Human Resource Managements Role in Recession

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The recession is healthy, from time to time. The recession helps to stop the businesses, which are not bringing value added and the human capital is transferred to more vital businesses at lower costs. In the companies, which survive the recession, the HRM Role is very important.

The recession is very dangerous for the companies. During the times, when the business grows dramatically, the HRM Function introduces different policies, which are focused on spending money. The company was able to carry all the costs and the employees started to take the policies as the standard.

In time of the recession, the HRM Role is to make cost cuts and the HRM Function has to provide the list of the policies and the procedures to be cancelled or discontinued. The employees do not like it, but the company has to return to the healthy basis for the future growth.

The HRM Function has to be able to identify the top potential in the organization quickly as the company needs to make the cuts in the human capital of the organization. The HRM Function needs to provide the tools to managers to inform their key employees about the security, the company wants to offer to key employees.

The HRM Function is not a department to make employees happy, the role of HRM Function is also about the cuts in the costs of the organization and the HRM Function's role is about minimizing the damages to the organization.

The recession can be a very interesting period for the HRM Function. The HRM Professionals can design, develop and implement a lot of new HRM Processes in the recession, which are simple and really efficient. But they need to have a clear vision of the HRM behavior in the recession to be really successful.

The HRM Management has to define the HRM Vision for the Recession. The employees in Human Resources have to understand the goals for the difficult period of the recession. Many activities in the organization can be cancelled, but the HRM Employees have to understand the reasons.

The HRM Vision for the Recession is needed for the employees of the HRM Function as they should serve the organization as the change agents. Many procedures, policies and processes can be cancelled during the recession or they can be strongly changed and the HRM Employees have to be able to explain the reasons for the change or cancellation of the policies.

The HRM Management has to push the top management to define the vision of the organization for the recession as the roles in the organization can be clearly defined. The top management has to set the vision for the strategic initiatives as the whole organization can share the same goals. It is very painful for the top management to define such goals, but the employees and managers can support the painful way to prosperity, when they believe and trust their leaders.

The HRM Function can serve as the navigator and facilitator for employees, but the HRM Vision for the recession has to be defined and clearly communicated and explained to HRM employees. The HRM Management has to communicate the full story as the HRM Employees have usually access to confidential information and they can build a good picture of the organization's health very quickly.

The HRM Vision for the Recession should be about the trust and honesty. The HRM Employees have to understand the need to make changes and to make the cuts in the procedures they introduced and run for the organization. The HRM Management has to be proud to announce the cutting of job positions in the HRM Function and to explain the reasons for selecting the employees to be fired.

The HRM Vision for the Recession can play a significant role in the success of the HRM Function in the recession. The HRM Management Team has to set it as a priority and the vision has to be transformed into actions quickly.

Main HR Recession Initiatives

The HR Function has to conduct several HR Recession Initiatives as soon as the recession is recognized in the organization. The organization can grow rapidly, when the recession ruins companies around your organization. But, when the organization feels the pain from the recession, the HRM Function has to start several HR Recession Initiatives.

The HR Recession Initiatives have to be focused on the analysis of the current situation and the unlocking the potential for the future growth. The HR Recession Initiatives are not just about the cost cutting, the recession initiatives have to be focused in more areas:

Cost Cutting

Key Groups of Employees

Process Efficiency

Honest Information for Employees

Management Consulting

The HR Recession Initiatives have to be balanced well. The cost cutting is about the immediate activities to decrease the personnel expenses of the organization, but the HR Recession Initiatives have to be focused on the future as well.

The employees are told to be the best capital of the organization and the HR Recession Initiatives cannot be focused on the full destroy of the human capital of the organization. The employees to be fired have to be selected carefully and the rest of employees have to sure about the future of the organization. The organization has to guarantee the future for the most important employees - the key employees, high potentials and the managers.

