Human Resource Management in the Global Financial Crisis
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Published: Tue, 10 Jul 2018
What is Consumer Behavior?
Consumer behavior is basic study of decision making process; when, where, what, how to buy and not to buy. It involves psychology, sociology and economics. It also duties individual’s demographics and variable people’s wants. Consumer behavior is very much dependent on internal and external factors. Internal factors are self-needs and wants of individuals whereas external factors are financial resources and many others like psychological, demographic and social factors (Schiffman, 2009).
Global Financial Crisis has changed consumer behavior. It was triggered by “liquidity shortfall in banking system of United States of America due to overvaluation of assets in year 2007- to date”. Global Financial Crisis has great impact on consumer behavior. The impact of Global Financial Crisis can be observed on the spending pattern of individual and as well as of a business. Global Financial Crisis is a major force that has impact on emotional and mental behavior of consumer. Businesses have identified and understand that how consumers testament react to difficult system conditions within different cultures and political economy. The current crisis is having severe impact on consumer behavior. In this juncture the user s fearfulness of the future strongly impacts their behavior and is hard to overcome (Perriman, 2009).
Global Financial Crisis – Impact on Human Resources
Global Financial Crisis is a three words phrase. It has fictitious a salient profile throughout the existence s economies over a very shortstop period of time. For human Recourses fractionators and people managers, the global financial crisis had and impact in a number of areas as consumer spending decreased, and businesses began to look as way to cut costs in response to reduced income. Recruitment and Selection was in many ways an early causality, job advertisements shrunk across the board and remuneration, especially executive remuneration, was put under the microscope. Because everything in business affects everything else, each of these changes has repercussions for human resources departments, especially in continuing to attract and retain talented staff without which many enterprises lose their competitive advantage (Wilson, 2009).
Global Financial Crisis has made organizations to respond to these human resources issues as matters of strategy, how to retain talented and key employees. Human Resources will need to maintain the balance of retaining key talent and reducing labor cost as well as managing the flow-on impacts on remuneration. Remuneration arrangements will be impacted for executives and through the negotiation of employment agreements. This will serve up to having need of human resources to take a more generally based role, harmonizing the money-making needs of the organization with the kind of traditions and people needed to make sure the sustainability and good corporate citizenship of the business. Human resources has not credit or sole rights on the principle of the business and the sort of traditions that are required within an organization, but it is an ideal opportunity for the human resources function to take a position on influencing a balance in what is right for all stakeholders to the organization. Global Financial Crisis has made performance management focal point for the organization. Organizations are focusing on talent management in order to retain key employees. Such practices adopted by the organizations will improve the performance measurement and the performance review of all the individuals (Wilson, 2009).
Human Resources Management
Human Resources Management is considered to be the essence of every management function. Human resources management is a strategic and logical approach to the management of a system within an organization and that is the most valuable assets human resources. Human Resources Planning posits the right number of people at the right place and at the right time. A common knowledge of human resources is staffing which is the most critical function for the success of an organization. To proactively respond to the replacements of recent turnovers as well as upsizing the caliber of talent and therefore increasing the capability of the company by means of adding new competencies set, strategic recruitment and selection is the key (Nelson 1997).
Implications in Term of Recruitment and Selection
Recruitment and selection of employees is considered to be the most sensitive function of human resources management. Recruitment and selection are boundary less functions of the organizations. An effective recruitment process follows these steps; job definition, job specification, job description, designing recruitment and selection process. Selection is the other side of recruitment and selection process. Selection process answers a basic question that what is required by the job. It is the responsibility of the recruiter to take out the best. Recruitment and selection brings stability to an organization by attracting and hiring talented workers. Human Resources demonstrate the value-added nature of its role. HR professionals are finding way to maximize the value-added cost of recruitments and selection while at the same time minimizing overall expenditure. This change of view has led to greater awareness of the costs of inadequacies and errors, productivity losses, high turnover, worker errors and accidents, severed relationships with clients and suppliers, and lost business. Another trend that has a big impact on the recruitment and selection activity is the increasing competition for talented workers. During recruitment and selection, aiming at diversity must be considered because a diverse workforce serves as a resource rather than a threat. This is a capacity-building strategy evident in range of talents, experience and knowledge insight (Richardson, 2006).
Role of Human Resources Management in Crisis
Human resources management plays a vital and strategic role in the survival of an organization. In this time of global financial crisis, human resources management must not only innovate but must also act as change agents, strategists, mentors, counselors and motivators. Human Resources management must adopt a people-centered model of management instead of the go-get-them approach. The latter approach will not only push down the morale of your employees but it will also shove your talented workers from leaving your organization.
