Executive Summary The recent economic downturn, like any financial crisis has resulted in a sudden hike in global

unemployment rates. The prevalent layoffs, retrenchments by corporate managers make them stand against workers desperately seeking job security. But in the midst of the recession, still there are some long-term aspects propelling the war of talent acquisition and enhancing the search for human capital like globalization, the aging population in developed countries and associated demographic shifts, technological developments, scarcity of skilled human resource etc. This paper endeavors to highlight the issue of Human Resource Management (HRM) practices during such recessionary times. It tries to project Human Resource Development (HRD) efforts as a long term investment made towards building human capital which in turn bring organizational efficiency so that the organization itself becomes more effective to stand against any adversity, like that of an economic downturn. The paper will resort to various studies already made and research done on this aspect, to come out with the logical conclusion. Introduction It is not the first time that the world has come across such an economic downturn. Ever since the Great Depression of the 1930s, the

In the current economic downturn HRD is an investment that organizations need to foster and promote to ensure capacity building

global economy has come across such economic slowdowns almost every decade. As a matter of fact, being cyclic in nature, every recession is followed by period of rapid growth and development. Thus the recent economic downturn will also pave ways for steady growth, following the similar trend. Now here comes the demarcation between a visionary and proactive leaders and a reactive and complaint manager. The HR leaders foresee this opportunity and will use HRD as a long term investment to build the human capital. On the contrary, the reactive HR managers will just resort to short term cost cutting by way of layoffs. The visionary leaders understand the need of the hour and are aware of the appropriate time to invest further in HRD so as to equip the human resource to take up the challenges put forward by the current economic crisis and to enhance the efficiency of the workforce so that the growth phase which is to follow may be appropriately exploited in the favor of the organization in general and workforce in particular. This paper takes up with various academic literatures, case studies and practitioner literature to comprehend the matter relating to HRD and its use as an investment too for building capacity. This paper will aim to come out with a logical conclusion on this aspect. The paper will provide a comprehensive platform to correlated various research done in this area and

In the current economic downturn HRD is an investment that organizations need to foster and promote to ensure capacity building

will also try to highlight the areas associated with this topic, where efforts are needed to come out with academic research. Review of the literature The human resource management is going through a phase of transition. This transition is evolving HRM from the existing and old model which was relying mostly on the administrative processes to a new paradigm which is focusing on the strategic attributes of HRD (Armstrong, 2005). This new model of HRM requires the working HR managers who are aware of the importance of the human capital for various corporate strategies, to have capability to steer through a complex global HR market so that they can engage the employees as an asset to the company. These assets when nurtured like a long term investment will provide appropriate return on maturity (Wright, 2005). The said investment can be made through various ways which are exhibited by HRM methodologies. It can be through intelligent selection and recruitment processes; it can be through appropriate training and

development; it can be through logical succession planning and may more. Though, the investment can vary as per the size of the organization but the efforts are dependent on its execution methodology and companys existing financial state of affairs. Investments in HR are unlikely to be prime concern for an organization whose survival itself is vulnerable as on outcome of the
In the current economic downturn HRD is an investment that organizations need to foster and promote to ensure capacity building

ongoing global downturn. But for organizations which are deep pocketed and have strong financials to sustain the blow of any such recession, the downturn actually put forwards a very significant prospect to empower their human capital through capacity building which will prepare it for the eminent economic recovery (Harcourt & Wood, 2007). Studies have revealed that the expenditures made by any organization on its employee and workforce training returns huge benefits (Blair & Sisakhti, 2007). Especially those made during the recessionary phase, when the employees are very insecure about retaining the job (Harcourt & Wood, 2007). Investing in employees and the workforce during any economic downturn has the added benefit of improving staff loyalty, commitment and building high-performing teams. Such initiatives not only address their concern for job security but also boost organizational loyalty. This in turn helps the organization to increase its operational output through long term employee retention (Blair & Sisakhti, 2007). Researchers have further inferred that investment in human resource yields strategic advantage to the companys (Bitner & Zeithmal, 2001). Dynamic economic environment and changing customer base needs special approach and procedures and latest skills to equip the company with a competitive differentiator. This dynamic economic environment necessitates that the company in concern should keep investing in employee skills so that

In the current economic downturn HRD is an investment that organizations need to foster and promote to ensure capacity building

it can enhance its own ability to respond to such dynamic state of affairs (Jarventaus, 2007). Strategic focus on talent acquisition, acquiring new skills focused on future organizational need, training in hard and soft skills and enhancing effectiveness through various employee engagement

programmes are vital for the organization to make a sound investment decisions. Practitioners have given a lot of emphasis on training during any such recessionary phase (Jyothi & Venkatesh, 2006). Studies have shown that training and development efforts are one of the various possible solutions for addressing the problems caused by internal or external factors, faced by employees as well as the company (Summers & Hyman, 2005). There are many factors, some of which are not apparently known, are responsible for the recent economic downturn. However, the limelight is taken up by a major factor which is relating to adequate liquidity level in the system. But as it is evident that the recession has hit all the sector without any prejudice, it becomes eminent that every sector will be requiring skill sets, innovative ideas and trained workforce to bring the economy on track. Thus, investment in training, grooming and developing human resource for capacity building becomes a panacea across the industry, be it public or private (Boselie, Dietz & Boon, 2005).