The HRM Function has to focus on the honest communication in the recession. The HRM Function has to inform the employees fairly about the bonuses, salaries and number of employees in the organization in advance as the employees can prepare themselves.

The HRM Function has to have a good balance in the HR Recession Initiatives. The employees and managers have to feel the fairness and transparency in the initiatives as they can build the trust to the HRM Function.

HRM Priorities and Recession

The recession changes the priorities of the organization. The change of the organization´s priorities should be reflected in the HRM Function priorities and HRM Strategy as well. The HRM Function cannot live alone; it has to follow the general business strategy.

The HRM Priorities in the Recession can change quickly or they need to be adjusted at least. The organization has no resources to add to the new initiatives and the HRM Function can be asked to produce cost savings on current programs.

The HRM Management has to make a quick scan of current procedures and policies to be prepared for the cancellation or change, when asked to make an urgent cost cut. The recession is about cost cuts and designing efficient, cheap HR Processes.

The HR Priorities have to be assessed using a simple tool for selecting the processes and policies to be discontinued. The best tool is to use the simple matrix, which divides the processes and procedures according their costs and impact on the organization.

Generally, the HRM Function should cancel the processes and procedures with the highest costs and lowest impact on the organization. The HRM Function has to be very careful as cancellation of some policies can be very sensitive for employees. Those are the processes and procedures with the highest impact.

The recession changes HRM Priorities. The HRM Function has to make a quick response to changed conditions by the cancellation of the least important procedures and policies, but the HRM Function has to change the HR Strategy to have a consistent approach during the whole recession period.

The HRM Function has to adjust the HRM Priorities in the recession very sensitive way as the employees feel some security and consistency and that they can trust the organization and its success in the war with the recession. The HRM Function has to keep the role of the employee advocate and this should be reflected in the decision matrix as well. The recession is not a chance to change and cancel everything, the corporate culture should not be touched by the change of the HRM Priorities during the recession.

The recession is about the creative Human Resources Management. The HRM Function is asked to bring new ideas, to change the HRM Processes and to develop or change the procedures. And this effort has to be cheap or it has to cut the costs of the organization. The HRM Innovation is easy in times of the business growth, but the recession is not good for big innovative HRM Initiatives.

On the other hand, the top management understands the effort to innovate the HRM Processes better. The top management is in the search for the potential cost savings and they count every single penny brought by the line management. The HRM Costs are usually a very significant cost to the organization and the HRM Function has to be proactive.

The HRM Function has to focus on unpopular innovations during the recession as the role of Human Resources during the recession is to save money to the organization. The top management expects all the support functions to bring innovative solutions, which will have to make the organization stronger, when the next growth era comes.

The HRM Innovation during the recession has to focus on the following topics:

Reduce the number of employees in the organization

Strategic initiatives to increase the productivity and efficiency of the whole organization

Redesign of the compensation scheme

Cancellation of several benefit schemes

Training and Development Programs cutting

On the other hand the HRM Function has to find innovative solutions for the following topics:

Identifying the real key employees and to keep them in the organization

Identifying the real top potentials and to strengthen their development program

The second two topics have to be done with the minimum additional costs and it is a really hard task to accomplish. The HRM Function has to have priorities in mind and the strategic impact of the HRM Innovations in the recession time. The role of the HRM Function is not to cut the costs for the time being, but to make the organization stronger and ready for the future growth.

Recession and Employees' career options

The employees are the most important assets of the organization. In times of the recession, the employees have to be secure about their future and the organization should announce a clear plan to them.

The HRM Function is responsible for the employees as their employee advocate and the change agent. The HRM Function has to be involved in all the communication plans, the communication toward employees.

The recession brings a panic to the organization. The rumors about the recession and the layoffs spread quickly around the organization and the HRM Function has to monitor the emotions in the employee population. The rumors are the most important danger for the successful survival of the recession. When the employees start to speak about the recession, the key employees and top talents can leave the organization within several weeks, as they feel no future in the organization.

