Article: Should we be celebrating economic recovery?


Should we be celebrating economic recovery?

If the signs of recovery are for real, it is time for HR professionals to gear up for the impacts of recovery

The panic button of recession has made organizations to put strong control mechanisms in place


The economic recovery is not far away and is fast approaching


Job cuts, job losses and unemployment have been the buzz words during the past one year. Countries like US, Europe and Japan were the worst hit by recession. In the absence of any formal, scientific data, the guess of the number of persons across sectors impacted in India seems to be close to a few million.

Due to various innate strengths, we in India escaped recession but only experienced economic slow down. While the rest of the world, except China is still trying their best to wriggle out of recession, there seems to be light at the end of tunnel in India.

HR professionals in India too need not wait for official declaration that slow-down is over but prepare proactively.

Is the Worst Behind us?

If yes, the challenge for HR folks seems to be to successfully gear up for impacts of recovery and to avoid getting caught napping.

What is the Likely Post-recovery Scenario?

1. When market opens up, organizations may face retention challenges

a. Those employees who are any way planning for a job change, but postponed it due to bad times may look for options after recovery.
b. Due to talent shortage, competing organizations may try to attract talent by offering higher wages. Companies which either froze wages or gave very low hikes may feel the brunt of it if they do not make corrections at appropriate time.
c. During bad times to save manpower costs, a large number of companies reduced manpower impacting the morale of the employees left out. Such employees may think that the company will not stand by them in case of uncertainty, and hence may leave the moment they get better options. Sirota Survey Intelligence ( argues that firms that fell into the trap of seeing employees as costs to be controlled rather than assets to be nurtured could end up with a rude shock when things do finally pick up.

2. When crisis blows up

When there is a common threat for the organization namely surviving during economic slow down, members surrender their individual interests and the super ordinate goal of survival becomes more important than the individual goal. After normalcy restores, when the super ordinate goal is no longer critical, members may regress where individual goals may again become important. It is like a situation after lifting emergency or declaring that a cyclone has passed.

3. Manage increased expectations of employees from organizations

Those employees who think they made sacrifices by missing increments/promotions even salary cuts and drop in perks during the tough period may build expectations of being suitably rewarded after normalcy restores. The challenge for HR is to manage their expectations.

4. Higher levels of efficiencies expected from employees

During tough times, most of the organizations learnt to cut wastages, avoid luxuries by limiting to essentials. Having experienced higher levels of efficiency at lower costs, organizations would expect to continue same higher levels of performance during normal period also.

5. Resistance toward living up to continued expectations of higher efficiency

Once the top is used to higher levels of efficiency with lower manpower costs, and managing with essentials, they may insist on the same even after normalcy is restored. The employees who made any additional sacrifices like longer working hours, sharing additional work loads due to fear of job cuts, lower wages and perks during the slow down period, may not be willing to continue to sacrifice when normalcy gets restored and may end up resisting such expectations.

Positive Side of Impact of Slow Down

Some HR members believe that employers and employees have a social/emotional contract, and hence would not switch over jobs as mercenaries at the first sight of recovery.

In younger companies, especially in the service sector that may have never experienced a trough of a business cycle in the last ten years, there is a greater level of understanding of business realities and an acceptance of such practices as downsizing. This is because most of them work on an outsourced model, with each manager himself hiring and firing people every day.

Trust Between Employer and Employee

In established manufacturing companies where mutual trust exists over a long period of time, people are likely to have been with the company through at least one or two business cycles. They are unlikely to exhibit knee-jerk reactions to either bad news or good news. They may have seen it before and know that the company will by and large do what is in their best interest.

What HR Needs to do

1. Assess your threats:

Sandeep Krishnan, VP, HR, Acropetal Technologies says that HR should ensure that basic parameters of employment like workload, compensation, policies and development opportunities are in tune with the changing environment. Even factors like perks that were frozen during the tough times need to be reviewed with the changing scenario. This needs a comprehensive review and assessment as we may not know what policies will be changing quickly. The policies that have linkages with business need to be reassessed first. The panic button of recession has made organizations to put strong control mechanisms in place and some of them need review with the changing environment.

2. Road Map for HR

Senthilnathan, VP, HR, Citi Bank suggests the following broad road map for HR for 2010:
a. Identify critical resources and draw plans to retain them.
b. Attrition is inevitable once the sentiments turn positive, gear up HR machinery to proactively meet the hiring challenges. 

3. Communicate proactively to internal employees

After any down sizing/right sizing, the remaining employees are very important. They may be left with feelings of anger and mistrust toward the organization. In such a scenario, the high potential employees may be a target for poaching.

Emmanuel David, Ramky Group opines that the survivors need to be assured of their value in the organization. HR professionals need to pro-actively communicate the reasons behind such right sizing decisions, absorb any anger, and restore trust and credibility. The mantra for HR seems to be ‘to communicate pro-actively rather than be a silent spectator’.

4. Thank those who contributed

An individual personalized, ‘Thank you’ note to employees who contributed to the organization during tough times would go a long way in building the morale.

The organizations may decide to reward a few for their exceptional contribution.

5. Employee involvement

Raja SV, Head HR, Quatrro, suggests involving the outstanding performers in planning for the recovery phase as it builds a sense of belonging and also reduces any residual anger and mistrust.

6. Induct the new recruits with counseling-wounds need time to heal

Some employees who lost their jobs during the slow down period, suffered badly as they could not get alternative jobs. Even though very few in number, some of them even mortgaged properties, etc. Such employees carry emotional and financial baggage. A well structured induction programme would help them adjust healthily.

7. Build company brand with potential employees externally

When slow-down ends and normalcy gets restored, every organization on its growth-path would need additional manpower and it will be a challenge for HR professionals to attract the top talent. When there are options, potential talent would invariably prefer companies with right brand image. Hence, even if the company’s brand image has taken a beating during the slow-down, efforts need to be made to rebuild image to attract and retain right talent.

8. Organizations need to gradually stop playing card of ‘Slow Down’

Depending on each company’s recovery status, company can communicate to its employees on a major event like the New Year Eve that the worst is over and thank them for their support and recharge them for future challenges!

Santrupt Misra, Aditya Birla Group says that HR need to introspect on the learnings from down turn as to what practice worked and what has not in their company.

Arvind Agrawal of RPG Enterprises believes HR should change gears now to build organization capability for world class productivity and quality.

It is time for HR fraternity to say cheers and gear up for exciting future!

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Topics: C-Suite, #ChangeManagement

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