The HRM Function and Its Role in Recessionary Times

The Case for the Importance of the HRM Function even in Recessionary Times

In these recessionary times, it is tempting for the companies to cut the budgets of the HRM function and focus on cost control and trimming as a means of profitability. Further, with the squeeze on hiring by many companies, one of the key activities of the HRM function, which is the hiring, and on boarding activity remains frozen. Therefore, there is more the case for pruning the HR budgets. However, companies need to realize that there is a strong correlation between people management and economic performance that has been conclusively proved in recent research by the consulting firm, Boston Consulting Group or BCG. The research that focused on how companies that do well on talent management, leadership development, and performance management have been shown to have significantly higher economic performance. What adds to this research is the anecdotal evidence from many multinationals that seems to prove the hypothesis that excellent HR policies makes for a well-motivated workforce that can ramp up their performance to match the increased expectations of companies during recessions. The implications are that in case organizations want to do more at the same cost, they must focus on Processual cost cutting instead of on HR budgets alone.

Handling Laid off Employee Separations

The second aspect of the HRM function during recessionary times is that it is often the case that the HRM staff are asked to handle the involuntary separations. These exits that are otherwise known colloquially as “pink slips” have to be handled with grace and respect for the employee instead of condescension and arrogance. The point here is that when employees are asked to leave, the HR managers and the HR staff have the unenviable task of making sure that the message is communicated to those employees who are being asked to leave and to handle their exits in a structured manner. With the pressure on the HR staff growing with the increased incidence of layoffs, it is not easy for the HR managers not to get affected and take things personally. However, the key aspect here is that the HR managers have to perform well under pressure and ensure that the outgoing employees are offered assistance with their job hunts for alternative jobs by giving them the use of the office space and the facilities for a week or so after their last day at work. The point here is that gestures like these go a long way in convincing the other employees that the company is not an opportunistic employer who is a fair-weather friend to them.

Managing the Motivation Levels of Employees

Talking about the impact of layoffs on the employees who have remained in the organization, the HR staff also has the challenging task of keeping these employees motivated and not making them look over their shoulders periodically to check whether they are next in line to be laid off. Indeed, this is a delicate and often-diplomatic exercises that must be carried out with finesse in the same manner exits are handled. The other aspect of the recessionary times is that more often than not, companies do not hand out pay hikes and bonuses and hence, there tends to be a slack in morale among the employees. This is another of those tasks that the HRM function has to manage in recessionary times. Given the fact that many companies are struggling to stay afloat and which leads to resignations from key employees who do not see a future for themselves in the companies, it is important to remember that the HRM function must be bolstered rather than cut down to handle these unpleasant tasks.

Closing Thoughts

Finally, the HRM function also has to cooperate with the organizational imperatives on the need to reduce costs and hence, must play its role and part in ensuring that the organization practices what it preaches and does not merely indulge in cost cutting, layoffs, and freezing of pay hikes and bonuses.


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Human Resource Management