GLOBAL RECESSION AND

EMERGING CHALLENGES FOR

HUMAN RESOURCES
MANAGEMENT IN INDIA

Ms.Khyati vora
Roll No 12

M.PHIL (COMMERCE)

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 GLOBAL RECESSION AND EMERGING
CHALLENGES FOR HUMAN RESOURCES
MANAGEMENT IN INDIA

INTRODUCTION
Meaning of Global Recession
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 A recession is a decline in a country’s Gross Domestic Product
(GDP) growth for two or more consecutive quarters of a year. A
recession is also preceded by several quarters of slowing down. An
economy, which grows over of period of time, tends to slow down
the growth as a part of the normal economic cycle. An economy
typically expands for 6-10 years and tends to go into a recession for
about six months to 2 years. A recession normally takes place when
consumers lose confidence in the growth of the economy and spend
less. These leads to a decreased demand for goods and services,
which in turn leads to a decrease in production, lay-offs and a sharp
rise in unemployment. Investors spend less; as they fear stocks
values will fall and thus stock markets fall on negative sentiment.
Risk aversion, deleveraging and frozen money markets and reduced
investor interest adversely affect t capital and financial flows, import
– export and overall GDP of an economy. This is what exactly what
happened in US and as a result of contagion effect spread all over
the world due to high integration in the global economy.
According to the International Monetary Fund (IMF)’s latest
Global Financial Stability report (GFSR) widening and deepening
fallout from the US subprime mortgage crisis have profound
financial system and macro-economic implications.
While the US remains at the ‘epicenter’, the backwash effect of
the American financial institution in other countries ‘reflecting the
same overly benign global financial conditions, an inattention to
appropriate risk management systems and lapses in prudential
supervision’.
The global slowdown has its implications on the domestic
economy. During the last three years Indian Economy grew at an
average annual rate of 8.6 per cent. For the first time the economy
has shown signs of deceleration and grew at 7.8 per cent in the first
half year of 2008-09 (April-September). The service sector, which
contributes more than 50% share in the GDP and is the prime
growth engine, reported to be slowing down, mainly in the transport,
communication, trade, and hotels & restaurants sub-sectors. The
industrial growth has decelerated sharply during April-November,
2008 encompassing all the constituent sectors. In manufacturing
sector, the growth has come down to 4.0 per cent in April-
November, 2008 as compared to 9.8 percent in the corresponding
period of last year. The slowdown occurred in the all the use-based
categories, except consumer goods where it has accelerated.
Meaning of HRM
Humans are an organization's greatest assets; without them,
everyday business functions such as managing cash flow, making
business transactions, communicating through all forms of media,
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and dealing with customers could not be completed. Humans and
the potential they possess drive an organization. Today's
organizations are continuously changing. Organizational change
impacts not only the business but also its employees. In order to
maximize organizational effectiveness, human potential—
individuals' capabilities, time, and talents—must be managed.
Human resource management works to ensure that employees are
able to meet the organization's goals.
Human resource management is responsible for how people
are treated in organizations. It is responsible for bringing people into
the organization, helping them perform their work, compensating
them for their labors, and solving problems that arise. There are
seven management functions of a human resources (HR)
department that will be specifically addressed: staffing, performance
appraisals, compensation and benefits, training and development,
employee and labor relations, safety and health, and human
resource research.
Global Recession and HRM
The financial downturn is impacting developed as well as
developing economies are likely to get worse as the European
countries, the US and others go into a deeper depression due to the
increase in job losses which often follows recession. The slump in
the market and increased job losses will have some important
implications for the changing task of human resource professionals.
As the unemployment continues to increase, HR professionals are
likely to be dealing with more stressed employees who are the sole
wage earners in their families.
As recession is becoming the part of the normal cycle of
business. Therefore it makes just as much sense to plan for
recession or downturns as it does to plan for good, economic times.

OBJECTIVE
This economic downfall has affected all the major sectors in India
including IT, aviation, banking, real estate, tourism, outsourcing,
telecommunication, etc with its consequence mainly on the HR
policies of these industries.

This article discusses

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 1. Impact of economic slowdown on employment in India.

2. The emerging challenges of human resource management in

the global recession situation.

3. The strategy adopted by HR personnel to deal with these

challenges.

HYPOTHESIS
In today’s economic meltdown where job cuts, loss, pay
reduction, last come first go, insecurity of employment atmosphere
prevail, HR has special responsibility to create ease environment to
the affected by counseling, displaying care and concern, preparing
them for multi skill task, engaging and deploying in other required
areas of functions like security, crisis management team, etc.

Global recession has raised various emerging challenges

for Human Resources Managers

HR needs to be proactive & innovative and try to come

up with early interventions as for any organization to

survive during recession.

REVIEW OF LITERATURE
“The global economic crisis is expected to lead to painful cuts in the
wages of millions of workers worldwide in the coming year. It
predicts that the slow or negative economic growth, combined with
highly volatile food and energy prices, will erode the real wages of
the world’s 1.5 billion wage-earners, particularly low-wage and
poorer households. Between the years 1995 and 2007, for each one
per cent decline in GDP per 2 capita, average wages fell even
further by 1.55 percentage point, a result that points to the possible
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effects on wages in the current crisis. [International Labour Office
(ILO), 2007-08].

‘The economic slowdown of the advanced countries which started

around mid-2007, as a result of sub-prime crisis in USA, led to the
spread of economic crisis across the globe. Many hegemonic
financial institutions like Lehman Brothers or Washington Mutual or
General Motors collapsed and several became bankrupt in this crisis.
According to the current available assessment of the IMF, the global
economy is projected to contract by 1.4 per cent in 2009.Even as
recently as six months ago, there was a view that the fallout of the
crisis will remain confined only to the financial sector of advanced
economies and at the most there would be a shallow effect on
emerging economies like India. These expectations, as it now turns
out, have been belied. The contagion has traversed from the
financial to the real sector; and it now looks like the recession will be
deeper and the recovery longer than earlier anticipated. Many
economists are now predicting that this ‘Great Recession’ of 2008-
09 will be the worst global recession since the 1930s’. [Choudhari
2008]

“The financial downturn that is impacting developed economies are

likely to get worse as the European countries, the US and others go
into a deeper depression due to the increase in Job losses which
often follows recession. The slump in the market and increased job
losses will have some important implications for the changing tasks
of human resource professionals. As the unemployment continues to
increase, HR professionals are likely to be dealing with more
stressed employees who are the sole wage earners in their families”.
[Mujtaba, 2008}

“The global economic crisis has brought to the forefront of

organizations the concepts of viability and survival which at these
times can be desperate pursuit. There are three main reactions in
organizations, namely the corporate reactions in organizations,
namely the corporate reaction to remain viable, the employee
reaction to survive the turbulence, and the human resources
reaction ( including recruiting and hiring talent, corporate
organization, training and institutional learning)”. [Kathleen
Patterson & Gray Oster, 2008]

