to improve the organisation in the current unstable market.
Long term vision Long term vision – The long term goal setting and long term forecast in the human resource will help to develop a competitive advantage over the competitors.
Reward and performance management:
- The estimation of performance for the each employee throughout the recession time by the HR managers to find out the best employees for their organization was also a another issue faced by the HR managers during recession.
- During the economic crisis most of the organisations are reducing their bonus and incentives schemes offered to the employees and even more some of the organisations are eliminating the schemes for the permanent staffs.
- By applying the performance management by the HR personnel to measure and evaluate employee’s performance by which they can maintain the talented staff for the long time
- The company has to give rewards to the employees even also in recession.
The system of annual reward and appraisals for the employees not only motivates them towards their goal also helpful in develop them more productive and to hold them in the organization for the longer period of time. The reward and performance is the motivational force for an organisation.
Employee involvement & engagement:
There was one more issue during recession there is no job security for the employees which may have the impact on each employees motivation a key factor in performance and productivity (Emerald Published Article, 2002).
- Companies should make use of the employee talent and skills of the individuals and make them participate in the workshops and utilize their ground floor knowledge to the top level. As previously said the countries and companies succeeded the recession have learned from the previous experience. This is nothing but keeping the employee committed and engaged.
- The company should not mainly focus on costs control but there were also some other things like talent stays critical for the employers and also for the future influence of function. By this time HR manager has to improve the system so that the employers can work together and learn.
- The company themselves has to come forward and they should mainly focus on the engagement of the employee then it is valued as honesty and trust. And they also start an initial step to bring motivation and discipline.
- Reduced absentees and increased rewards will produce better results in human resource perspective. The HR team has to analyse the various motivation techniques and work accordingly with the labours to improve better communication between top and bottom level workforce of an organisation.
An organisation’s most important and extreme task is to motivate the employees properly. They cannot afford to lose skilled people without motivating them. The rewards and promotions have to be provided at regular time periods. Employees involved in field work have to be given the incentives. By these means an employee can be kept close to an organisation which will ultimately develop the attitude in the employee to think the organisation as his own and to work properly. The focus should be on employee’s strengths and not on weaknesses. There should be a layout and design in the work and the employment should be safe and they need job safety at the last and most key factor.
All the key factors of HRM such as strategic planning, contextualities, job design, work flexibility, motivation, appraisals etc provide an effective international human resource management. These HRM can be defined in short term as “HRM on a larger scale” (Torrington 1994:6), the practical definition is “concerned with the HR problems in multi-cultural firms in foreign subsidiaries (such as expatriate management) or, more broadly, with the unfolding of HR issues that are associated with the various styles of the internationalisation process” (Boxall1995:5)
Multinational Corporations and International sectors use the key factors of international HRM to analyse the global market place and yield necessary results such as to employ people with change in the horizontal and vertical positions, change in the western or eastern culture, communication skills etc. In international HRM, the sectors in different parts of the world will be affected by different economic breakdown with respect to their places where they are positioned. So this gain an advantage for the MNC’s to utilize the resources widely in areas where recession affected badly.
The main five areas that can regarded when discussing about HRM is
- Power distance
- Uncertainty avoidance
- Time Orientation
The proper training and communication skills are the most required factors for an international organisation. But factors like money value, currency exchange, environmental factors, government related issues, tax policies have to been considered and based on these employees will be recruited. That employment should produce profit for the organisation, for example if an organisation employs a staff from Mumbai to UK or US that can be a profitable shift because of the favour in money value and currency variations. But in the other way when an employee shifts from US to India it will be an loss to the organisation for the same reason.
1. Effective communication between the top level management with the human resource management.
2. Suggesting with the bottom level management and top level management regarding all the issues that the organisation.
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