The role of the HRM Function in Recession for the employees is being their real advocate. The HRM Function should prepare the proper communication and it should manage to get the buy in from the top management.

The employees feel the danger from the recession, the top management has to inform all the employees honestly about the outlook for the organization and it has to provide them with the vision to follow.

Affected HR Processes by the Recession

The recession affects different HRM Processes. Some HR Processes can be affected by the recession very hardly and other processes can be completely immune from the recession impact. The HRM Function has to react very quickly and the response has to include the whole HRM team as all employees have to help the most affected employees to keep the level of the satisfaction.

The organization needs to save the costs and it needs to identify and potential additional source for the cost saving and starting a new growth era. The HRM Function has to prepare a new HRM Vision and a new HR Strategy for the coming period as the cost cutting is not the only way to build a stronger organization fighting with the recession.

The most affected HR Processes are the following:

Recruitment - The first HR Process with the change in the recession. The job vacancies are cancelled and the HRM Function should come with a new recruitment strategy. The organization can hire a new set of skills and competencies to strengthen the position of the organization on the market

Training - The training are cancelled as it is a quick cost cut. The training can be later focused on more specialized training session and more internal training courses can be introduced.

Compensation and Benefits - The department can be asked to bring a new compensation scheme, which will save the costs and motivate employees to be more proactive.

HR Front Office - The HR Front Office have to be present at clients all the time as they will need a strong guidance and facilitation during the recession.

The HR Processes are heavily affected by the recession, but the HRM Function has to take this as the opportunity to change and to bring new ideas on the scene. The recession is the best time to design a completely new approach of the organization to its human capital.

The HRM Function should be ready for the recession, which comes from time to time. The HRM Function should be always very careful about the costs added to the organization as cost cutting always hurt. The HRM Function has always to predict, the recession will come and the nice initiatives can be then very painful initiatives. The HRM Function has to prepare the HRM Recession Quick Wins.

The HRM Recession Quick Wins should include the following actions:

Stop and prioritize the recruitment process. The vacancies should be cancelled and all the vacancies should be strategically re-shifted. The organization can need a completely different set of jobs to survive the recession. Why the continuing recruitment process should make the situation even worse?

The FTEs in the organization has to be evaluated. The number of FTEs can be fine, but the structure has to be reviewed. There is no company in the world, which cannot decrease the number of FTEs. The HRM Function has to offer the methodology for the FTEs review and the HRM Function has to act as the facilitator in the process of the FTEs review.

The bonus schemes have to be reviewed. The bonus scheme can support the organization in the time of the strong growth, but it can de-motivate employees in time of the recession. The HRM Function has to prepare a good analysis of the bonus scheme performance and its impact on the motivation of employees. The HRM Function can propose additional changes to the bonus scheme to provide the employees with some kind of the stability.

The talents have to move around the organization to play their strategic role in the change of the organization during the recession. The organization needs to awake its creativity and the shift of the talents can help a lot.

The HRM Recession Quick Wins are not hard, but they need a lot of courage from the HRM Function. The HRM Function has to reflect itself and it has to be proud to say, it made some mistakes in the past. The recession is always about the restart and the HRM Function needs to restart its processes quickly at the beginning of the recession.

HRM Communication in Recession

The HRM Function is always responsible for the mass communication to employees in the recession. The HRM Function should be responsible for the consistency, transparency and fairness of the crisis communication to employees. The recession is usually not about the good news, but the HRM Function has to be the employee advocate and the messages should provide the employees with the clear outlook of the future.

The crisis and recession communication have to be targeted, as not all the employees should receive the same amount of the information. The Sales employees should have completely different details from the Operations guys.

The HRM Communication in the Recession is about defined and agreed target groups. The organization cannot publish the details about its business position to all the employees, but some groups of employees have to know more to feel comfortable and more secure.