“In emerging economies, growth is projected to slow down

appreciably but still may reach 5.0 percent in the year 2009. The
overall recruitments are lower for the industry this time as
companies remain cautious amidst the global financial crisis.”
[Srivastav, 2009]
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“Growth in real wages has slowed down globally in 2008 because of
the economic crisis and the trend is expected to continue in 2009,
despite signs of economic recovery. Growth in average wages
reduced from 4.3 % in 2007 to 1.4% in 2008. Real wages in the first
quarter of 2009 also fell in more than half of 35 countries, compared
to the annual average of 2008, “Wage deflation deprives national
economies of much needed demand and seriously affects
confidence,” “Minimum wages are an important policy tool for social
protection and proposes that minimum wages be combined with
other income support measures and/or tax reductions”. [ILO,2009]

"The last time anyone faced a situation like this was in the 1930s, so
if there is anyone who is 98 (assuming they should have been at
least 20 then) and is coherent… the rest of us are figuring out and
learning on the fly," reasons Elango R, chief human resources
officer, Mphasis. According to Elango, "Managing the unknown,
visualizing into the uncertain future, constantly calibrating and
tuning the variables… and hoping to high heaven that you are on
the right path… are responsible for increasing stress levels." He
believes that the challenge is to take long term decisions without
issuing the short term. This requires skills, knowledge and thinking
that are not called on in a growth environment. "In a growth
environment, one's pre-occupations are different, and having seen
growth for years most of us are skilled at this. The current business
environment entails a delicate tightrope walk balancing both the
business interests and employee interests." [Elango R, 2008]
-

RESEARCH METHODOLOGY
Secondary Data collected from various sources like

• Economic & Political weekly

• HRM Journals
• ILO Reports
• Ministry of Labour & Employment Labour Bureau

ANALYSIS & INTERPRETATION

I. Impact of economic slowdown on employment in
India.

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 ➢ Ripples of recession leading to reduction in exports to
developed countries are being felt by all the developing
countries. Credit availability and its cost have become major
areas of concern. The combined impact of all these factors
would be loss of employment and reduction of income leading
to social distress. The International Monetary Fund (IMF) placed
the estimated world output growth at 3.75 per cent in the year
2008 and 2.2 percent in the year 2009 in World Economic
Outlook (WEO), November 2008, which represented a
significant slide from a level of about 5.0 per cent in the year
2007.

➢ The global situation deteriorated rapidly after mid September,

2008 following the collapse of Lehman Brothers, one of the top
five investment banks in the US, the collapse of American
International Group (AIG) Bank and also of the mortgage
lenders Freddie Mae and Fannie Mae. There has been a
massive choking of credit since then and a global crash in the
stock markets.

➢ The deepening of the global crisis and subsequent

deleveraging and risk aversion in the global markets affected
the Indian equity and the foreign exchange markets. While the
Indian economy has a sufficient internal ballast to withstand
the impact of global recession because of overall strength of
domestic demand and the predominantly domestic nature of
financing of investment and exposure of exports to less than
20% of GDP, nevertheless some slowdown is inevitable.

It may be observed from Table 1 that the total estimated

employment in all the sectors covered by the survey went down
from 16.2 million during September, 2008 to 15.7 million during
December, 2008 resulting in job loss of about half a million. It is
seen that the employment declined every month during this period.
It has also been observed that the employment in all the
sectors/industries studied went up significantly over the period from
March, 08 to September, 2008. Beyond September, 2008, it has
however, decelerated at all industries/sectors level at an average
rate of 1.01 per cent per month.

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 Trends in Average Employment
Period Average Employment in
Percentage
(millions)
change
September, 08 16.2
October,08 16.0
-1.21
November,08 15.9
-0.74
December,08 15.7
-1.12

Average Monthly change

-1.01

Source : Government of India, Ministry of Labour & Employment

Labour Bureau, Chandigarh.
From the above data it is observed that the management people
and employees may experience anxiety around a number of issues during
an economic crisis or downturn.
The monthly average rate of employment loss during Oct- Dec, 2008
was 1.01 per cent whereas in January, 2009 the rate of decline has
increased to 1.17 per cent. The increase in rate of change is mainly due to
the decline in employment in IT/BPO sector in January, 2009 in contrast to
the increase in employment during Oct-Dec, 2008 and also higher rate of
unemployment in Automobile Sector. The month wise employment trends
are presented in Table 1.2.
Table 1.2
Trends in Average Employment
Sl. No. Period % Rate of
Decline

1 October, 2008 1.21

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2 November, 2008 0.74

3 December, 2008 1.12

5 January, 2009 1.17

Source : Government of India, Ministry of Labour & Employment Labour
Bureau
Chandigarh

The economic slowdown is expected to adversely impact the quality

of employment besides the quantity reflected by decline in employment.
The quality aspect is measured in terms of decrease in average wages
received by the
employees. Hence information is also collected on the total 12 earnings of
workers. The results of the survey reveal that the average monthly wages
have also declined by 0.26 per cent in January 2009. The average monthly
decline during Oct-Dec, 2008 was 3.45 per cent. During the current survey
the average monthly wages for direct and contract workers are also
collected. The findings of the survey reveal that average monthly decline
in the wages are 0.25 per cent for
direct category of workers and 0.63 per cent for contract workers in
January, 2009. The information is presented in Table 1.3.
Table 1.3

SR.No. Period Percentage

Change
1 October, 2008 1.74
2 November, 2008 -11.43
3 December, 2008 -0.5
4 January, 2009 -0.26
Source : Government of India, Ministry of Labour & Employment
Labour Bureau
Chandigarh

Table 1.4
Month Wise Estimated Job Loss

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Sl.No. Period Estimated Job
Cumulative Job
Loss
Loss

1 October, 2008 1,96,092 1,96,092

2 November, 2008 1,17,550 3,13,642

3 December, 2008 1,77,222 4,90,864

4 January, 2009 98,156 5,89,020
Source : Government of India, Ministry of Labour & Employment
Labour Bureau
Chandigarh

It needs to be noted that the rate of decline in employment in

January, 2009 is higher than average monthly rate of the previous
quarter, whereas the total loss of employment estimated is less than
the previous monthly estimates.
In this recession period HR play an important role to make the
industry sustain and the entire economy flourish. This paper
expresses the challenges of human resource management in the
global recession situation. The role of the Human Resource
Manager is evolving with the change in competitive market
environment and the realization that Human Resource Management
must play a more strategic role in the success of an organization.
The most important challenge in recession period that is
revolutionizing the Human Resource systems to identify, maintains,
develop and utilize talents across the organization to their fullest
capacities. The management of Human Resources has now assumed
strategic importance in the achievement of organizational growth
and excellence. As globalization advances and we move into the

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information age, organizations need to adapt to the changes in
technology and the changing issues in management of people.
I. The emerging challenges of Human Resource
Management in the times global recession……

