Monday, December 22, 2008

Economic Meltdown- HR Role

Economic Meltdown………………………Stepped in.

Economic growth has gone through many changes. We all have seen good times and now some difficult times too. We can always hope for better and one should be positive, however the economic situation seems to be worst for the duration of next one year. The economic meltdown has already started. But again it is a cycle, and one should be ready to face it.

The question, which arises, is that, as a professional, how we face the situation? Do we see it as an opportunity or as a threat?

To get some answers to this question we have asked few questions to HR professionals. The main question was as a professional how they see the economic meltdown and what are the probable ways they have thought of as to contribute to the business.

The answer could be…reducing the cost, (why now, the cost should be control during good days also), downsizing, salary cuts, no increments, lay-off etc.

However some innovative responses were expected and some of them responded well.

Total 85 professionals responded the survey. Almost 601 professional could not respond properly and left the survey in between.

The survey was conducted online and only for benchmarking purpose. The identity of the companies, professionals etc are kept confidential.

Generally the actions which are taken on priority basis are as under:

1.Slowing down or stopping the recruitment fully,
2.Cutting down all administrative costs,
3.Revising the HR policies like travel, lodging etc,
4.Suspending all HR activities (like employee engagement activities and external training programmes) which involves cost,
5.At some extent rightsizing (downsizing??)

As a HR professional, following descriptive responses are received.

What measures are you taking as a HR professional in your company to cope with global economic meltdown?

HR professionals who responded seem to be very positive and firm to handle the situation. Following are the responses. The responses should be taken in a right spirit and efforts of these professionals should be recognized. Some responses may reflect just what we should do as an HR professional, however most of the professionals implemented what they have written here.

The summery of responses in bullet point:

• Right and timely communication of new goals and targets based on business goals.
• All employees are being briefed on a regular basis with the company updates and setting the expectations to ensure that they understand the link between their performance and company goals.
• Through regular meetings & trainings, the HR professionals chart out regular plans to grease the entire work force to keep their morale high.
• Talk about the seriousness of the issue without creating panic or fear in the system. Insist on the importance of saving costs and optimizing resources rather than spending freely. Making each employee realize that he has a role to play in the organization and that his contribution to the system with reference to the larger picture is important.
• Slowing down recruitment and reducing recruitment cost, retaining the existing staff. Avoiding hiring through consultant, rightsizing, redeploying and restructuring is the right way to survive. Rationalize salary structure,
• Introduce variable pay across levels and reduced salary hikes.
• Focusing on productivity per employee, increase the productivity of the members by multitasking them and ensuring each member is secured.
• Asking employees to stretch & perform in difficult times. Defining tougher Performance Yardsticks.
• Helping all the business heads to consolidate their teams.
• Time to take stock of skills and developing competencies needed for the future- including of course facing such tough business situations!!!
• Move the focus from Recruitment to Employee Development & Engagement
• Time to re skill the HR associates and move into "REAL HR Stuff".
• Ensuring proper manpower management is done, more concentration on Organizational development.
• Asking each & every employee to pour in their suggestions so that company can put forward it further.
• There Is a Rainbow Behind Every Dark Cloud. And yes, applies in organization as well.
• Cost cutting in all area wherever possible. Awareness in employees.
• Communicating with people in the organization to support the cost reduction drive. Reducing administrative overheads, operating cost.
• Laid off people should be the last option.
• Reducing Salary to a minor level and giving minimal Increments
• Employee benefits have been reviewed, air travel only when necessary many expenses have been tapped at HR level.
• Separation of non-performing employees.
• Putting thrust on to the core competent areas while using the manpower in totality curbing the wasteful practices tooth and nail.
• Stopping OT/Extra timings except on emergency services.
• Revising HR Policies like travel policy, meal policy, mobile reimbursement policy, celebrations policy, etc.
• Alternate working Saturdays revised to all Saturdays off.
• Reduce price of Goods but not in loose.
• Curbing of non-essential capital exp.
• Reductions in costs on Trainings and Seminars
• Salary survey and analysis for increments and bonus for 2009 as per the market situation.
• Less focus on retention strategies, reduction in costs in reward and recognition programs.
• Encourage Sales team to focus on small customers and frequent visit to them
• Create an environment in which every employee can contribute in cost reduction areas measures. Usage of Stationery Usage of Xerox machine Control on usage of Electricity- Make habit to switch off AC and computer once you leave your seat. Control on Wasting of food-Canteen Usage of water Usage of mobiles phones as well as landline facility Conveyance-Traveling (Using shuttle in stead of hiring special auto where it is possible
• New recruitment should preferably be a fresher. As it is a cheaper as compare to experienced person.
• Reduce the PLI Amt.(Which happens half Yearly).
• Planning to shutdown the plan for two days in a week when Electricity Department had their power cut. We also planned weekly off our employee accordingly.
• We have already retrenched 34 staff members
• We are going to reduce contract workmen by half.
• Stopping canteen facility, Bus transport, stop overtime work .etc
• To keep the people busy on the job, get the maximum output within minimum possible time. Training of the employees on new technologies when there is shortage of job.
• Transportation – by reducing the frequency of tempo and loading rickshaw Saving in raw material cost by size, by type by grade Reduction in frequency of visits at suppliers/vendors end (For QC and purchase team) Reduction in sub contacting of the parts and effective utilization of internal resources
• Business class travel for seniors has been reduced to economy.
• Office space has been reduced to half of the size to cut cost in rent.
• Freezing employee activity like annual events, birthday blasts & parties.
• Salary converted to variable pay component Performance basis or metrics pay structure No benches and proper monitoring of the utilization
• Encouraging Video Conferences, Allowances like providing Cars to Director's and their maintenance and other activities which incur much expenditure

