HR Practices in a

Recessionary Economy.
 Introduction.
The world economy is facing a recession. Organizations
need to make tough decisions to survive in market.
The tough decisions like cutting down production,
reducing bonus & salaries, closing down branches &
production facilities, retrenching employees etc have
become imperative for organizations.
All these decisions impact on the HR of organizations .
All these decisions need to be fair, transparent & ethical
to all employees.
 To overcome various HR practices the following should
be taken care:

 Recruitment
 Results
 Rewards
 Retention &
 Retrenchment

We can also call it as 5 Rs approach.

RECRUITMENT:
The principle behind this is to select right candidate for the right
job at the right place at the right time. It is the duty of the HR
manager to ensure that the best candidate is selected.
During a recessionary phase, hiring should be done preferably
depending on the cost to the company.

Challenges to HR manager:
 Should we recruit for people with new skill or train an existing
employee for new skills.
 When & whom to recruit.
 How much compensation should be promised?
 Should we recruit on the rolls of the company or as a contract
employee.
 Should we recruit an over qualified candidate for junior
position?
RESULTS:
At the stage of the economic downturn, employees feels
weak, stressed out, & overburdened which directly affects the
morale of the employees.
As morale gets affected, the performance of the
employees decreases , which leads to “recession fatigue”.
where the company experiences lots of problems like
low productivity, poor customer service, increase in sick
leaves & lower profits.
In order to get rid of this recession fatigue, companies
need to be proactive while dealing with employee morale.
Challenges to the HR manager:

 Should organizations continue to train existing

employees for new skills.
 Should we look for employees who have multiple set
of skills, strong foundations & are highly adaptable to
dynamic requirements.
 Should we modify our results measurement system
to suit the changing economic situations.
 What mechanism has the company instituted for
handling employee stress arising out of uncertain
business economy .
REWARD:
In the downturn of the economy, companies have started to
restructure their reward strategies. At the impact of
recession , employers have become tightfisted when coming
to rewarding employees.
Many of them have already cut down costs, incentives
plans& rewards .

Challenges to the HR manager:

 compensation structure should fixed.

 Should we pay higher compensation to retain
talent .
 providing fringe benefits & other facilities to the
employees
RETENTION:

Nowadays, there is scarcity of knowledge as well as skilled

employees. Every organization needs to think that recession may
end, but the competition for the talent will be a big challenge in
the future. The companies that cut down investment for talent
management may struggle when economy returns to normal.

Challenges to the HR manager:

 How to recruit the best talent?

 How to induct new recruits into your culture for immediate
production contributions?
 How to manage the growth of your employee through training &
education?
RETRENCHMENT:

When the market is down & the options are non-existent, the
lack of certainty in existing job creates a lot a tension &
unproductive stress. Managers have to address the manpower
requirements in a cohesive fashion & identify acceptable policies
with regard to retrenchment & downsizing.

Challenges to the HR manager:

 How do we identify employees for layoffs?

 How do you balance the motivation of the remaining employees
when layoffs are administered?
 Should we layoff employees who were recruited recently or
employees who have been trained?
 Conclusion

The above mentioned HR

practices will define the probability of survival
of the organization through recession. The
organizations should, not only work for
survival but also create a framework for
decisions that will ensure long term
acceptability of the organization.
THANK YOU