How Economic Climate of Recession Impact Upon the Behaviour of Organizations

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This report is written on fast food company i.e. McDonald's Restaurant to study their behaviour of organization during the period of recession regarding their human resource planning flexibility and recruitment strategies.


In an early treatment of the topic, Vetter (1967) defined human resource planning as:

"The process by which management determines how the organization should move from its current manpower position to its desired position. Through planning, management strives to have the right number and the right kinds of people, at the right places, at the right time, doing things which result in both the organization and the individual receiving maximum long-run benefits". viewed on 20-02-2010

Human resource planning assists organizations to recruit, retain, and optimize the deployment of the personnel needed to meet business objectives and to respond to changes in the external environment. The process involves carrying out a skills analysis of the existing workforce, carrying out manpower forecasting, and taking action to ensure that supply meets demand. This may include the development of training and retraining strategies. viewed on 27-02-2011

HR planning accomplishes the organization's requirement for human resource to achieve the strategic goals. HR planning based on the conviction that people are most important strategic resource for the organization. In the long run usually it concerns with matching resources to business needs, although some time it address shorter term requirements along with the human resource needs both in quantitative and qualitative terms, which means to answer two basic questions: first, how many people, and second, what sort of people? Human resource planning also looks at broader issues relating to the ways in which people are employed and developed in order to improve its effectiveness. The objectives of human resource planning in any organization will depend mainly on its perspective but in general terms, the usual objectives might be to:

Attract and retain the number of people required with the proper skills, expertise and competencies.

Anticipate the problems of potential surpluses or deficits of people.

Grow well-trained and flexible personnel, hence backing to the organization's ability to adapt to an uncertain and changing environment.

Reduces reliance on external recruitment when key skills are in short supply by formulating retention, as well as employee development strategies.

Improve the utilization of people by introducing more flexible systems of work.

Planning for manpower is very important for an organization to decide on the basis of its work and effort required to carry out its specific targets. It's all about choosing the appropriate resources and to upgrade the existing resources. To make the planning effective organization should keep in mind the following two elements:

Analysis of existing resources.

Need of resources for future activities.

Human Resource Planning plays a vital role during recession period because during recession period most of the organizations do right sizing. Companies reassess their need and try to minimize their expenses through different means as some of the companies adopt a policy to reduce their employees because of downturn and try to keep the persons having multiple skills. The world recession presents an opportunity for strong companies to strengthen their human resource capabilities, including hiring of talented individuals caught in corporate downsizing. Some big companies prepare themselves to compete in the boom period after recession and try to hunt the talented people from the outside at their terms and conditions as in the recession period the unemployment always increased which provide the companies' opportunity to hire skilled people and prepare them for the boom period.

McDonald's HR management always think about the business as well as employees. They always keep searching the new people even in the recession period they did not stop recruiting. They did not sack anybody until they involved in any disciplinary misconduct, although they reduce the working hours of their employees according to their requirement. McDonald follow the both Soft and Hard approach at the same time. They Introduces the temporary contract in such a way that when they recruit anybody they must offer him minimum of 7 hours per week and maximum according to their requirement. They trained every employee to work at any section of the store as and when required. Their every employee holds multi skills and remains ready to work at any position during his/her shift according to the need of business.


Hard HRM approach is very instrumental, practical approach where people considered as a passive resource to be used, deployed and if necessary disposed off. In Hard approach HR planning seem as a factor of production which is not compatible with trade unions which some time may necessitate confrontation to implement concepts whereas in Soft HRM approach, people are treated as human capital and provided with a flexible environment to work during recession period.


Wright and Snell (1998) define flexibility as:

"An organization's ability to reconfigure resources and activities quickly in response to environmental demands".

Flexible working opportunities can worth for everyone i.e. employers, employees and their families. Most of the employers are now aware of that flexible working opportunities for their employees make good sense of business so they encourage it. Flexible working facilitates the employees to choose the work pattern according to their availability. McDonald's restaurant also provides the flexible working opportunity to their employees.

