In current difficult economic times, firms may be tempted to decrease HRM expenditures to emphasize budgetary control and downsizing as a strategy for increasing profitability. Furthermore, with many organizations putting a freeze on hiring, two essential operations of the HRM department, namely hiring and onboarding, have remained frozen.
As a result, there is a stronger rationale for reducing HR budgets. However, companies must recognize that people management and economic growth are inextricably linked. If companies want to do more with less money, they must emphasize operational cost-cutting rather than just HR budgets.
The goal of human resource management is to ensure that an organization’s employees are capable of performing successfully, as well as to boost the company’s efficiency and capabilities.
Role of HR During Recession
1. Smart and Budget Hiring
Most businesses either discontinue recruiting altogether or decrease it to a bare minimum. Because there are no new hires, this impacts job analysis and planning.
The HR department pays close attention to recognizing the company’s personnel needs and creating job positions that cover a broader range of responsibilities and require less specialized. During this time, they can also establish a “brand name” by conducting job campaigns that attract talent at a low cost.
2. Layoffs and Downsizing
During a recession, layoffs and downsizing are unavoidable aspects of business operations. Human resources managers must assess present employees and their tasks to determine which positions are disposable or combinable.
This may entail reallocating personnel and financial resources to areas of the business that are critical to operations. Human resources managers may be required to evaluate severance payouts and, in some situations, help dismissed employees with job placement aid and unemployment filing as part of this procedure.
3. Employee Performance Analysis
Employee evaluations are frequently conducted by human resources. During a recession, it is critical to guarantee that all employees are operating at their best. Pay modifications and incentives based on performance are frequently part of the review process.
This is something that needs to be carefully considered in light of the company’s financial resources. To guarantee the business’s financial viability, human resources may need to propose a raise freeze as well as possibly revise the terms of some employee contracts.
4. Organized Planning
When it comes to salary costs, human resources executives should be involved in both short and long-term corporate planning, especially when searching for ways to reduce unnecessary operational expenses.
Reduce full-time positions to part-time roles to save on health care and other benefits; move some positions from salaried or hourly payroll jobs to an independent consultant or freelance contracting positions, and introduce job sharing or work-from-home telecommuting positions to save on overhead and operating expenses.
5. Managing Change and Maintaining Peace
During recessions, HRM can incorporate the following innovations in the company’s organizational culture:
- Work collaboratively with ecological ways of communication to reduce costs;
- Boost employee morale by making them feel significant and sharing the company’s vision with them;
- Introduce flexible working, transforming it from an employee benefit to a cost-controlling strategy;
- Increase employee engagement in the company’s performance;
- Attract and retain valuable employees;
- And finally, maintain peace.
Conclusion
In certain ways, HRM contributes to a company’s departure from the recession by cutting costs and maximizing corporate performance through new initiatives. HRM may provide actual value to a firm by focusing on organizational culture, implementing processes, and utilizing technology.
Companies devoted to surviving a recession owe it to their employees to do so. Their human resources departments are critical in ensuring employees of job security, pay, and the company’s strategic direction.