The role of the Human Resource Manager is evolving with the

change in competitive market environment and the realization that
Human Resource Management must play a more strategic role in
the success of an organization. Organizations that do not put their
emphasis on attracting and retaining talents may find themselves in
dire consequences, as their competitors may be outplaying them in
the strategic employment of their human resources.
With the increase in competition, locally or globally,
organizations must become more adaptable, resilient, agile, and
customer-focused to succeed. And within this change in
environment, the HR professional has to evolve to become a
strategic partner, an employee sponsor or advocate, and a change
mentor within the organization. In order to succeed, HR must be a
business driven function with a thorough understanding of the
organization’s big picture and be able to influence key decisions and
policies. In general, the focus of today’s HR Manager is on strategic
personnel retention and talents development. HR professionals will
be coaches, counselors, mentors, and succession planners to help
motivate organization’s members and their loyalty. The HR manager
will also promote and fight for values, ethics, beliefs, and spirituality
within their organizations, especially in the management of
workplace diversity.
These paper discusses few important challenges of HRM due to
recession and i.e…
1. Problem of Recruitment.
2. Managing downsizing program appropriately.
3. Talent management.
4. Stress Management.
5. The Return on Recognition in a Recession.

1. Recruitment and Recession.

Recruitment industry is going through a tough time at this
moment, the numbers have dropped drastically for the biggies and
even recruitment agencies are battling for survival. Synergy
Solutions provides recruitment services to companies in India and in
US, the biggest challenge today is to find newer and better ways to
add value to the clients. There is a need to find innovative ways to
improve recruitment ROI for the client.

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 First things first, the base idea is not to wait and find ways to
weather the storm but to take proactive measures to tide the wave.
The world is changing very quickly to combat recession and it’s
about time we translate our thinking into action or else we will be
late. The main reason being the companies who are hiring have
recently made drastic cuts in their recruiting budget and are in the
process of streamlining their side of the story.
Companies (clients) has to demand greater accountability from
recruitment agencies and focus on improving their recruitment ROI.
Recruitment agencies / staffing companies who are agile in their
operation and can quickly adapt to the changing environment will
emerge victorious at the end of this recessionary period.
Few areas where placement agencies should focus:
• Closely monitoring the way each industry is changing in
current times and the way companies within the industries are
changing their hiring strategy.
• Build stronger relationship with clients thereby working closely
with your contact points in the company to get clarity on their
internal hiring plans and prepare accordingly. This will also
help protect your share in the pie from your competitors.
• Clients will use this recession to re-negotiating the recruitment
contracts with recruitment agencies. Since numbers are falling
every day recruitment agencies will be concerned about their
cash flow situation and as a result will have no option but to be
forced to negotiate their existing contract. New client would
want to start the relation on the terms advantageous to them,
that means lower rates and tougher terms.
• Look out for companies who are brave and would consider
recession as the right time to recruit good quality talent at the
right price. These are usually multinationals with deep pockets
and would want to drive competitive advantage home. Be
smart to attack these companies.
• Train your recruiters to be tactically smart and agile in their
actions. During the boom there were a lot of open positions
and even more candidates available so the match making
activity was comparatively easy and largely govern by the
good sentiments in the market. During tougher times
recruiters need to be smart and get themselves deeper into
the fit gap process and ensure win - win situation for the client
and the candidate
• Use of technology and social media applications to hunt better
profiles as compared to job boards. Sites like LinkedIn,
Facebook, Twitter and other social and business networking

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 sites are fast becoming every recruiter’s trump card. Lot of
head hunting can happen over these networking sites.
• If your salary component are on the higher side and you
foresee that it’s going to be difficult to sustain then take
adequate action now try and offer a mix of lower fixed and
higher variable with an assurance that salaries will get back to
normal once the market stabilizes.
1. Managing downsizing appropriately.
Virtually every country has to face the impact of a global economic
downturn which can be in the form of recession, slowdown,
depression or growth recession. When a downturn occurs, the
organizations have to suffer heavy losses and bear the brunt of slow
revenue generation. During this period, there is also less spending
by the consumers, less investment by the investors and more of
savings. Even the sectors who have been thriving in the boom
period try to save more.
Numerous causes can be attributed to the economic downturn
and one of which affects the business is lack of skilled manpower.
Other reasons could be the increasing population, lack of food
supply, climatic condition, and entry of substitutes, inapt
investments and technological changes. The shift in supply and
demand hugely affects the entire business cycle. There can be acute
shortage of cash supply leading to less or poor investments.
All of this may ultimately affect the morale of the employees
which should be a concern to every organization. Also, the decline in
growth and decrease in profits certainly calls for certain top-of-the-
line strategies to make adjustments to serve organizational needs.
Managing the teams or human capital at this juncture is a
Herculean task. So, a manager should devise certain strategies in
order to manage teams during down turns. Downsizing during this
period is certainly not a good option because if there are merits of
laying off of employees, there are many demerits too.

What should a manager do to manage teams or workforce?

• Hold special meetings: During this unsafe situation, the

organization’s top most head or CEO should brief the meeting
where the main subject should be the employees and their
concern. If the head of any organization feels confidant, the
whole organization feels confidant. Alternatively, middle-level
managers and senior managers can conduct private meetings
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 where they can console their subordinates. Also, give your
workforce to ask questions and express their feelings
regarding the business insecurity.

• Motivate the employees: The key to managing and

retaining the employees during downturn is motivation. Apart
from the special meetings being conducted, a manager should
regularly be attending to their problems and constantly trigger
the employees to have good mood.

• Offering challenging assignments and opportunities: If

you offer your teams the challenging assignments, they spirits
will be lifted and they will manage to survive even in bad
times.

• Explain to them the importance of their existence in

jobs: There is no use crying over the spoilt milk, just like
economy turning to a bad shape and business showing
downfall. Its better that you discuss about the new projects
and subsequently tell them what role they have to play. How
their productivity can make the organization grow, explain to
them.
• Initiate change by identifying key people: There are few
employees who are influencers and can bring about a lot of
change in the organization. If these employees are given the
right message to convince other team workers, the
organization can move in the right direction.
• Identify the achievers and reward them: Even during this
period, you should give your employees the bonuses and
increments if possible. In this way, they will always remain
motivated and perform.

All the above points are crucial to letting the organization grow to
greater heights and following the above strategies will promote the
general health of the organization despite economic downturns.

3. Talent Scenario during Recession

The law of demand and supply mercilessly applies to human

resources, also. During the economic downturn, companies were
able to downsize by getting rid of redundant work force and dead
wood. They also restructured the employee compensation (mostly
by decreasing) to stave off financial losses. Only those employees
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were retained who proved their worth. The employees had to accept
all kinds of compensation-related compromises while maintaining
the same or even higher level of efficiency and productivity. They
could thus survive the financial tsunami.

