HRM role in tough times

Recession is about the creative Human Resource Management. HRM function is asked to bring new ideas, to change the HRM process and to develop or change the procedures while reducing costs of the organisation.

In many cases, this means implementing a redundancy programme and for some companies this can be the only option. So long as a fair redundancy procedure is adopted with meaningful consultation, fair dismissals and managing 'survivor syndrome', a company can survive to meet ongoing needs. However, for some companies there could be other options to consider.

It is at times like this that HR needs to take charge and help both employees and the business work through challenging times through extra advice, training and support.

1) Strategic moves

In any change management programme,there will be the inevitable redundancies. A major re-structure of the business to anticipate future needs and cope with current pressures is a major strategic move. This allows the business to hold on to key talent who are slotted into key roles with an accompanying training and development plan, and is more effective than a mass redundancy programmes. A planned process allows a company to remain in control. Securing existing talent and investing in them will ensure that a company becomes more competitive so that when the economy picks up they are much better placed to move forward.

2)Nurture and reward talent

Talent management is key in these challenging economic times to ensure employee engagement. Talent needs to be nurtured and rewarded accordingly to ensure employees don't jump ship and join a competitor. Having clear HR processes in place such as succession planning and career paths are the basic building blocks together with appropriate training and development.

3)Ongoing Training and Development

This is often the first HR process to go when things get tough. Cutting back on training is a false economy because when key skills are needed in response to market forces in future, a company will struggle. Many companies see this as an unnecessary cost. However, there are low cost and even free options to consider such as work shadowing and developing coaching and mentoring programmes using existing talent to train developing talent.

Web based discussion boards can be hosted where any one can post questions or doubts and others will share their experience over the issue. This will help in sharing experience, solutions and best practices as and when required.

4)Total Reward programme

There is the need to look at creative ways to reward staff, where, for the time being, increased financial compensation is not available. Communication to staff about companies' actions in this area will help employees to understand the hows and whys.
Offering more tax-efficient benefits that can save the company money could release funds to offer motivational perks such as company days out or a paid-for social gathering to improve motivation.
Educating staff in the value of their total reward package can often be beneficial. This can be achieved through providing total reward statements either paper-based or online or by financial workshops, on key aspects such as pensions or financial benefits.
Flexibility is a major motivator and the introduction of flexible working, flexi-time, job sharing, and home working is surprisingly easy ways to improve the bottom line.

5)Open Communication

Many companies still believe it's best to provide employees with minimal information about layoffs to prevent them from talking about it. But just the opposite is true.

In the absence of information, people make up stuff and panic, there's resentment, and they get very paranoid. HR needs to stand up for those being laid off and continuously motivate those who survive the lay off. HR should listen to the employees, Keep them motivated and show them the long term vision.

The above steps will enable the employer to hold its team together during a recession, and will even make bond between all of you stronger. Employees should be motivated enough to stick to the employer during tough times and put in the extra effort required for the organization growth.

6)Improve effectiveness


Now is a good time to remind our workforce that providing quality service to customers and creating greater effectiveness and efficiency are the absolute best ways for employees to help the business through the difficult times.

Fear and the drive to keep your business up and running can unify an organization and become a great motivational tool for employees. A shared challenge enables team members to set aside their individual concerns and rally around a greater common cause.

Employees should be motivated enough to stick with their leaders during tough times and put in the extra effort required for the business to come out of the storm unscathed. To achieve this level of motivation, employees need to trust their leaders and the organisation.


7) Earn the Trust

Trust is the most important element in today’s world of business, at the personal, institutional and global level. There is a positive relationship between trust and team satisfaction and commitment within the team (relationship commitment). Although team satisfaction in some situation is more strongly related with perceived task performance than with trust, as we battle through the economically difficult times that confront us, the elusive quality of interpersonal trust will be a sustaining variable for the retention and motivation of our workforce.

Value added SHRM to Drive profits

Most people will acknowledge that the HR profession encompasses a body of knowledge, expertise and skill that add value to organizations. But intuition doesn’t cut in today’s business world. Executives want proof that HR is a profit maker and not just a cost center.


Fortunately more and more studies are coming out that demonstrate a remarkable correlation between specific HR practices and shareholder return. Furthermore an increasing number of individual companies are able to provide solid anecdotal evidence that HR is, if not a profit center, then at least an important contributor to their profitability goals. Executives are beginning to understand that the “human” resource is the most valuable resource they have and there is also proof available now to show that investment in human resource pays off.

SHRM professional must – and can – do more to actively manage perceptions and promote the good work they do. Besides ensuring all personnel related activities operate at a steady hum, HR must design initiatives in line with business objective to add value to bottom line.

While HR doesn’t directly produce revenue, it doesn’t go out and find new business or open new markets – HR certainly improves the effectiveness of the organization, which allows the company to find new business or open new markets.

Various studies have shown that the 15 to 30 percent of the total value of a company can be correlated to specific human capital practices. The point is that the HR professionals have a choice in terms of how they spend their money and invest in the human capital of the firm.

HR has two ways of looking at building profit: 1) Cutting costs and 2) Helping to generate revenue by implementing right HR initiatives.

1) Cost cutting is a quick and relatively easy way to boost profits. It is typically HR’s first tactic. One of the most common way of cutting cost is utilizing technology to provide employee self – service. Self service technology enables employees and their managers to do such things as pursue e-learning, change benefit options, get answer to compensation questions, and manage performance without the help of HR professionals. When done well, measures that utilize technology to bring efficiency to administrative processes have the potential to reduce costs substantially.

