Guest Column: Emmanuel Zvada
THE human resources department has a role to play not only in protecting the welfare and safety of employees, but also in supporting organisational sustainability during an economic crisis. Why? The simple reason is that there is always a human side to every challenge that the organisation faces. Business cycles always pose a major challenge to business organisations, especially in an economic slump. Today’s turbulent business environment requires that firms continuously re-shape HR practices and strategies in order to sustain competitiveness within the market.
Thriving in a downturn requires greater diligence and more skills than during favourable economic times. The current economic crisis is making many organisations limp as there are a lot of uncertainties. So far, many organisations are facing challenges in swimming through the waves of this economic crisis and HR has its role also in helping organisations remain cost effective, competitive and to exploit opportunities presented by changes to labour markets. The human resource management is responsible for seeing that employees of an organisation are utilised in the most efficient and economical way possible. During a recession when budgets are tight, this vital human resource role becomes even more important to keep a company on track in all facets.
The current environment is an unfavourable period to many businesses. Most of the companies crave for a stable economic environment in which to plan and increase profitability, but under harsh conditions business cannot prosper. This crisis affects businesses across all sectors of production. Cost-cutting is also one of the HR challenges as it comes in the scenario when companies are not earning much.
At this time, a company may have to introduce Innovative ideas to reduce operating costs without affecting business. You should involve employees in the process and listen to their feedback and opinions. Normally, in times of uncertainty, companies may find themselves unsure of what strategies to employ. Some companies might have to restructure and remake their organisations to cope with the new business environment that the crisis has presented and some might have to lay off employees, but in all this HR practitioners play a key role.
Strategic role of human resource managers
The role of HR is vitally important to the realisation of a sound business strategy that will secure business success, and in certain cases the very survival of the company. A recession is an opportunity for HR professionals to step and contribute strategically to the success of their organisations. HR will need to maintain the balance of retaining key talent and reducing labour cost as well as managing the flow-on impacts on remuneration. Part of the new role of HR is providing advice and mentoring to managers in dealing with the HR implications of business decisions that will affect the organisation.
The points that have to be looked at by HR management during recessions include; to optimise the manpower strength, taking strategic initiatives to increase the productivity and efficiency of the entire organisation as well as working on compensation benefits, among others. On the other hand, it is also the HR management’s responsibility to find some innovative solutions during a recession, like identifying the real key employees and to induct them in the organisation as well as identifying the real top potentials and to strengthen their development programme for the benefit of the organisation.
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Keeping workers motivated
Keeping employees motivated has never been as important as during the current economic downturn. Recession is a difficult period for employers too, but if you are at a higher position of responsibility, you should be able to motivate your team of workers in this time of crisis. As companies reduce their workforce, employers need to work at how best to ensure increased productivity and profitability. During harsh economic conditions, employees are worried about the safety of their jobs because the possibilities that their jobs are not safe seems to be high. This is especially true in the private sector than in public sector organisations.
A recession is, indeed, a difficult period as only the strongest fight to survive with less damage. Coping with recession requires teamwork and a positive spirit among employees. The key issue is to create an environment where employees genuinely feel engaged and involved, where there is a sense of collective responsibility and communication between the employer and the employees. By involving employees in problem-solving and by openly recognising their contribution, you will create a stimulating, progressive and inclusive workplace that is more likely to survive the bumpy roads and the harsh economic conditions.
It is known that to keep the profits at a viable level, you need to control costs. You need to control the cost of your business so that the costs will not exceed your revenues. In short, controlling cost is simply preventing you from losing your business. Managing the budget is a must in every business as you have to determine the allocation of your resources to maximise efficiency and profits of your business and prevention of possible loss. Cost-cutting measures may include reducing employee salary, closing facilities or unprofitable business outlets or eliminating outside professional services such as advertising agencies, among others. Cost-cutting measures are often employed to keep a business operating through difficult economic periods. In a downturn, cost control and cost reduction must be a prime focus of management who should start with a blank sheet.
Layoffs or reduction in manpower
Companies trying to reduce costs should use layoffs as a last resort. Ask any manager and they will probably tell you that one of the most difficult things they have ever had to do was let an employee go due to company downsizing. This is an especially tough situation because these could be loyal and productive employees who have done nothing wrong. Workforce reductions are often necessary to keep the company solvent during difficult times, but mishandling the process can make an already bad situation even worse.
The biggest mistake a manager can do is to lay off the employees for cost saving. In a recession, every company does the same. But the manager faces the problem when the market rises and the organisation wants a good employee. At this point of time the potential employees has been already laid off in the recession. This can be a mess later on if you discover that you have cut a critical employee. So, when a company is planning to go for a lay off it is better to lay off some highly-paid, non-potential and under-performing employees.
Job sharing or work sharing is an employment arrangement where typically two people are retained on a part-time or reduced-time basis to perform a job normally done by one person working full-time. This arrangement allows companies to reduce their labour costs as employees work fewer hours; however, it still allows the employer to maintain valuable skills and expertise. Job sharing allows employers to retain top-notch employees. For example, if a good employee was considering leaving the company because they felt their full-time workload was too much, job sharing would be a suitable alternative.
Human resources are the life blood of an organisation. HR combines other resources in the right mix to formulate appropriate strategies for the accomplishment of the desired objectives of organisations. This essential attribute of HR assists organisations to make rightful decisions and respond effectively to the threats and opportunities within the organisation. Organisations depend highly on their HR for success and survival.