'Flexible working' is a phrase that describes any working pattern adapted to suit the need of workforce. Common types of flexible working are as follows:

Numerical flexibility: Employers can easily increase or decrease the head counts quickly and easily according to change in demand for labour which provides the employer opportunity to keep the workers as and when required basis. As these kind of companies having core staff with multi skills which provide short term coverage of work at different positions and these companies also exercise the inside recruitment. McDonald's restaurant practices it by reducing hours of workers during quite time and gets maximum work from the members who are multi skills. During recession period firms do redundancies and keep only core staff.

Functional flexibility: Employers can easily redeploy their workers quickly and smoothly between activities and tasks it accomplished primarily by having a labour force that is able to carry out a wide range of tasks. This strategy applied to the workers having multi skills to perform different functions in an organization. In recession it is a useful strategy for the firms including McDonald as they only keep the core workers having multi skills to get them involved in wide range of tasks.

Temporal flexibility: It facilitates the worker to schedule the start and finish time according to his choice which definitely provides him with increased choice and control regarding working hours such as part time workers contracted to work less than full time hours. Employers can also provide them the facility take paid/unpaid leave during school holidays while they have a permanent contract and term time employees. Another form of temporal flexibility is Job sharing where workers can share the responsibility for a job between them.

Reward flexibility: is having a payment system in place that encourages and reward improved performance e.g. performance related pay, bonus, incentives etc. McDonald's restaurant exercises the reward flexibility by rewarding reward cards to Crew of the Quarter, Employee of the Month and if team meet the target they reward them with discount vouchers. This is a good kind of motivation for the employees.

Locational flexibility: workers work remotely from different locations i.e. own home using telecommunication connections to the work place, if necessary. Garment workers bring cloth at home and sew specific hours a day. Police researchers bring lengthy documents at home and work there to avoid interruption. Some workers do working remotely from a designated satellite work centre. In recession period this can be a useful strategy like if garment worker bring cloths at home employer do not have to provide her a space for work and can reduce cost.

During the recession period Flexible work arrangements are suitable for the firms as they can hire the people on as and when required basis. Firms can arrange to adapt any strategy of flexible working according to their requirement to reduce cost and maintain efficiency.


Farnham presented the concept of strategy as:

"A plan or pattern that integrates an organization's major goals, policies and actions into a coherent whole"

Farnham (1999)

Acquiring and retaining high-quality talent is critical to an organisation's success. In a tight market, recruiters need to be more selective in their choices because poor recruiting decisions can yield negative impact in the long run which, in turn, result impact the staff morale, the production of high quality goods and services.

Recruitment can be done through following methods:

Recruitment from internal sources:

Internally through the promotion and transfer of existing personnel.

Through referrals, by current staff members.

Recruitment from External resources:


Posting vacancies.

College Recruitment.

Job Fairs.

Out sourcing


Recession provide the HR professional opportunity to step in and contribute strategically. The first possible logical management decision usually can be freeze of recruitment when the sales go down as the top management want to keep the cash flows under control followed by a restructuring process wherein they analyse the individual capability to make retain or layoff decision. Whatever the strategy company adopt, they must think about the key personnel of the company because most companies do these practices that during recession they do redundancies a lot and after the recession period they face really very difficult to finding the skilled people on the same rate. During recession period big companies practice a different approach by hiring skilled people to prepare themselves for the boom period after the recession.


Recession has a great impact on Human Resources (HR) planning, flexibility and recruitment strategies as Human resource professionals have to think more strategically in difficult economic environment than working in times of rapid growth. During the tight economic environment they have to manage the recession period and also required to think very positively for the boom period after the recession.

Keeping in view the business planning and recruitment strategies adopted by big companies/organizations, recession dose not really have any impact as their business is big enough to cope with these issue because when they do planning for business they already consider these things as they have got their own HR Departments to face downturn/recession crises.


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