2) Value added SHRM is the ability of HR to select and retain the right employees and help them to do their best work. This is where the real profit gains are to be found. Line and HR managers need to embrace the idea that investment in human capital can be a significant source of value creation for shareholders. When we look at companies that continue to be profitable despite today’s brutal economic conditions we find that there are many similarities in how the HR efforts at these companies help to strengthen the bottom line. However it is important to remember that none of these efforts can build profit in isolation. HR activities must work together to create an overall culture that is conducive to profit-making.

a> Communicate extensively: The vision, values and goals of the company are regularly communicated to employees. Not only that but bad news is routinely shared, and successes are celebrated. Company’s encourage free flow of communication and maintain open door policy. Knowledge based companies don’t believe in hiding any knowledge and information from their team members.

b> Employees are involved in setting goals: Instead of executives sitting down and devise a list of objectives for each employee to follow, employees are encouraged to identify the business drivers, set accountability measures and roll out the plan. Involving employees in goal setting has an impact not only on profits but also on morale. This substantially improves employee satisfaction and morale, belief in company’s vision and employee understands how their jobs contribute to the company’s business objectives.

c> Employees understand how their jobs affect the bottom line and how the bottom line affects their paychecks: When employees understand the impact of their work, amazing things can happen. But research proves that in addition to devising a clear line of sight between an employee’s job and company’s success, it’s vital for a company to share its success with employees. When employees understand the vision and how they contribute to it and benefit from it, they are much more inclined to help achieve it.

d> HR is not solely responsible for HR activities: HR acts like a facilitator of change and encourages others to do the actual culture change work. Experts say “Companies fail if they believe any one department should handle cultural responsibilities.”

e> Cost savings are important, but not the focus of HR: Saving money is an ongoing concern of HR bust cost saving should not be the primary focus of HR professionals who want to generate value for their companies. HRs focus on maintaining a culture that can ensure growth of business and that employee are creative and innovative enough to get the job done.

f> Employees are given what they need to be productive: It may go without saying that it pays to provide employees the tools they need to get the job done. But those “tools” are not always obvious and may include everything from training and work/ family initiatives to competitive compensations and corporate ethics programs. HR adds value to the bottom line by creating attractive workplace that helps employees stay and want to be productive. If your company is a good place to work, with good policies and procedures and a good environment, productivity- and profit - increases.

( Ref: Paper presented by Shari Caudron)

Aligning HR Strategy to Corporate Strategy

(How HR professionals can contribute to better integration of corporate and business strategy with HR strategy)

Recognition of the link between corporate and business strategies and HR strategies is not new. McKinsey’s 7-S framework that emphasized the need for the alignment of seven organizational variables (Super ordinate goals, Strategy, Structure, System, Staff, Skills and Style) for organizational effectiveness is about twenty years old. As businesses have become more knowledge and technology driven the importance of people to organizational success has if anything, only multiplied.

Corporate and Business Strategy

Business strategy focuses on achieving competitive advantages on a sustained basis. The four building blocks of building a competitive advantage are

Superior efficiency
Superior Quality
Superior customer responsiveness
Superior innovation

Companies achieve these drivers of competitive advantages through the creation of distinctive competencies through resources and capabilities. While resources are created by deliberate actions by the organization, capabilities get embedded in an organization’s routine and processes. Capabilities are often the result of a complex interaction between the structure, system and values of an organization. It is possible for an organization to take deliberate actions to create capabilities. The deliberate actions taken to create resources and capabilities spring from the functional strategies adopted by an organization.

Linking HR strategies to Strategic requirements:

For corporate, business and HR strategies to be integrated well it is apparent that the top management, business heads and HR professionals need to work closely with each other. There are five ways in which HR professionals can enhance their ability to contribute to this integration process.

1. Spend more time and effort understanding the business environment and the key strategic issues faced by the company

HR professionals need to be able to anticipate issues that will be of concern to the top management before they actually come on table. They also need to build credibility with the top management. With the increasing uncertainty in the business environment, and the volatility of different markets, organizations are increasing forced to take drastic decisions at short notice such as the rapid downsizing etc. HR professionals need to be mentally prepared for all possibilities, to be able to give a clear picture of change to fellow employees and to be able to look ahead and foresee changes on the horizon that could involve changes in HR policies and practices, understanding the business environment and the key strategic issues faced by the company on a continuing basis is essential.

2. Get involved in the nitty-gritty’s of the business, i.e. in operational details and issues:
Organizations want to focus more on performance issues. In this context HR professionals have no option but to get their hand dirty by understanding as much of operational issues as they can. Better understanding of operational concerns will also help HR professionals play a more useful role in training and development, transcending behavioral training programmes and “leadership”. This is particularly important in an era when domain knowledge and technical expertise are becoming more important.

3. Take an integrated look at the people in the organization, bridging the gap between HR and IR (Industrial Relations):
The worker on the shop floor is becoming more qualified, multi skilled. In service organizations in spite of repetitive nature of the work, employees see themselves more professional than blue collar workers. This is therefore an opportunity for HR professionals to bring a single HR perspective to the organization, and to cast aside the confrontational mindset often inherent in IR paradigm.

4. HR should act as facilitator of knowledge flows within the organization:
Organizations are increasing dependent on leveraging knowledge from within the organization to be competitive in the marketplace. Documentation and sharing of such knowledge helps organizations do this effectively. Performance appraisal process and incentive systems need to reflect the importance of this activity. Besides creating such systems within the organization, HR professionals need to first internalize the knowledge creation and dissemination mindset within themselves.

5. HR need to change from a support paradigm to value creation paradigm :
To be recognized as an important contributor to the performance of the company, HR contributions need to be measured in the right framework. HR professionals often measure themselves in a very limited way such as “we hired 120 people” instead of we enabled the addition of Rs. 5 crores to the EVA of the company”. Human resource valuation may never enter balance sheet, but concepts like EVA are here to stay, so HR has to find ways of linking itself to such measurement concepts.