Organisations Slowly Coming Out From Recession Commerce Essay

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Most of the organisations are now slowly coming out from recession, it is the time for the MNC's and SME's to chase for better sustainability and good economic growth, but there is still uncertainty in the global market. It is now expected to end in 2010. A gradual recovery will be more beneficial for the global market. As per the analysis many of the organisations are facing problems like Unemployment and delay in handling handle new projects that results from recession and unable to take up new projects, and organisations are not ready to invest more money at current stage. Employees are not commitment and loyally towards their work, etc. Baring all the problems in mind, from HR perspective we are going to discuss what is the best the organisations can do to get the best possible outcomes.

I am influenced by Software Company in India - Tata Consultancy Services (TCS) which has faced many challenges at the time of recession and had a slight change in the HR system that resulted a small decline in income. Around the globe, there are number of similar cases because of recession that caused unemployment and lack on handling of new projects and. Most of the employees are in dilemma about their future which aimed to be more critical than what they have expected.

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In this research I will discuss about recession, how organisation are effected, general role of HR in an organisation and organisations behaviour towards employees during recession period, the best possible plans and actions of HR will take at recession time. And will end the topic by gathering the relevant information about the research from some of the companies

Objectives:

The objective of research is to determine ways by which Human Resources can be managed in the recession period, to know about the effects of recession, to determine the most sensitive HR functions with respect to recession. A careful review of these questions areas led to the development of the following specific research objectives:

To determine the perception and views of the employees at TCS.

To determine how HRM can play an important role in coping with recession.

To identify effects recession has left on the employees on TCS.

A detailed report will be

Literature review:

Most of us have an intuitive idea of what a recession entails - job losses, plant closures and tough times for families. But what exactly is a recession? There are a few similar, but not identical definitions. To learn what economists mean by a recession, see (Moffatt, 2008)

Economists officially define a recession as two consecutive quarters of negative growth in gross domestic product (GDP). The National Bureau of Economic Research cites "a significant decline in economic activity spread across the economy, lasting more than a few months" as the hallmark of a recession. (Davis, 2008)

According to The National Bureau of Economic Research (NBER), a recession is a downturn in a nation's economic activity. The consequences typically include increased unemployment, decreased consumer and business spending, and declining stock prices. The indications are all in places, even the leading companies stumble left and right from the overwhelming effects of the recession. Desperate measures are being seized apart from the layoffs, bailouts, mergers acquisition etc… besides these measures; everyone should realize that it is as important to adjust in managing HR during recession. In fact, Human Resource Management plays an even superior role in difficult circumstances than during periods of growth and prosperity.

Economists officially define a recession as two consecutive quarters of negative growth in gross domestic product (GDP). The National Bureau of Economic Research cites "a significant decline in economic activity spread across the economy, lasting more than a few months" as the hallmark of a recession. (Davis, 2008)

Economic recessions are caused by a decline in GDP growth, which is itself caused by a slowdown in manufacturing orders, falling housing prices and sales, and a drop-off in business investment. The result of this slowdown is falling employment, and rising unemployment, which causes a slowdown in retail sales. This creates a downward spiral in manufacturing and increased layoffs. A stock market decline, known as a bear market, can either be a result of a recession but is often a cause itself. (Amadeo, 2009) According to The National Bureau of Economic Research (NBER), a recession is a downturn in a nation's economic activity. The consequences typically include increased unemployment, decreased consumer and business spending, and declining stock prices. Recessions are typically shorter than the periods of economic expansion that they follow, but they can be quite severe even if brief. Recovery is slower from some recessions than from others. (Campbell, 2004) The reality in all organization is that the directors and board are in the position of highest influence and their primary responsibility is leadership. As such, considering the consequences of a recession such as we currently face is not the time for directors to abdicate their responsibilities - it is time for governance leadership. The directors and the board must think and respond strategically. (Daniel, 2009)

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As recession takes a choke hold on the economy, you might find that there are fewer new customers walking through the doors of your business. Your existing customers may also seem to have shut their wallets tightly as they also try to control their rising expenses. (Recession-ruin-small-business, 2009) If your small business that has a mortgage loan on it, then you could be in deep trouble. This is because lenders have been steadily hiking their interest rates in a bid to cover their losses due to other borrowers not being able to pay their monthly instalments. If your current mortgage is about to end, then you could find that there are no lenders available who are willing to provide you with a new mortgage at low interest rates. This could put enormous pressure on you, as you would be forced to decide on which loans to clear off first - all on a steadily-decreasing income. (Recession-ruin-small-business, 2009) The first casualty during any recession is usually sales. Once sales are down, then it usually isn't long before profits could follow the southward trend. If in the past your sales have been excellent, and if you can afford to take a little downward trend in sales in stride then don't worry; but if you really need to increase sales even at the cost of incurring additional expenses, then there are two ways to achieve this. One is to lower profits in an attempt to achieve higher sales figures. The other way would be to spend more on marketing and advertising while keeping your profit margins unchanged. This will still lower your profit figures due to an increase in your marketing expenses. However, this move would not only increase your presence in the market but you could be the first to reap the benefits as soon as the economy emerges from the recession. A recession accompanied by high inflation will mean that your monthly expenses could increase, even as you face the daunting task of maintaining your profits. This could eat into your savings and pose financial problems as the days go by.

