Global recession and emerging challenges for human resources management in india

INTRODUCTION

Meaning of Global Recession

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, 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

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 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]

“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.

Ø 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.

Ø 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.

Ø 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.

Table 1

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

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

Percentage change in Average Monthly Earnings

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 Sl.No. PeriodEstimated Job Cumulative Job

LossLoss

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 information age, organizations need to adapt to the changes in technology and the changing issues in management of people.

II. 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.

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 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.

2. 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 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 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.

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 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:

1. 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.
2. 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.
3. 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).
4. 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.
5. 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.

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 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

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:

Ø Develop a capacity for detached involvement. Be sensitive to personnel issues and individual employee concerns but resist the rescuer role.

Ø 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.

Ø 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.

Ø Juggle various roles and responsibilities to promote autonomy by setting boundaries. Delegate work wherever possible. Train employees and supervisors on HR-related procedures. Allow vital interdependence between HR and employees; for instance, install a dartboard on a back wall for fun and competition.

Ø 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.

Ø 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.”

Ø 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.

Ø 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, 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 their achievement. As such, there are many situations where coaching skills will be very effective and the following list presents some of them:

Ø Reinforcing good performance.

Ø Motivating employees to new heights and peak performance levels.

Ø Orienting new employees into the department or organization.

Ø Providing new knowledge to individuals about changes and tactics.

Ø Training a new skill for a new task that needs performing.

Ø Explaining the current or new standards and how they can be achieved.

Ø Setting priorities for effective time management with those employees who need it.

Ø Increasing the self confidence of employees about the task or new responsibilities and challenges.

Ø 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.

5. 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 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.

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 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.

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 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.

III. 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 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.

Ø Finding opportunities during recession.

1. 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.
2. 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.

3. 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’.
4. 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.
5. 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.
6. Review and restructure policies: The mad p