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Managing Human Resources for an Economic Downturn

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Recessive economic period it is a time for the company's top management and the department of human resources to assess and re-evaluate the impact that the current decisions on staff optimization have on the long-term term company’s performance. It is a challenging task to maintain a high ratio of productivity along with the cost reduction. This paper critically analyses main directions and strategies that HR departments could implement taking into consideration the result they are expecting to obtain.

Employees’ retrenchment is a first cardinal decision that comes to HR specialist’s mind that is not aggravated by specific for the economic downturn HR strategies with the aim to survive from the tough times with minimal losses. They receive strict orders to cut costs and banally throw out hundreds of highly skilled workers. Chui (2009) argues that mass employee retrenchment is a last out of the possible decisions regarding the high level of company’s productivity ensuring. The author underlines that HR specialists have to evaluate the level of professional qualifications of existing employees firstly. Only based on the obtained results, HR department will propose some employees that failed to fit the established qualifications requirements to be fired and list of positions that need attracting of new talents. However, the outplacement programs should be provided for the redundant employees. It is vital for the company’s image to reduce the anxiety of surviving employees whereas demonstrating of such a respect and support creates a positive image of the company.

Naturally, cost cutting may be unavoidable. And HR department in cooperation with the top management must communicate a clear message to the employees explaining why salaries cut is undergone, reasoning that it is a temporal measure that will allow the company to be competitive at the market where most of the companies lay off workers massively. HR department representative must develop such a strategy that will allow the employees increase their productivity based on trust in the reliability of the company but not on fear and uncertainty about the future. Strong leadership, open communication will reduce the negative impact of the reduction in payments and set a clear goal for all employees that the company puts before itself. Disengagement and low productivity are the most essential factors that influence the overall performance of the company even without the retrenchment procedures or cuts in salaries level (Chui 2009).

It should be emphasised that current economic downturn diminished severely market power of labour unions and its bargaining ability to influence the leading in the industries companies and their personnel restructuring decisions. Dinan (2009) underlined that “labour unions have been in decline for decades as a percentage of the work force and have been losing power over that time”.

The main task for the human resources department is to maintain the past level of the performance productivity or at least prevent it from decline due to the quickly spreading rumours about a crisis and its negative consequences. Uncommon appreciation, professional trainings in different fields beginning from the team cooperation to the specific field’s courses, listening to the complaints and giving advices that will keep the employees engaged are the steps towards the strategic goal set by the company. People like to be awarded. If the company could not provide financial stimuli to them, HR department could securing working talents by investing in their professional growth, establishing rewards in a moral sense that are also strong motivation techniques during uncertain time of economic download (Chui 2009).

Southwest Airlines is the best example of the company that values its employees even higher that the interests of the shareholders. Even during the toughest times Southwest did not lay off its employees.. Moreover, the company provides numerous trainings that improve the level of employees’ qualifications. Freedom for experiments, trust in the stability of the company and desire to be the best company in the industry providing high quality services for its customers drive the increase in the productivity of Southwest Airlines employees (Southwest Airlines 2011).  

Chui (2009) emphasised also that “it is important to ensure employees have a strong bond with the organisation where all employees understand how their team connects to the big corporate picture” (p. 17). It means that communication inside a company and the employer-employees relationship becomes more important issues during the time of economic crisis. Panic, fear of losing their jobs, the reluctance to accept the need to reduce wages in exchange for the future prosperity of the company must be overcome in order to increase the working productivity. It is a high time for the HR department to unite the team maybe with new talent incomers to work for the unique corporate goal. It is a time to show that the company appreciates the efforts, skills, time and passion for their profession given by the employees to the company.

When making sharp drastic solutions, HR department and the top management of the company must understand that employees are the core assets that the company has; they are the sources of innovative inflows and progress for the organisation. Moreover, tough times will end someday, and then the company will have to deal with the economic recovery but already without the support of the highly committed, fully trusted in their reliable company employees. It is crucial, that no decision concerning the core values of the company such as dedicated employees should be made with only the short-term goals. HR department should conduct such a wise policy where the long-term vision and established goals of the company’s operations that are clearly communicated to all employees will be reached.

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