Business Success vs. Economic Crisis: HR to the rescue

Business Success vs. Economic Crisis: HR to the rescue

While many of us believe that the HR department has a role to play in protecting the welfare and safety of employees, it also crucial in supporting organisational sustainability during an economic crisis. Why? The simple reason is that there is always a human side to every challenge that the organisation faces.

It’s no rocket science to understand the fact that the Easter Bombing not only has emerged a national crisis, but also lead to a massive blow towards the economic stability leading many business sectors to hit rock bottom.

Today’s turbulent business environment requires firms continuously re-shape HR practices and strategies in order to sustain competitiveness within the market. Thriving in a downturn requires greater diligence and more skills than during favourable economic times. The current economic crisis is making many organisations limp as there are a lot of uncertainties. So far, many organisations are facing challenges in swimming through the waves of this economic crisis and HR has its role also in helping organisations remain cost effective, competitive and to exploit opportunities presented by changes to labour markets. Cost-cutting is also one of the HR challenges as it comes in the scenario when companies are not earning much.

Normally, in times of uncertainty, companies may find themselves unsure of what strategies to employ. Some companies might have to restructure and remake their organisations to cope with the new business environment that the crisis has presented and some might have to lay off employees, but in all this HR practitioners play a key role.

The strategic role of HR

HR is lead with the task of maintaining the balance of retaining key talent and reducing labour cost as well as managing the flow-on impacts on remuneration. Part of the new role of HR is providing advice and mentoring to managers in dealing with the HR implications of business decisions that will affect the organisation.

The points that have to be looked at by HR management during recessions include; to optimise the manpower strength, taking strategic initiatives to increase the productivity and efficiency of the entire organisation as well as working on compensation benefits, among others. On the other hand, it is also the HR management’s responsibility to find some innovative solutions during a recession, like identifying the real key employees and to induct them in the organisation as well as identifying the real top potentials and to strengthen their development programme for the benefit of the organisation.

Maintaining a motivated workforce

Keeping employees motivated has never been as important as during the current economic downturn. It’s no doubt that the prevailing period is difficult on employees too, loss of loved ones, colleagues, property, jobs, investments and the list goes on. As companies reduce their workforce, employers need to work at how best to ensure increased productivity and profitability. During harsh economic conditions, employees are worried about the safety of their jobs because the possibilities that their jobs are not safe seems to be high. This is especially true in the private sector than in public sector organisations.

 The key issue is to create an environment where employees genuinely feel engaged and involved, where there is a sense of collective responsibility and communication between the employer and the employees. By involving employees in problem-solving and by openly recognising their contribution, you will create a stimulating, progressive and inclusive workplace that is more likely to survive the bumpy roads and the harsh economic conditions.

Cost cutting measures

Controlling cost is simply preventing you from losing your business. Managing the budget is a must in every business as you have to determine the allocation of your resources to maximise efficiency and profits of your business and prevention of possible loss. Cost-cutting measures may include reducing employee salary, closing facilities or unprofitable business outlets or eliminating outside professional services such as advertising agencies, among others. Cost-cutting measures are often employed to keep a business operating through difficult economic periods.

Layoffs and manpower reduction

Even though the first option many organisations to for is layoffs, it actually should be the action of last resort. One of the most difficult things one had to do ever do was let an employee go due to company downsizing. This is an especially tough situation because these could be loyal and productive employees who have done nothing wrong. Workforce reductions are often necessary to keep the company solvent during difficult times, but mishandling the process can make an already bad situation even worse.

This can be a mess later on if you discover that you have cut a critical employee. So, when planning to go for a layoff it is better to consider some highly-paid, non-potential and under-performing employees.

Job sharing

Job sharing or work sharing is an employment arrangement where typically two people are retained on a part-time or reduced-time basis to perform a job normally done by one person working full-time. This arrangement allows companies to reduce their labour costs as employees work fewer hours; however, it still allows the employer to maintain valuable skills and expertise. Job sharing allows employers to retain top-notch employees.

                                  Human resources are the life blood of an organisation. HR combines other resources in the right mix to formulate appropriate strategies for the accomplishment of the desired objectives of organisations. This essential attribute of HR assists organisations to make rightful decisions and respond effectively to the threats and opportunities within the organisation during such an economic crisis.

  • Read 4511 times
  • Last modified on Tuesday, 04 June 2019 09:09
Super User

HR Sri Lanka aims to create a common ground for HR practitioners to share views and experiences.

Website: hsenidbiz.com/