Challenges faced in an economic downturn


Recession involves decline in economic activity at the same time it is the measure of unemployment levels, housing price declines, stock market losses, and the absence of business expansion ( Recession can also be viewed as a financial crisis or rather a process which gives a chance to an organisation to demonstrate the stability to survive in the financial dip. This brief report will focus on three main aspects of HRM i.e. the human resource planning, flexibility and recruitment for strategic change in organisational behaviour in a Recession.


Human resource planning (HRP) is seen as a variant of manpower planning more concerned with qualitative issues and cultural change, than with hierarchical structures, succession plans and mathematical modelling. (Cowling and Walters, 1990)

Planning the human resource is very significant aspect for every company as it helps:

To obtain and retain the number of people required with the appropriate skills, expertise and competences.

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To anticipate problems of potential surpluses and deficits of people

To improve the utilisation of people by introducing flexible work system. (Armstrong, 2005)

Marchington and Wilkinson (2002) suggests that HR plans are developed to FIT with strategic goals as HRP is percieved as a major facilitator of competetive advantage and building flexibility into organization. Whereas the only drawback with planning is the difficulties in developing an accurate forecast in an unstable environment. On the contrary HRP aims to enable there organization to adapt to the change to uncertain environment. However other features that can shape up the HRP are nature of labour, organisatinal constraints like budget and cash flow, worker pressure and influenece, cost minimization, requirement of stable workfore to retain the labour turnover. (Beardwell et al 2004).

Careful planning during recession can help employers determine whether and how to restructure benefits. This increases the need for performance management and good succession planning, redefining HR department positions by recruiting more prospective employees from business schools in an organization, Talent management being of critical importance by gaining a strong hold on the retention of positive employees. (HR focus 2008)

To sum up, planning during recession helps the organisation(s) reviewing its existing HR policies, processes and procedures to ensure that they are purposeful and contributes directly to the success of the company


In this world of rapid changes Flexibility is an important part of the process by which the human resource planning can overcome problems of forecasting and adapting to the unforeseen (Bramham 2000).

Flexible working activities can be built considering retention of staff, recruitment, increased loyalty and commitment, high performance, reduced absenteeism. These arrangements of Flexible working have also been shown to have a positive relationship with lower stress and better heath. More research shows that there is a virtuous circle where satisfaction with work-life balance achieved through flexible working methods positively affects employee enjoyment of work and productivity. ( Working families briefing; sapphire partners).

Flexibility can be described under different forms which have diverging routes to success when implemented by the organisation(s).

3.1. Functional:

"Functional flexibility is the requirement or expectation that workers will perform tasks beyond those strictly specified as their main role or function. This might entail 'cross-working' (performing other people's jobs at the workplace), expanding the number of tasks performed or working in teams."( Cantlay, April 2009)

Flexibility in Human Resource has many functional benefits which organisations are gaining during recession. "The world's largest retailer Wal-Mart Stores Inc. has announced that it will cut 700 to 800 jobs at its north western Arkansas headquarters." (Stephanie Rosenbloom, Feb 2009). As Wal-Mart has merged its 3 different units into one (Pharmacy, Optical and In-Store health clinics), which eventually headed to unemployment. Such consolidation of units has benefited the firm in identifying its key workers and promoting skills in them like multi skilling which resulted in increased productivity, efficiency, reduced cost and effective employability. And since the company has planned to come up with less number of stores during this economic downturn more focus is on improving the mandatory functional and operational changes.

3.2. Numerical:

According to (Torrington et al 2004) Numerical flexibility responds in terms of number of people employed. This is achieved by creating flexibility in recruitment and retention by balancing part- time, full- time and over time employees.

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Atkinson and Meager described the way in which firms may develop flexibily in their approach of employment. Atkinson Model differentiates between an inner core of employees with high levels of task flexibility. These are highly paid and involve in those activities that are unique to the firm and has a distinctive character. Whereas an outer core called peripheral group consist of two different types of employees contractual based and generalized skilled employees which work based on external labour market demand. Here the achievement of numerical flexibility is paramount, and beyond the organization to the use of self-employed, subcontract and agency temporary staff, none of whom were employees of the organization.

Initially every organisation plans to reduce the no of employees in the firm during recession. But, there are massive gains to be had in reducing costs and not through headcount.

3.3. Financial:

According to (Heery and Noon 2001) financial flexibility is the policy of adjusting employment costs in lines with the demand for labour in the organisation. It usually involves performance based element of pay. Pay structure can encourage or hinder the flexibility within an organisation.

Organisation(s) are giving a lot of importance to flexibility tools as it is essential. "BT has also sought to save overheads by encouraging home-working" (Dwelly and Lake). Such measure encourages employees working from home which not only generates a 24 hour economy to the organisation but also to the environment by cooperating with the green issues.

On the other hand companies and schools are adopting a four day weeks, which rewards in saving energy, shorter working weeks increases efficiency and productivity and at the same time cut overtimes, absenteeism, staff turnover, and utility bills.(working

In the current scenario, almost all the organisations are working flexibly with a view to sustain the situation.

4.0 Recruitment -

Recession has affected almost every sector of an organisation. Recruitment during recession seems a strange idea. During such a downturn almost everything should come to freeze, but on a broader perception, organisation(s) have an optimistic approach that, the economy will rise again and they will require exceptionally talented people to run the organisation.

4.1. Recruitment Technique

Recruitment in recession is a positive approach provided if done strategically. On a global level, employers are using a range of recruitment methods. For example, in Spain some companies use instant messaging to attract new candidates- jobseekers see the company's billboard and text their details if they like the sound of the role.  (Personnel today 2008). The other most cost-effective way is Internal Recruitment, i.e. deploying the existing staff to a higher position from a lower position within the organisation. Such techniques will help "the management to show that existing employees are valued and that career development opportunities are available to them," (Torrington, et al 2008) even during recession.

As there is a rise in redundancies and in number of candidates most of the organisation(s) are finding Online-recruitment as the best alternative. It is considered to provide better-quality candidates. But other advantages cited (personnel today 2009) include:

the ability to add more information than might be possible in a newspaper advert

its usefulness in determining an applicant's computer literacy

its ability to reduce 'response-handling work in HR'.

Eric Lochner, managing director of Kenexa (Europe, Middle East and Asia) explains: "Everyone thinks e-recruitment is pretty well ingrained, but it's actually not. Only a very small percentage of the working population uses online recruitment. In China, for example, recruitment is still very much a paper-based activity."

Employers emphasis on being transparent in there recruitment process which is achieved by using online approach. This use of technology has a great impact on security and flexibility, "It helps employers sift through masses of applications and get the right candidates." (personnel today 2008)

Another aspect which shadows online recruitment is social networking sites which help in screening job applicants before interview. "It's fairly common to check candidates out on social networking sites such as LinkedIn and it's certainly something that managers in the UK, US and Western Europe are doing," says Loncher.

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Outsourcing of recruitment is another effective and economic way out for human resource management to deal strategically the economic downturn.


Analysing the human resource activities in this economic downturn has lead to many strategic changes in the organization and its behaviour some organisations are using it as a unique opportunity to perform smartly and effectively. Therefore, such situations demand the necessity of introducing flexible working conditions, proper planning to deal with the unforeseen and change management within the firm.