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Why HR should embrace recession



Debashish Sengupta



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 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 organisation 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 then a crisis.

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 utilise this period of recession as an opportunity. Some of these opportunities are:



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.



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.

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.



Make organisations more performance-centric: The recession has forced organisations to take a close look at the workforce and identify the real performers. The non-performers have either found their way out of the organisation or have been put on a short notice to ‘deliver or perish’.



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 organisation.



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.



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.



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.



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 organisation is sailing through rough waters.





(The writer is Chairperson, Human Resources, Alliance Business School, Bangalore.)
27th April 2009 From India, Madras
Hi Sangeetha, Greetings from WanHan Consultants! The article provides lots of insights on the effect of recession and how could we go ahead with streamlining the process from the HR end.
27th April 2009 From India, Hyderabad
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