These survivors got the opportunity to handle a variety of

tasks that further sharpened their skills and made them multi-
skilled. Thus, overall quality of talent has increased. At the same
time, those who were out of job lost this opportunity to hone their
skills in a new challenging environment. Adding to our woes,
slashing of training and development budgets has led to a depletion
of the number of skilled employees within the companies.

Such steps from companies have created an altogether tricky

scenario: The quality of talent within the companies has increased
(raising the bar of the talent), while the quality of skills available in
job market has dwindled. Now, recruiters can hire the required
quality talent not from outside but from inside their competitors’
workplace.

While many have forgotten the term “War for Talent”, the
phenomenon is slowly re-emerging. “A study by Accenture has
found that more than two-thirds of executives are now deeply
concerned about not being able to recruit and retain the best talent.
In today’s global and highly competitive economy, the war for talent
is now global, not local. The survey of more than 850 top executives
from the U.S, UK, Italy, France, Germany, Spain, Japan and China
found worries about talent management were growing, with 67 per
cent this year putting it second only behind competition as the key
threat, up from 60 per cent last year.”

It may be worth noting that great companies such as Infosys,

responded to the downturn by investing more in training. Instead of
fearing of financial losses, these corporate focused on improving the
quality of their employees’ skills. And the effect is visible in their
financial results. Member of Infosys’ board of directors and head of
HRD and Education and Research, T V Mohandas Pai said, “In
response to the economic crisis, we had stepped up our investment
in training. This has made us more competitive in fulfilling clients’
needs today.”The demand for talent in the market will never cease.
Retention will always be a challenge.

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New Definition of Talent

While war for talent continues, the bar for talent also goes up. Old
skills and competencies may not work. Companies now need
salesman who does not sell products but does sell solutions;
production managers no longer control the operations, they are
expected to innovate and improve productivity; and quality
managers need to study competitive products with more zeal and
help develop better products and services. The employer’s
expectations have changed and are set to grow:

• Highly Productive: The talented employees need to be highly

productive. They should deliver much more than they are
compensated for. If that happens, employers are willing to give
larger share to them.
• Multi-Skilled: Companies have discovered that one way to
decrease recruitment cost is to have multi-skilled employees.
Multi-skilled employees help reduce manpower dependence,
and the overall sum of all the multi-skilled employees is
greater than the same number of equal number of specialist.
• Self-Managed and Self-Motivated: Self-managed and self-
motivated employees reduce managerial efforts. This helps
organizations to have less number of managers.
• Innovative and Out-of-the-Box thinkers: As the rules of
the business change and competition increases, the existing
solutions no longer work. Companies need employees who
constantly infuse new ideas and provide out-of-the-box
solutions to meet a customer need that seems to have no end.

The Key to Retain Talent Lies in HR Policies and Practices

As organizations increase their expectations from employees,

employers too have to significantly change the way they manage
the talent. Talented employees continuously need new challenges
and goals they can achieve, and a continuous supply of information
and resources they can use to solve business problems. And
needless to say, they will in return demand more lucrative and
effective compensations, a great work culture and friendly HR
policies.

“Even during the recession, companies are reviewing and revising

their leadership development programs. Survey after survey
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indicates that people who quit their jobs do so because of their
relationship with the boss, not because of dissatisfaction with their
job. A recession is a perfect time to take a hard look at leadership
style and training to increase employee satisfaction with
management.”

Five Important Talent Retention Factors

Lets us consider five factors that can help organizations retain
talent to meet the client and business requirements in post-
recession era:
i. Clear Goals, Targets and Expectations: You need to tell
them what exactly you expect from employees and what
should they do to meet these expectations. A talented mind
without a direction is most likely to pull the plug than a
mediocre or a dead wood.

ii. Balanced Work Environment: Talented employees have

huge positive energy and they exhaust this energy to meet the
deadlines. But often they need time to re-energize themselves.
Organizations that want to retain talented employees need to
provide a positive environment that allows them to re-energize
themselves more often.

iii. Track Performance Goals and Provide Analysis:

Innovators and hard workers need constant motivation to
perform better. They need to know whether they are producing
desired results. Any suggestion of not being able to deliver
throws them in doldrums. One way to let them know about
their performance (whether improving or declining) is to point
toward specific results, achievements or failures (which they
can fix before it is tool late).

iv. Fair Evaluation of Performance: At the end of the day, the

high fliers want to get acknowledged for their work. The first
acknowledgment of the hard work is a fair and formal appraisal
of their performance. They should be specifically told where
they met expectations and where they did not.

v. Compensation to Maintain a Decent Lifestyle: Employees

who deliver quantity with quality also expect from employers
fair compensation that is compatible with the market. If not
first, compensation remains the second most important cause
of brain-drain from organizations.

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 4. Stress Management
The financial recession is impacting large and small organizations
and countries in similar devastating manner. For example, as the
prices of goods and products increase, consumers tend to buy less
and thus companies end up having to lay off some of their
employees in order to avoid bankruptcy or just to stay in business,
in the US during the first two months of 2009, over 17 banks have
gone out of business and more such bankruptcies and closers and
expected in the financial industry. Such failures tend to increase the
number of people losing their jobs and moving them closer towards
poverty.

“Stress is an inevitable
reality and everyone
needs to find their own
ways of beating it”.
Stress is an inevitable part of work life. A recent Assocham
survey lists construction, shipping, banks, trading houses, electronic
and print media, courier companies, SSI, retail, card franchise
companies, and even government hospitals as high stress prone
zones… akin to chart toppers like BPOs, call centres and IT
companies. The pressure is truly spreading everywhere! There is
ample evidence of the fact that stress impacts employee health and
productivity. And of late, hundreds of articles have been written on
how financial stress due to the current economic recession is having
a dangerous impact on health and productivity. Results from the
AARP survey, "Impact of Economy on Health Behaviors" reveal that
20 per cent of people 45 and older reported health problems due to
financial stress; 22 per cent have delayed seeing a doctor due to
cost; 16 per cent had to use retirement savings or other savings to
pay for medical care; 21 per cent have cut back on other expenses
to afford their medical care; and 16 per cent are not confident they
will be able to afford health care in 2009. Bob Gallo, AARP Illinois
Senior State Director is reported to have quoted that right now
"people are increasingly concerned about their jobs, retirement
savings and simply being able to provide for their families and it's
taking a major toll on their health".