In the current economic downturn HRD is an investment that organizations need to foster and promote to ensure capacity building

The proactive HR managers are well aware of the fact that during recessions or difficult financial situations, it is important to safeguard the interest of the employees for the vested interest of the organization through investment in human capital, so that when the upturn in the economy occurs, the organization is well positioned to tackle any such situation. The organization is in a better position to place right people at the right place as those people have been tested to hold against adversaries and have withstood the test of such recessionary conditions (Rizov & Croucher, 2008). Some researchers have given a thought to the issue from entirely different perspective. The logic behind downsizing the employee base when the company or the economy is in financial distress and then again hiring new employees which will anyway be needing investment by way of induction, training and development, is not at all a proposition which can be considered cost effective (Ghebregiorgis & Karsten, 2007). Any organization can leverage the learning curve of its workforce and also can be benefited by the valuable insights acquired by its employees over years of experience. These are nothing but the lucrative return on the long term investments made by the organizations, which have withstood by the employees during such tough times. Such experienced and loyal employees contribute immensely towards mitigating the risks arising out of

In the current economic downturn HRD is an investment that organizations need to foster and promote to ensure capacity building

new challenges faced by the organization as they better poised to adapt quickly to such challenging business environment (Jarventaus, 2007). Implications It is essential to note that the research studies and academic research in this area are scarce. Most of the published and academic content associated with this issue is based on the subjective evidences and not on objective and vigorous findings. While this paper cannot profess to a comprehensive or exhaustive search, it appears that the studies taken up by the industry practitioners and the professional is yet to be matched to that by academicians. However, the day-to-day findings and hands on experience of practitioners provide a convincing learning insight. Based on the various studies and research papers, I can infer that in the economic downturn of the magnitude of the recent one, though laying off the workforce may not be the best strategy for any organization, it becomes inevitable for some companies not to do so as their very existence is questioned in such scenarios. But even when the company resorts to downsizing, they start with the least experienced staff. Thus it can be concluded that any company considers its experienced workforce as an assets and will keep on investing on it if it has adequate resources at its disposal.

In the current economic downturn HRD is an investment that organizations need to foster and promote to ensure capacity building

There are some areas of concern which needs attention from academicians and HR professionals so that adequate study can be taken up. Like self-assessment by any individual who lose its job is also equally important. Introspection as far as the skills, interest, weaknesses and strengths are concerned will help them a lot to avoid getting into such situations in future. A worker might not be responsible for losing his or her job, but a self assessment is definitely required to find for any deficiency which made him or her, the susceptible target. Further, this self assessment can also act as a factor which will motivate the worker to acquire new skills and knowledge. Another area which needs attention for further research is the role of Governments, which have the primary responsibility to avoid employee exploitation. The linkages between the administration and social partners need to be researched and emphasized upon. Conclusion In the current context of the economic downturn, any organization should take effective and active human resource management initiative and should position itself strategically based on its employee strength not only in terms of numbers but also in terms of effectiveness and experience. Thus any organization should perceive the resources deployed towards HRM activities as long term investment rather than mere expense.
In the current economic downturn HRD is an investment that organizations need to foster and promote to ensure capacity building

Such situations are ideal for honing the skill sets and imparting training to the workforce as they themselves are very eager to take on with such situation through the help of the organization. The employees, who gain valuable experience over the years, prove to be an asset to the organizations as they are now better placed to take up any such situation in future. Any company needs to proactively follow a strategic approach towards HRD and make investment in such HR practices to gain sustainable competitive advantage both in tangible as well as intangible forms. References 1) Armstrong, M.A. 2005. Handbook of Human Resource Management, Practice, New Delhi: Kogan Page India. 2) Bitner, M. J., and Zeithaml, V. A. 2004. Service Marketing, New York: McGraw-Hill. 3) Blair, D. and Sisakhti, R. 2007. Sales training: what makes it work? T+D Magazine, August,

available:www.astd.org/astd/Publications/TD_Magazine/2007_pdf/August/0 708_ExecSum.htm. 4) Boselie, J., Dietz, G., and Boon, C. 2005. Commonalities and

contradictions in HRM and Performance research, Human Resource Management Journal, 15(3), pp. 6794.

In the current economic downturn HRD is an investment that organizations need to foster and promote to ensure capacity building

5) Ghebregiorgis, F., and Karsten, L. 2007. Human resource management and performance in a developing country: the case of Eritrea, International. Journal of Human Resource Management 18:2 February, pp.321332. 6) Harcourt, M. and Wood, G. 2007. The importance of employment protection for skill development in coordinated market economies, European Journal of Industrial Relations,13(2), pp. 14160. 7) Jarventaus, J. (2007). Training in a risky industry. T+D Magazine, March, available at: www.astd.org/astd/Publications/TD_Magazine/2007_pdf/

March/0703_ ExecSum.htm. 8) Jyothi, P. and Venkatesh, D.N. 2006. Human Resource Management, New Delhi: Oxford University Press. 9) Rizov, M., & Croucher, R. 2008. Human resource management and performance in European firms, Cambridge Journal of Economics 2009, 33, 253272. 10) Summers, J & Hyman, J. 2005. Employee Participation and Company

Performance. A review of literature, Joseph Rowntree Foundation.York, United Kingdom. 11) Wall, T.D., and Wood, S.J. 2005. The Romance of Human Resource

Management and Business Performance, and the Case of Big Science, Human Relations, 58(4), 429462.

In the current economic downturn HRD is an investment that organizations need to foster and promote to ensure capacity building

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12)

Wright, P.M., Gardner, T.M., Moynihan, L.M. and Allen, M.R. 2005. The

Relationship between HR Practices and Firm Performance: Examining Causal Order, Personnel Psychology, 58(2), pp. 40947.

In the current economic downturn HRD is an investment that organizations need to foster and promote to ensure capacity building

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