The HRM Communication is one of the strongest tools for the retention of key groups of employees. The talents and key employees have to receive more information from the organization to keep their own security and their value for the organization.

The organization needs to raise the level of the motivation and the honest communication is one of the best tools for motivation. But the HRM Function has to act as the consultant to make sure, the employees are not de-motivated and frustrated by the amount of messages and the details provided.

The HRM Function has to provide the advice on the communication channels used as not all the messages should be sent via email. The HRM Function is the only function in the organization to have a general picture of the target groups and it can provide useful consultancy in the description of the target communication groups.

The HRM Communication in Recession is about a clear description of the organization´s position on the market, the economic outlook for the next period and about the strategic products and services, which will be the leading the growth in the era after the recession. The employees should know about these topics as they can prepare themselves.

Talent Management in Recession

The talents are the best assets in the recession, as the organization needs to mobilize the entire top potential in the company to bring new and innovative solutions to fight with the recession.

The talent management is under a huge pressure in the recession. Each manager tries to protect the resources in the unit and the HRM Function has to leverage the resources of the organization.

The talent management has to define a clear group of employees to be separated from their current units in the finding a new successful way to the future. The HRM Function has to have a mandate from the top management in the decision about the staffing of the special task force to define a new and bright future of the organization.

Talent Management under Pressure

The talent management works nice in the time of the economic growth. In the recession, the talent management gets under a huge pressure from the line management and the top management, as their interests are not aligned, at least fully.

The HRM Function has to be able to mobilize all the talents across the whole organization and the line management can be fully confused by such an activity. The top management can have a nice plan to use the top talents of the organization to have a new opportunity to win the war with the recession, but the line management likes to have the talents in their units to have the smooth operations certainty.

The talents usually like the challenges and the recession is the challenge for them. The HRM Function has to find the plan to allow the top potentials to be freed from their current units and to propose a good plan to the line management to keep their satisfaction and buy-in.

The talent management is usually set as the long-term activity of the HRM Function. The recession makes the whole talent management a lot quicker. The talents have to be set to new teams, they have to learn to co-operate quickly and they have to learn to make quick decisions.

The talent management in the recession is about the quick assessment of the top talents of the organization and assigning them to the special tasks from the top management. The role of the line management has to be minimized as they have no chance to prefer their own task above the strategic tasks of the top management.

Recession and Recruitment

Recruitment is one of the most affected HR Processes by the global recession on the market. The companies do not offer vacancies, the number of job applicants grows rapidly and the organization has to manage the recruitment smartly.

The organization has to change the focus of the recruitment and the recession is a good moment to focus on the recruitment process development and redesign.

The talents on the job market

The recession is a good moment to hire the top potentials from the job market and other competitors. The HRM Function has to act quickly to hire the best class employees before their current employers take the action to protect them.

The HR Recruiters should always ask the managers and key employees of the organization about the excellent people, they know on the job market. The HR Recruiters should have a list of the job candidates, who can be asked to join the organization.

The talents are usually known in the industry and the recession can make them to be more sensitive to the job offers from the competitors. When the organization has a clear plan for the fight with the recession.

The talents from the job market do increase the personnel expenses of the organization, but they can bring new sources of the revenue and they hugely increase the trust of the existing customers.

The role of the HRM Function is in the quick reaction to the recession, making the proposal to the top management and having a good contact with the recruitment agencies to start the hiring process as soon as possible.

The HRM Function has to co-operate closely with the top management, as the talents from the job market need to know the clear plan and clear expectations from them. The HRM Function cannot communicate the clear expectations itself, but it can co-operate with the middle management of the job positions, which can be created for the top talents from the job market.

The HRM Function has to monitor the personnel expenses added to the payroll of the organization as the company does not exceed the agreed rules and the HRM Function has to co-operate closely with the recruitment agencies to get the best class employees from the job market. The recession is a tough time and the top talents from the job market will definitely help to win the battle on the market.

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