India Inc. has woken up to the menace of stress and companies

are taking to novel ideas like teaching employees dancing and
music, trekking, etc, to reduce stress at the workplace. For instance,
Tata Consultancy Services Ltd. has a variety of clubs… Theatre Club,
Bibliophile Club, Adventure & Trekking Club, Fitness Club, Sanctuary
19
Club, Music Club and Community Services Club, etc. to provide
employees that much-needed break. Infosys Technologies Ltd.
focuses on increasing self-awareness and providing employees with
guidance on how to cope with stress through a series of workshops
by experts. Several organizations conduct off-site picnics, games,
and inter-departmental competitions. Some companies use
mentorship programs or promote open communication to improve
interactions and camaraderie at the workplace. Some employ
nutritionists to provide healthy food in office cafeterias and counsel
employees on healthy eating habits and lifestyle. Others are offering
employees in-house counseling services or considering employing
psychologists to counsel employees. Some organizations like Emami
uproot employee stress through spiritual discourses and gyms for
regular exercises to unwind and keep fit.
It has been observed that the work stressors that currently
bother top HR executives include narrow perceptions of department
heads and employees on achieving organizational goals, unrealistic
expectations, waste of resources, employee engagement, ability to
remain detached and be objective while dealing with management
and employees and being a robust problem-solving force in the
organization.
The demands of the current business environment are
increasing stress on HR professionals of today… and this is
impacting their work, personal life, physical health and emotional
well being. Expectations of better people management, coupled with
deadlines and competition, is taking a toll on top HR executives. The
constant changes in industry, ups and downs in employment
markets, challenges of hiring and retaining best talent, aligning HR
functions with business objectives in current environments are
increasingly posing threats to their stress levels. What's more, the
economic downturn has increasingly put pressure on HR heads to
manage and stretch themselves to the hilt as far as talent
management goes… innovating continuously with a view to
optimizing productivity with lesser resources. Amidst the challenges
of cost cutting, which invariably result in downsizing and layoffs,
many top HR executives find themselves at the forefront of the
action wielding the 'infamous axe' and taking on yet more stress as
they take on the role all others in the organization fight shy of… the
one who delivers the pink slips.
Due to the changing demographics of the business world,
organizations are discovering that traditional tactics of management
are no longer enough to remain competitive. Following are some
ways to manage stress effectively.

HUMOR AS A STRESS REMEDY

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Humor is a wonderful stress-reducer. Experts say a good laugh
relaxes tense muscles, speeds more oxygen into your system and
lowers your blood pressure. Tune into your favorite program or
comedy shows on television. Read a funny book. Attend comedy
shows. Call a friend and chuckle for a few minutes. Share funny
episodes with your spouse that can relieve stress as well improve
communication. It even helps to force a laugh once in a while. You'll
find your stress melting away almost instantly.
Humor is used to facilitate communication and avoid conflict. It
gives us a different perspective on our problems. If we can make the
situation lighter, it no longer feels threatening to us. With such an
attitude of detachment, we feel a sense of self-protection and
control in our environment. Bill Cosby says, "If you can laugh at it,
you can survive it."
It's sometimes difficult to force a laugh in tense situations. But
that's precisely when you need it most. One trick for finding humor
in the worst of situations is to blow things absolutely, ridiculously out
of proportion. When your scenario reaches the point of absurdity,
you begin to smile. The situation is put in perspective and you can
calm down. Remember humor about sex or gender, ethnicity,
politics, humor or joking about tragedy or disease-related symptoms
are considered humor exclusion zones.

STRESS BUSTING
Understanding what triggers your stress and how to deal with it
helps in staying healthier. Here are a few tips:

➢ Develop a capacity for detached involvement. Be sensitive to

personnel issues and individual employee concerns but resist
the rescuer role.

➢ In times of processing downsizing of staff or upgrading

technology get experts help. Even while dealing with seriously
disgruntled or dysfunctional employees, collaborate with an
Employee Assistance Program counselor. And, for widespread
department tension use a corporate change/critical
intervention consultant.

➢ Walk around the organization. Swap stories with employees on

the work floor, become a bridge between management and
employees. This rotation of different hats helps fireproof life
with variety.

➢ Juggle various roles and responsibilities to promote autonomy

by setting boundaries. Delegate work wherever possible. Train
employees and supervisors on HR-related procedures. Allow
21
 vital interdependence between HR and employees; for
instance, install a dartboard on a back wall for fun and
competition.

➢ Organize productive team meetings for sharing a logistically

and emotionally demanding workload. Build a fifteen-minute
wavelength segment for group brainstorming and venting
emotionally tough personnel issues - dealing with pink slips,
reorganization uncertainty, battles with other departments,
and cultural diversity tensions. Let team members
acknowledge sources of work pressure as a group, assess the
strengths and roadblocks affecting solid team coordination and
cooperation.

➢ Listen to your family and friends as they know you best, and
are often the first to tell you that you are stressed. Their
insight may reveal situations or incidents that you weren't
aware of-such as consistently being short-tempered with one
or other family members. Seek their support to help ease
workload, which in turn will help reduce your "stress load."

➢ Avoid being an over-achiever. Doing everything for everybody

all the time can be rewarding, but it can also be mentally and
physically draining. Seems the more you do, there's always
more that has to be done-often without support from others.

➢ Learn to say no. If you find that you're being asked to do more
than you can manage-whether physically, emotionally or
financially-learn to set boundaries and remember that "no" is a
complete sentence.

De-stressing at work

Practicing regular stress management is good for long run. But,

practicing preventive stress management helps in improving quality
of life.
"Everybody reacts to stress in different ways and even deals
with it differently," says Dr. Fatema Saeed, a practising
physiotherapist. Describing how exercises can help de-stress, she
says, "Moderate to intense aerobic exercise for longer durations and
resistance training protocols of longer duration, lighter resistance
and longer interest rest intervals, cause the greatest release of
endogenous opioids (stress-busting or "feel good hormones") in the
bloodstream and hence, help in relieving stress. This secretion
increases pain tolerance, improves appetite control and reduces
anxiety, tension, anger and confusion. Also, with regular exercise,
22
the individual becomes more sensitive to the opioid effects so that it
takes less of the hormone to induce a specific effect." Therefore,
apart from improving physical fitness and overall health, regular
physical exercise also has psychological benefits.
There can be no one solution. Everyone needs to find their own
ways of beating stress.

Coaching for productivity

Due to changing demographics of the world such as more
competition and the introduction of new technologies, organizations
are discovering that traditional tactics of management are no longer
enough to remain competitive. As such, coaching is becoming to be
recognized and practiced as an effective tool to increase morale,
performance and the bottom line through the success of each
individual associate. For example studies show that about 90% of
employees who received their job performance and professional
success. In organizations where coaching is effectively practiced as
a management style, the bottom line performance is two to three
times better than the traditional “ command- and – control” type of
organizations. Furthermore, it has been proven that employee
commitment increases when there is strong, positive relationship
between management and his/ her employees. These types of
relationship are developed best as a result of effective coaching.
Coaching can be productive, expansive and costly
simultaneously. Since most employees will not be able to hire
personal coaches, human resources professionals and managers
should act as coaches to their employees in the organization.
Effective relationship – oriented coaching creates more
knowledgeable and competent employees, reduces errors and
rework and it greatly assists in bringing new changes to the culture.
Effective coaching skills make a manager’s job easier as it enables
greater delegation leaving him/her time to take on bigger projects. It
builds the manger’s reputation as a developer of people while
increasing productivity since everyone will know the expectations
and the fact what they do matters. It can also develop trust and a
good relationship between managers and employees. Last but not
the least, good coaching skills can increase creativity, innovation,
morale and teamwork since everyone will feel safe working in an
inclusive environment.
Simply stated, coaching is about developing a trusting
relationship with your people so you can jointly clarify expectations
and departmental goals thereby leading to specific action plans for
23
their achievement. As such, there are many situations where
coaching skills will be very effective and the following list presents
some of them:

➢ Reinforcing good performance.

