HRM is a strategic approach of managing the most valuable assets of any Organization, most important asset of any organization are those individuals who contribute or work for achieving the business objectives set by organizations. There are different terms which replaced HRM with the passage of time in managing the peoples in an organization i.e. HR, Personnel management etc HRM is basically all about employing people, managing people, developing resources, marinating and utilizing the services according to the job and requirements set by organization.
HRM has become more important now as economies are slowing down and peoples are losing their jobs in large numbers through out the world. How HRM can play a role in recession is discussed further in the article; one way is to keep the organization running in a smooth way to survive the period of recession. There are several other things which HRM professionals can do, like focusing on cost cutting and most importantly managing the FTEs in organization.
HRM is one of the most important factors that, in any organization play an important role as a change agent during the period of recession; HRM has to assist top management in recession period. Recession provides an opportunity to HRM and organizations to cancel out old policies and introduce some new and modern techniques with high standard to make their organizations better than before to keep working when economies are slow down.
The main focus in recession of all the organizations is mainly to reduce the cost, which is also one of the main causes of layoff. HRM can play an important role in reducing cost in many processes from recruiting to evaluating the employees.
There two ways to reduce the cost in recession period.
• To reduce the staff, firing some workers
• To divide the responsibility among employees in same cost.
The first way HRM identifies employees for layoff is diverting its responsibilities towards the workers who will be left in organization. The reduction cost which is processed by reducing large numbers of workers could be done without reducing a large number of workers, yes but one thing is important to be considered that is equality. For example, if one person is doing a particular job for $1000 per month then the focus is to distribute that same sum amongst two workers.
HRM can work out and identify those events which are useless. In the period of recession and focuses on them to control the cost, in recession, there is a cycle which ultimately effects the organizations and customers. When economies become slow the buying power of customers reduces, cost of producing, recruiting, training, sponsoring etc increases.
[adsense1]So we can say that every society and economy has to suffer, USA, Japan, Middle East, Europe, Asia as well. The problem arises when companies neglect investing in HRM, because it is one of the most important factors, when it comes to dealing with employees in bad situations. Without an HRM department, large organizations cannot exist. HRM creates a balance between demand and supply unlike Marketing and other function which concentrate on producing demand.
A very decent example of dealing with recession can be given by keeping China in mind, because of the fact that a very large huge number of labor is working in China but no firing or reduction took place when recession hit. If we compare the HRM function in China and other parts of the world, the only thing which comes to mind is that China produces goods at low costs, which is the ultimate objective of all the organizations. In china 3-4 peoples work for the same amount of money compared to Europe or USA where 1 person does the work for the same amount. In China the cost is being neutralized rather than being cut. The focus is to produce more with more workforces at lowest possible price and cost. Remember, laying off employees is not the only way to reduce cost, there are many other ways to reduce cost during recession, one of the ways to reduce cost by not laying off is by, utilizing man power with lower salaries, until the company can stand back on its feet.
Recommendations for facing negative challenges during recession
“Top management should know the contingency plan. Do the brainstorming session with your top management and contribute in their strategic planning. A complete or partial job freeze, however, communicate to the workforce that the company many continue to recruit key individuals even in difficult times. Review the employee performance evaluations to determine the key people that company cannot afford to lose. Flow of Communicate should be from top to down that will help in making conducive atmosphere within the organization. Make prepare yourself for individual and group concerns therefore there should be a proper counseling session, to maintain a calm atmosphere. Review all HR policies, processes and procedures to ensure that they are purposeful and contribute directly to the success of the company. Suppose the company has to lay-off staffs ensure that there are no other opportunities for them in other functions or divisions of the organization. Advise managers to deal the process of managing change.” The HR Management has to focus on unpopular innovations during the recession as the role of HR during the recession is to save money to the organization. The senior management expects all the support functions to bring innovative ideas and solutions which will lead to stronger organization, when the next growth era comes.