You can reduce your expenses by cutting down or splitting them. Unnecessary expenses should be totally avoided - and only those expenses related to your business should be attended to on a priority basis. (Business recession, 2008)

The indications are all in places, even the leading companies stumble left and right from the overwhelming effects of the recession. Desperate measures are being seized apart from the layoffs, bailouts, mergers acquisition etc… besides these measures; everyone should realize that it is as important to adjust in managing HR during recession.

In fact, Human Resource Management plays an even superior role in difficult circumstances than during periods of growth and prosperity. (Walker, 2008)

Priorities of the organization get changes by the recession. HR strategy and priorities should reflect the changes in the organization's precedence. The Human Resource Management cannot live on its own; it has to chase the general business strategy.

The recession can change the HRM priorities promptly, or at least, they have to be adjusted. The HRM can be asked to produce cost savings on current programs when the organization has no resources so that the new initiative can be added. The quick scan of the ongoing procedures and policies has to be made by the HRM to prepare for the termination/cancellation or change, when asked to make important cost cuts. The recession is about the cost cuts, planning, designing efficient cost-effective HR policies.

5 There have to be an assessment of the HR priorities for selecting the processes and policies which have to be discontinued. Simple matrix is the least tool to be used in which the processes and procedures are divided according to their costs and the impact they have on the organization.

Generally, the processes and procedures which have the maximum cost and minimum impact on the organization should be terminated by the HRM. As the termination of some of the policies can be very for employees, the HRM has o be very cautious. These are those processes which have highest impact.

A quick response has to be made by the HRM to changed-conditions emerged by the termination of the least important procedures and policies as the recession changes the HRM priorities, but the HR strategy needs to have a constant or steady approach throughout the recession period.

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In the recession, the HRM priorities has to be changed by the HRM in a very sensitive way, so that the employees feel some consistency and security and they do not lose trust in the victory of the organization in the war against recession. It is important her to understand also that the recession does not mean at all to change or terminate everything; the change in the HRM priorities should not touch the corporate culture during the whole recession period.

Different HR processes get affected by the Recession. It can affect some HR processes very badly and at the same time, some other processes can be completely immune from its impact. The reaction of the HRM has to be very fast and the whole HRM team has to be included in it, as all employees have to help other employees who have got affected badly in order to the level of satisfaction intact.

The organization has a need of saving cost to discover and potential added source for the cost effectiveness and start of new era of growth. A new HRM vision and HR strategy has to be prepared for the approaching period as the cost cutting is not the ultimate way to built a strong enough organization fighting against the recession.

The most affected HR processes are:

Recruitment is a first of HR processes which gets affected and changed in the recession. The jobs vacancies are terminated and HRM has to arrive with the new recruitment strategy. A new set of skills and competencies can be hired to strengthen the market position organization. Global Hunt says that "recession is not the end of the road for recruitment firms but it actually has given us a picture that what kind of profiles floating in the market." Eventually, one can say that go in the market but with utmost care. (Hunt, 2007) Training; as it's an instant cost-cut, the trainings are cancelled. The organization can focus later on the more specialized training sessions and can introduce more internal training courses. Compensation and benefits is another affected HR process. The HRM can ask the department to come up with new compensation schemes, which will be cost-effective and will serve as a motivator for employees to be more proactive. One of the most affected HR processes by the recession is Recruitment. Vacancies are not offered by the companies and the job applicants'number increases rapidly and recruitment process has to be managed smartly. The organization has to make a change into focus of the recruitment and the recession is the opportunity to focus on the redesign and the development of the recruitment process. The recession is related to the organization's focus on the strategic initiative in order to make the stable income of the organization and the future growth. Usually, the organization does not stop recruitment completely and some new job opening can come into view. The HRM should be asked to make a swift SWOT analysis of the employees in the organization in order to have an unambiguous view about the gaps in the skills and competencies. These gaps have to be filled by the organization with new and fresh employees from the job market who can bring more creativity into the organization with them and ready to work hard to save the organization.

The top management has to tell the HRM for the approach through the crises so that it can decide about the needed skills for the victorious fight against the HRM for the approach through the crises, so that it can be decided about the needed skills for the victorious fight against the recession. Usually, the proposal is designed by the small team for the solution and recognition of the skills. A mix of current employees and new hires constitutes a team recommended by the HRM. In order to find a complete different set of skills and competencies, the recruitment team has to be prepared.