➢ Motivating employees to new heights and peak performance
levels.
➢ Orienting new employees into the department or organization.
➢ Providing new knowledge to individuals about changes and
tactics.
➢ Training a new skill for a new task that needs performing.
➢ Explaining the current or new standards and how they can be
achieved.
➢ Setting priorities for effective time management with those
employees who need it.
➢ Increasing the self confidence of employees about the task or
new responsibilities and challenges.
➢ Conducting a performance review.
Coaching is not innate skill but rather it is learned. It occurs
through one’s life personally and professionally. From this
perspective, coaching is and it can be one of the most important
functions managers perform because it communicates performance
levels, expectations, and the importance of the tasks and
responsibilities and it communicates a caring attitude.

4. The Return on Recognition in a Recession

People management is a Key Result Area in delivering success for

a business unit during the downturn. It is obvious to adopt lay off as
a strategy in achieving the cost minimization strategy. But
alternatives such as seeking voluntary reduction in salaries and
incentives, flexible work hours and improvement in productivity are
worth enough to try during the slowdown. These strategies reduce
the costs besides improving the efficiency of the organization.
Every year, PricewaterhouseCoopers (PwC) launches its Global
CEO Survey during the World Economic Forum’s annual meeting in
Davos, Switzerland. The survey, PwC says in its introduction to the
2008 edition, “examines how CEOs perceive the business
environment in which they operate and how an increasingly
connected world affects the way their companies function and
achieve success.”
This year’s survey says: “At present, CEO confidence is at an
all-time low. Worldwide, just 21 per cent of CEOs say that they are
confident about revenue growth in the next 12 months, down from
50 per cent in last year’s Global Annual Survey. Pessimism prevails
24
across all geographic regions, business sectors and levels of
economic development.”
In these tough economic conditions, there are many reasons to
suggest that if the human element was responsible for plunging
companies and the world into this deep financial crisis, then the
human resources of an organization are also perhaps the best bet to
help it emerge out of the same. And this is the reason why experts
view this period of economic recession as an opportunity for HR
management rather than a crisis.
The declining state of the global economy, layoffs,
bankruptcies, the credit crunch—the headlines are impossible to
ignore. Companies across industries and around the world are
dealing with similar complex challenges due to the ailing economy.
Now is not the time for employees to give in to fear and not work as
hard because they believe they will not be recognized for their
efforts. But how do company leaders address these employee
concerns while remaining fiscally responsible, encouraging greater
productivity and sustaining growth?
Strategic employee recognition programs reaffirm employees
in the value of their contributions, acknowledge the additional work
and effort they are being asked to perform, and allay rumors
through frequently updated executive messages. Human Resources
leaders can actually deliver savings to the bottom line through a
properly deployed strategic recognition program while
simultaneously boosting morale and productivity. As Judy Bardwick
said in Psychological Recession, “Chronically fearful people are too
exhausted to be creative and innovative. They expect the worst to
happen, so they see no reason to give their all.”

Power of Recognition in a Recession

“Recognition helps people to be resilient. Businesses right
now...they’re trying to survive. And to survive you’ve got to have
some psychological resilience. You’ve got to have employees who
are positive despite the negative situations around them....I would
argue that recognition is even more important in times like this.” –
Jim Harter, Gallup, October 2008
News articles and research studies from firms including Gallup,
Deloitte, Towers Perrin and many others confirm three common
issues among employees in this recessionary economy:

1) Survivor’s guilt – Those remaining on the payroll after a round of

layoffs often feel guilty about surviving the ax. This guilt distracts
them from the task at hand. These employees typically need
additional reinforcement of the value of their work to help them
justify their status in the group.

25
2) More work, less motivation – The survivors are also paying close
attention to how management handles the layoff and subsequent
redistribution of the work. With more tasks on each employee’s
desk, managers need a way to encourage strong individual
performance while reinforcing priorities based on ultimate corporate
strategic objectives.

3) Rampant rumor mill – The inevitable rumors of additional layoffs

or restructuring further contributes to productivity and motivation
challenges. Teams often suffer the most with rumors fueling
backstabbing and protection of individual tasks over team goals.
A recessionary economy is precisely when companies need to
get the most productivity out of fewer employees, however.
Company leaders are struggling with how to accomplish this when
annual or performance bonuses and even pay increases are no
longer in the budget.
Roughly half of the HR executives from several hundred firms
who responded to a Society for Human Resources Management
(SHRM) November 2008 survey reported wage freezes and bonuses
cuts were likely in response to the downturn. A similar study by
Towers Perrin found nearly half of the 450 companies surveyed are
likely to cut spending on pay and merit increases while 39 percent
plan to cut annual bonuses and other cash incentives.
At a fraction of the cost of cash compensation and bonuses,
strategic recognition targets each of these challenges with
mechanisms to acknowledge and reward performance, personal
achievement, and team successes. The recognition program should
also be used to reiterate core company messages such as key goals
and the mission to keep staff focused on achievable targets. By
using the tool to encourage team members in a stressful time,
company leaders communicate clearly their commitment to the
wellbeing and future of the employees. Deployed correctly, strategic
recognition programs also become a scorecard for executives on
increased productivity and the factors that are specifically driving
that increase.

Savings through Proper Program Deployment

Most companies are already investing significantly in an incentive or

recognition program of some sort, but the majority of those
programs are disparate, unfocused and do not deliver the full return
on investment possible with strategic recognition.
Simply by consolidating multiple disparate programs into one
and implementing efficient global administration, companies are
able to achieve tremendous savings on their current investment in
26
recognition. Globoforce’s strategic recognition programs take the
buried and distributed budget of multiple legacy initiatives,
consolidate it into a single global program, track it, and provide
executives with reports on the value of the program across the
corporation.

These strategic recognition programs reduce the budget spent

on recognition through a Zero Budget Impact and Net Cost Savings
structure. This is possible by consolidating the various overhead
expenses of multiple programs and implementing features to more
effectively invest the budget allocated to recognition. Now
executives can track spend in all divisions and groups and compare
to the results achieved in terms of productivity, demonstration of
corporate values, and achievement of strategic objectives.

Strategic employee recognition ensures:

• Budget spend is primarily invested in employees and not on
multiple local administrators.
• Fully automated and integrated processes reduce the costs
associated with data entry and errors.
• Cost savings and program enforcement through global corporate
governance, tax compliance, and program measurement and
management.

