Hi Halen,
Problem is far more complicated with Indian Companies or Counter Part of MNC's in India. Within last 3-4 years, Indian Economy has suffered numerous turbulence, I can name one after another companies who were forced to follow 'Hire & Fire' strategies, due to poor global market , No projects or business developed within India, Internal Priorities, Legal frame work etc.
Some of the companies are (2011-Till date)
1. Oracle 2. IBM 3. L&T. 4. HCC and the list will continue (long list). Employee often don't get chance to prove their competency.
If you look, overall registered companies in India (Shrinkage is there. Additionally, those who are present, it includes financially weak companies & some involved in fraudulent activities, and about 10% is based due to window dressing of financial statement')
TOTAL NO. OF REGISTERED COMPANIES =13,69,362.
TOTAL NO. OF COMPANIES CLOSED (till DEC 31,2013)=2,67,639.
TOTAL % of COMPANIES CLOSED IN CALENDER YEAR(2013-2014)= 19%.
STATES IMPACTED MOST: Maharastra, West Bengal , Delhi.
TOTAL NO. OF REGISTERED COMPANIES IN MAHARASTRA: 2.79 lakhs.
TOTAL NO. OF COMPANIES CLOSED IN MAHARASTRA: 56,008.
TOTAL NO. OF REGISTERED COMPANIES IN WEST BENGAL: 1.78Lakhs.
TOTAL NO. OF COMPANIES CLOSED IN WESTBENGAL: 41,621.
TOTAL NO. OF REGISTERED COMPANIES IN DELHI: 2.57LAKHS.
TOTAL NO. OF COMPANIES CLOSED IN DELHI: 41,458.
Why Companies are failing ?
1. New Company's Act 2013 is not yet applicable & It contain sec & clauses which is not practically designed. Entire fund management is the biggest challenge.
2. Indian Counterparts are failing to developed from after effect of recession, due to Central Government strategies to provide advantages to few selected people. Over all weak global market, additionally no significant contribution from government to boost trade & commerce.
3. Be it FEMA, IT ACT, Finance Act- Taxation, Money Laundering Act or be the new Company's Act,2013. It was a control government exercised. Thus effective fund management hampered.
4. Indian Economy's current biggest threat is 'Hedge Fund'. Means, by hedging of funds, players can bypass licensing & can create tremendous pressure on Indian Companies /Indian Counter Parts via direct & Indirect means.
5. Earlier Government has tried their best to restrict trade & commerce as much as they can. That's why impractical conditions are imposed.
6. Large Corporate houses were not wearing any special repellent suit which can save them from overall effects.
7.Liabilities of KMP (Key Managerial Personnel) has been increased a lot & penalty or fine or Indirect consequence of failure will force them to seek perfection. Thus, if someone fail (say suppose an engineer), he/she may not get another chance to prove himself, or say a particular project closed, employee may not be hired at some other project- if cost increases, reason being project heads will be in continuous pressure to maintain p/l accounts via chain of management. This is indirect effect.
8. Entire chain of management will be in pressure to discharge liabilities vested, and to conduct business at arms length. So from now onwards, option for business gesture, sympathy & kindness will be severely affected. Though people may claim, only KMP or Management will suffer this, but dear practically in business what management face some effect of it falls on employees.
Why HR department will face challenge?
1. Lack of knowledge of other domains, like finance, economics, accountancy , Laws (Huge In depth knowledge is required).
2. Result of first will be failure to perform detail complex analysis (all cant be done only via technology) & by a group who have expertise in different sector individually. Clubbed knowledge will be required to detail analysis, else cause & effect can never be understood properly.
3. Manpower planning will require much more skills, then core competencies, expertise or experience- especially for large organization.
4. Conventional technique, conventional strategies or tools may not work. Out of box thinking will be required. So, just training someone few Excel figures, graphs, charts, few rules & acts, or simple pay roll or man power planning will not at all help giants companies to face practical challenges.
5. Sorry to say, complication & challenges will increase more & companies will be bound to follow 'Hire & Fire' policies. It may seem that this strategies will increase costing, but opposite will happen.
Regards
Sovik B