What is the role of HR during such global meltdown?

• Regular communication with employees – Communication with people thru HR should be proper during this time, since people are afraid of loosing jobs, rumor of downsizing or rightsizing should not be spread. Frequent meetings to explain current sin aria to arrange positive and motivational training to arrange welfare activities
• Plan ahead for the employees. Reassure the values of the organization to the employees and keep all communication channels open.
• Concentrate more on employee engagement activities.
• Providing emotional support to the employees so that there is no sense of job insecurity.
• Training, motivation and morale boosting of employees.
• Take all possible steps to reduce impact & spread positively.
• Performance is monitored, wherever required rightsizing is done.
• HR do plays a very pivotal & soothing role at any crisis. We have to act as a bridge between the management & the employees. We should try to discourage rumors & negativity among the masses by communication.
• You never know how these petty issues turns into grave concerns. It’s wise to nip in the bud by constant communication.
• To be Lean and mean
• Creating awareness, asking cost cutting suggestions etc.
• Ensure right manpower planning and budgeting, measures on attrition control, anticipation on financial control, etc
• Helping people to take decisions for them rather than putting them into difficult situation. Empathize with them and understands them. Offering them alternatives.
• Keeping the Employees Morale High
• Keep simple Fun Activities going on to keep them Happy and focused on Jobs
• Counseling to Employees who are confused and concerned
• Monitoring HR expenses. In many companies it can be near 40-50 %of monthly operating expenses
• Identifying the underline of the business policy and cut the cost according to the need of the Organization.
• Serious introspection and analysis of Exit interviews.
• Effective grievance handling
• Healing touch to employees
• Participate in finding out innovative ways to reduce cost, facilitate in enhancing productivity, enhance employee communication
• Just watch on employee performance, communicate company's financial position, expectations at regular interval
• HR needs to streamline processes and identify non-performers in the system.
• HR plays a role of counselors and facilitator in this tough time.
• Finding ways to increase employees utilization - communicating information on company's financial situation to employees - re-train employee to take up a larger job scope
• Talent retention: Discuss with employees, managers and find who are performing well, if any employee is wasting time and resources of company and such employees should be out of the company. If they have potential, discuss with them and ask to work efficiently, effectively if still no improvement fires them... as its adding extra cost to company.
• Raising a banner on "How to react on meltdown"
• Restructuring of manpower for optimum output application of other cost cutting techniques like house keeping, stationary etc
• Maximum Utilization of Staff with limited resources.
• Communicate the daily status of the shares and the market update the skills for the manpower to face market changes people to take in the confidence
• Being assertive & motivating

Research: Vinod Bidwaik

(For detail research pl mail)


ankita23jain said...

I read the survey report. There is quite truth written about the HR people how they should deal in the professional environment.

Vinod Bidwaik said...

Thanks you!

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