The Problem with Cash-based Incentives

With the cash bonus and annual compensation increase pool drying
up and employees on a cash incentive performance track no longer
able to meet those performance goals, many employees are
choosing to not work as hard because their goals (and
accompanying incentives) are out of reach. Yet many companies
continue to rely on cash-based recognition programs, which neither
maintain program consistency on a global scale nor ensure local
participants feel motivated and involved in the organization.
Additionally, people become habituated to cash no matter how
much you give them, viewing it as an entitlement. An August 2008
study found that in eight of nine tasks, the promise of a bigger
bonus actually significantly decreased people’s performance.
Non-cash recognition programs save money by reducing
manual intervention and eliminating the paper chase while also
creating a positive work environment where employees see that
best practices, strong ethics and exceptional performance are
recognized and rewarded consistently, openly and fairly – an
environment that encourages loyalty, commitment and honesty of
effort. It is this kind of environment that drives greater morale and
productivity when company leaders need it most.

27
Strategic recognition programs:
• Drive productivity and morale by giving far more frequent awards
to far more employees.
• Use non-cash recognition, which produces twice the performance
boost as cash.
• Offer a hard, predictable budget to manage against.
•Become a scorecard for executives on increased productivity

“As companies tighten their belts during tough times, it’s important
to remember that money isn’t always what matters most to
employees. When it comes to encouraging employees to pour
discretionary effort into their work, the chance to make a difference
and be recognized for their contributions can provide a much
stronger incentive. Unfortunately, only 49% of non-management
employees report that their contributions are recognized by their
company when they perform well.” – Hay Group Insight, September
2008

The Problem with Merchandise Rewards

During the 20th century, many companies added a catalog-
based merchandise rewards program to their cash bonus plans.
However, this century old method offers no bottom-line savings on
recognition budgets. These programs typically include 30% markup
on their products with unpredictable and very costly shipping,
handling, customs and duties fees. These programs deliver even less
on a global scale where companies tend to spend 10-40% more on
awards to employees in countries with a lower standard of living,
inequitably awarding them more than their colleagues and certainly
more than was intended.
Gift-card based strategic recognition programs give reward
recipients the key to countless shopping, dining, entertainment and
travel adventures. With set shipping fees, the gift-card model also
frees human resources managers from tracking global shipping fees,
customs and duties laws while giving them a hard, predictable
budget to show to senior executives.

Benefits of Strategic Recognition in a Recession

Companies who implement a strategic recognition program in
a recession can boost morale, increase productivity, realize savings
and gain competitive advantage.

Boost Morale
Strategic employee recognition programs reaffirm employees
in the value of their contributions, acknowledge the additional work
and effort they are being asked to perform, and allay rumors
through frequently updated executive messages. By using the tool
28
to frequently recognize and encourage team members in a stressful
time, company leaders communicate clearly their commitment to
the wellbeing and future of the employees.

Increase Productivity
Strategic recognition acknowledges and rewards individual
performance, personal achievement, and team successes. By tying
every recognition to a company value demonstrated or strategic
objective contributed to, employees begin to see how their efforts
directly impact company success, giving them meaning and
purpose. This recognition reinforces and increases repetition of
precisely those actions and efforts the company needs from
employees to succeed. Deployed correctly, strategic recognition
programs also become a scorecard for executives on increased
productivity and what factors are specifically driving that increase.

Realize Savings
Consolidating multiple disparate programs into one
comprehensive, compliant and governable program saves 50-70% of
a company’s current investment in tactical recognition and incentive
efforts. Company leaders also realize cost savings through global
corporate program governance, tax compliance, and program
measurement and management. Studies show non-cash recognition
produces twice the performance boost as cash with praising
employees – saying thank you – equal to a 1 percent increase in
pay.

Gain Competitive Advantage

Companies implementing a strategic employee recognition
program during recessionary times position themselves to
outperform the competition today and when the economy turns.
Perform at a higher level today and rebound quickly in the upturn by
having the right people in the right jobs and by fostering a culture of
appreciation key talent will want to be part of over the long term.
Partner with the CFO to deliver program savings and increase
productivity by creating a marked difference in the morale and focus
of your employees over the competition.

I. The strategy adopted by HR personnel to

deal with these challenges.
The recession is an opportunity for HR professionals to step
and contribute strategically. In the classical strategy paradigm, we
begin by looking at the macro-economic environment. Then we look
29
at the micro-environment - what affects us and our competitors.
Next, we establish which strategic factors HR influences directly.
Finally, we drop down to our tactics. 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.
Dave Gartenberg, Director HR of Microsoft UK, reportedly said
recently: “In turbulent times more than any other, there is not only
the opportunity but the need for HR to provide leadership to the
business. The ability to attract and retain workers when times are
really tough requires leaders to be at their best.” Many feel that
issuing pink-slips and managing layoffs are the biggest challenges
that HR faces today; but there is far less wisdom in this belief
because the real challenge that confronts corporate HR today is to
utilize this period of recession as an opportunity.

➢ Finding opportunities during recession.

i. Consolidate workforce: Workforce consolidation is a huge
opportunity that any organisation has nowadays. This is not
only in terms of having a leaner workforce, but also in
redeployment of the workforce to improve utilisation and
efficiency.
ii. Streamline salaries: For the past few years most industries
have seen above-normal salary hikes due to the pressure of
retention. In fact, India Inc recorded the steepest salary hikes
in Asia for seven years running till 2008, according to Hewitt
Associates. But the recession has changed things dramatically.
Salary freezes and pay cuts have suddenly become the order
of the day. The 13th annual Salary Increase Survey conducted
across 480 companies by Hewitt Associates shows that salary
increase projections for 2009 in India have dipped to 8.2 per
cent from an actual increase of 13.3 per cent in 2008, but
continue to be the highest in the Asia-Pacific region and among
the highest globally.

30
 According to the company, for the first time in six years,
India will see single digit salary increases. Importantly, the
data for the survey was collected from December 2008 to
January 2009 and Hewitt expects that the salary increase
projections may fall even further in coming months. Hence,
this period can be viewed as an opportunity to streamline
salaries and cut costs.
iii. Make organizations more performance-centric: The
recession has forced organizations to take a close look at the
workforce and identify the real performers. The non-performers
have either found their way out of the organization or have
been put on a short notice to ‘deliver or perish’.
iv. Identify real talent: The renewed strict focus on
performance alone for survival in organisations has not only
exposed low- and non-performers, but has also brought to the
fore ‘real talent’ in the organization.
v. Develop talent as leaders: A recession is the right time to
wisely invest in the development of talent, both in terms of
skill sets and in the form of future leaders. The focus has to be
on how much they are investing in their employees and what
skill sets they will need to grow their businesses in the future.
vi. Review and restructure policies: The mad pace of hiring,
training and appraising seems to have come to a screeching
halt. And if not to a complete full stop, the rate is low and slow.
This also gives HR the time to revisit its policies, compare them
with the best-in-class practices and restructure them for
maximum effectiveness in the present and the future.
vii. Build employer brand: Despite the fact that many
companies have put a freeze on hiring, both hiring talented
people and retaining them will continue to be a challenge for
HR. Hence, keeping the employer brand intact and re-building
the same could have a cascading impact later.
viii.Communicate and build trust and morale: Communicating
with employees not only remains one of the greatest needs of
HR, but is also an opportunity to build the trust and morale of
people during tough times. It is vital for HR to see that the
morale of employees does not sag while the organization is
sailing through rough waters.