Retaining Key Employees
Retaining the right and key employees is a crucial challenge for any human resources manager. Employees are considered to be the most important asset within an organization. In troubled, economic condition, human resources managers must develop a strategy that will keep the most talented employees in your organization and at the same time, discouraged the not-so employees from hurting the company’s operations.
The global crisis is pushing companies to stretch their financial resources to buffer the effects of limited income as a result of the sharp decline in the demand of their products and services. Efficiency is the key to the survival of any company in this kind of economic condition. Running the company at the least possible cost should be the priority of management. In order to achieve that, companies must keep a pool of competent employees that will help the organization in pushing their sales, expanding their market, innovating new products and in keeping the operations efficient as possible. Employees that are causing too much “wastage” should be encouraged to be more productive and their financial contribution to the company must be at par with the salaries they are receiving. We are not saying that we should put a price tag on every employee, but we should also remember that business organizations are not synonymous to charitable institutions. Income is always their lifeblood, period. With this, HR managers should always find a way to motivate this type of employees, either through training or coaching, before making any drastic actions like transfers, demotions or terminations (Raman, 2006)
Effective Employee Retention Strategies
Sharp and smart managers for all time understand the significance of retaining the best employees on board. It is a fact that, retention of key employees is significant for the success of any organization in the long run. The basic reason behind retaining a key employee is the performance of those employees which is frequently has a great link with the quality work, customer satisfaction, and even to the image of a company.
Finding a Cause
Possibly, there are many causes which make an employee to leave the organization and global financial crisis could be the main reason.
What can be done?
It is impossible though, to scrap all the problems totally but there are certain way outs by which organizations can handle such situations. Human resources department can address such issues along with the help of top management to evolve strategies to retain key employees at all the level.
At the time of Recruitment
Select the right people through competency screening.
Offer an attractive, competitive, benefits package.
Make clear of performance enhanced incentives and other benefits. Keep these promises, later.
At the Office
Work of an employee must be communicated clearly for example job details, time limit, any change made to these let the employees know about it as soon as possible.
Employees must be provided necessary tools and equipment to complete a task.
Training must be provided. Training and development of employees at work place is essential.
Provide the employees a stress free work environment. People want to enjoy their work. Make work and work place cheerful and pleasant as possible.
Make sure that employees know that their work is important for the organization. Feeling valued by their employer is the key to high employee motivation and morale. Recognize their strengths and help them to improve those they lack.
Offer excellent career growth prospects. Encourage & groom employees to take up higher positions/openings. If they don’t get opportunity for growth within the organization, they will look elsewhere for it.
Implement competency models, which are well integrated, with HR processes like selection & recruitments, training, performance appraisal and potential appraisal (Raman, 2006).
Training and Development and Career Planning
It has become turmoil and uncertain during the recent global financial crisis that human resources managers think in many ways before investing in workplace, training and development of the employees, soft skills programs. The prospect of investing in a workforce and which has the potential to drop off or even decreased their purchasing choices in terms of training and development.
The fact of the matter is that this Global Problem calls for even stronger measures to be put into place to ensure that Workplaces all over the world, can withstand these tough times. It is exactly this sort of climate which will determine what businesses will prosper and even flourish due to past and ongoing investment in the Training and Development of staff as well as the all important Risk Management measures that have been out into place. The investment in Human Capital and Comprehensive Retention & Career Planning and Risk Management Strategies will determine which businesses are more vulnerable to market & economic volatility (James L., and Debra J. Mesch 1995).
Strategic Human Resources Management
Global Financial Crisis has made organizations to think strategically. Strategic management of organizations (SHRM) has greater concentration on various functions of human resources management. Strategic management is an art of formulation and implementation of various functions in order to achieve its goals and objective. Strategic human resources management is the prototype of planned human resources deployment and activities intends to enable an organization to achieve its goals and objective. Especially when it comes to bad financial position strategic management process is in practice whenever there is financial crisis and or bad economic situation through out the business world. Strategic human resources management will need to show that careful planning of the people issues will make it substantially easier for the organization to achieve its wider strategic and operational goals during the global financial crisis (Asyali, 2007)
As they say, happiness can be contagious. So make sure the work place is a happy one, which every employee would love to spend time. Human resources department along with senior management must take steps to make sure of this.
Effective human resource management must be practiced at both strategic and day-to-day levels. HR management practices must reflect company policy as to how it will manage and relate to its employees. The HR strategy should evolve from a transactional support role to partnering in the organizations business strategy. HR must take steps to be aware of employee problems and try to solve them, creatively. According to the recent studies, organizations are responding to the global financial crisis according to the changes in economic environment which are directly and indirectly effecting their operations and organizations are aligning their HR strategies to their business strategies. The downturn has increased people’s desire for simplicity and has forced consumer’s to question their beliefs and attitudes as well.
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