➢ How to intact your employee during recession:

31
Here is how to keep your employees with you and away from your
competitors during tough economic times.
· Differentiate Between Your Good and Average Employees
· Redirect Your Employees to Other Departments (Job Rotation)
· Listen to Your Employees
· Keep Them Motivated and Busy (Communicate-Communicate
and Communicate)
· Show them the long term vision
The above steps will enable the employer to hold its team together
during a recession, and will even make bond between all of you
stronger. Employees should be motivated enough to stick to the
employer during tough times and put in the extra effort required for
the organization growth.

➢ HRM Innovations in 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

32
  Cancellation of several benefit schemes

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.
As a leader and strategic partner in your organization, you
have the tools to assist your company in surviving and thriving
through these difficult times. First you need to start thinking
strategically…
 How can the organization make effective and economical changes
that will help through these difficult times?
• What can I do to minimize our organization’s risk for fines,
violations and/or unnecessary legal proceedings?

Following area should be looked upon:

The point has to be focused by HR management during recession
are as follows:
• To optimize the manpower strength.

• To take strategic initiatives to increase the productivity and

efficiency of the entire organization.

• To work on compensation benefits.

• Redesign training and development programs.

• Ensure your organization’s policies and handbooks are up to

date. Remember that an annual review of your employee
handbook for compliance by an experienced professional is
highly recommended. Also, each employee having a copy of
the employee handbook is not enough. They have to be able
to read and understand the content. Be sure that you provide

33
 employees a handbook in a language they can read and
understand.

• Layoffs are never easy. Ensure you are familiar with your
legal responsibilities in a lay off to minimize your
organization's risk. Be sure that you have properly defined the
criteria you are using to determine who will be let go.

• Alternative Workweek Schedules and Flexible Scheduling can

maximize production and cut-back on overhead costs for
organizations. Be sure you follow all of the DLSE rules when
deciding if an Alternative Workweek Schedule or Flexible
Scheduling is right for your organization.

• Cutting Pay may be an option to consider to save on today’s

costs. Is this really an option for your organization? How are
your pay scales as related to the market? Are you willing to
risk losing key employees whose talents may be needed by
other organizations, because you chose to reduce their pay at
this time? Remember, you should not cut pay without a
recovering strategy of how you will re-adjust when the
economy has turned.

• Downsizing does require internal document maintenance for

your organization. As jobs are modified and responsibilities
are increased changes also must be made to your job
descriptions.

• Offer Professional Development as a reward or incentive to

employees for performance and hitting goals. Professional
Development courses are an economical way to reward
employees with the gift of education and skills they will use
throughout their lifetime.

34
 • Downsizing does require internal document maintenance for
your organization. As jobs are modified and responsibilities are
increased changes also must be made to your job descriptions.

• Remember that the law is very specific on what positions can

be considered Salaried – Exempt and what constitutes an

Independent Contractor. Looking at adjusting your staff to fit
into one of these two categories is NEVER the answer when
trying to save money.

➢ Situational Leadership style during recession

During recession, H R manager has to act as a democratic leader.
He should also try to combine the organizational and employees
interest and adopt situational leadership style as well as humanistic
approach for leading the employees to achieve the organization
goals. Following are few recommendations for H R Manager to deal
with employees during recession:-
1. Top management should know the contingency plan.
2. Do the brainstorming session with your top management and
contribute in their strategic planning.
3. A complete or partial job freeze, however, communicate to the
workforce that the company many continue to recruit key individuals
even in difficult times
4. Review the employee performance evaluations to determine
the key people that company cannot afford to lose.
5. Flow of Communicate should be from top to down that will
help in making conducive atmosphere within the organization
6. Make prepare yourself for individual and group concerns
therefore there should be a proper counseling session.
7. To maintain a calm atmosphere
8. Review all HR policies, processes and procedures to ensure
that they are purposeful and contribute directly to the success of the
company.
9. Suppose the company has to lay-off staffs ensure that there are
no other opportunities for them in other functions or divisions of the
organization.
10. Advise managers to deal the process of managing change.
Managing Human Resources (HR) in a difficult economic
environment is even more demanding than working in times of rapid
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growth. Therefore the task of HR is very important to maintain
equilibrium throughout the hierarchy.

CONCLUSION
To sum up we can say that the global financial recession which
started off as a sub-prime crisis of USA has brought all nations
including India into its fold. The GDP growth rate which was around
nine per cent over the last four years has slowed since the last
quarter of 2008 owing to deceleration in employment, export-
import, tax-GDP ratio, reduction in capital inflows and significant
outflows due to economic slowdown. In India, the impact of the crisis
has been deeper than what was estimated by our policy makers
although it is less severe than in other emerging market economies.
Since humans are an organization's greatest assets; without
them, everyday business functions such as managing cash flow,
making business transactions, communicating through all forms of
media, and dealing with customers could not be completed. So when
we are discussing the topic of recession and recovery from
recession, Human Resources Management plays a very vital role.
Human Resource Management must be able to address the
right kind of demands related to Human Resource functions during
the recession. Human Resource Management must play a highly
proactive role in managing the issues of global recession by helping
organization to enhance their abilities to learn and collaborates,
manage diversity, ambiguity and complexity. Human Resource
Management is responsible to manage the human resource of the
corporate to maximize the productivity, efficiency at minimal cost
and maximize profit. During this global recession, Human Resource
Management is facing the many challenges and changes in
organizational level, workplace and HR department level itself. The
challenges can be faced by HR Managers effectively if proper
strategies are implemented. The recession is the temporary
economic climate of the business world. It will be changed through
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more productivity at minimal cost and maximize profit at moderate
price of products in business.

BIBLIOGRAPHY
1. Economics and Political Weekly Journal.
2. International Labour Office (ILO), Global Wage Report 2008/09
3. Choudhari 2008, HRM Journal.
4. Mujtaba, 2008, HRM Journal
5. Kathleen Patterson & Gray Oster, HRM Journal
6. Elango R, Chief Human Resources Officer, Mphasis.

7. Global Wages Report 2009.

8. DK Srivastav – Global Head, HR, HCL. HRM Journals

9. Government Of India official website.
10.ILO website.
11. Human Resources Management, -Diwedi.

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