Why is it most important for the HR plan to address redundancy for times of economic downturn?

Being ahead with time has become a necessity in the current time. Change is taking place everywhere in our surroundings and the change has been only constant in the business.  

Recently in my organisation, the name of “HR department” has been changed to “People and Culture department” as we work for people and culture of the organisation and care for them. People are not just human resources who can be utilised and consumed but they must be valued and treated with full respect, compassion, and sentiments.

So, in such a dynamic stint as lot, many businesses are going through various business challenges, economy slowdown, Industry downturn or diversification and Recession has become inevitable – How HR should put in its strategy to manage Workforce during a recession at the same enthused level as it was earlier?

Before discussing the HR Strategy on Workforce Management during a Recession, it is imperative to understand the HR challenges caused by Recession and I believe they are as follows: 

During Recessionary time, it is important for HR professionals to be in lockstep with the business and define the right HR Strategy for workforce Management. The strategy must be focused on the analysis of the current situation and future perspective of the business.

It should not be just focusing on cost-cutting but more on the objectives mentioned below:

• Cost reductions while maintaining harmony in the organisation
• Restructuring the organisation processes, identifying future potential, exploring various other ways in order to get things in shape.
• Increase productivity and the efficiency of the people staying in the organisation.
• Unlocking the potential for the future growth.

In today’s time, HR should always be prepared for unknown, unexpected. When Recessions begin, there is no shortcuts and secret formula to deal with it. This is the time when HR needs to demonstrate its business acumen, alignment with the company’s Mission, Values and principles, honest and transparent communication.  

During my experience of 17 years, I have seen multiple recessionary periods in the Organisations and have handled 300 plus lay-offs. The strategy should not be only focusing on surviving an economic downturn but to develop unique practices and restructuring the organisation processes to gain a competitive advantage over other companies.

In my views following strategies can be followed by an HR professional for Workforce management during the recession: 

1. Strategizing the Lay-Offs

The employees to be laid-off have to be chosen carefully and who are staying to be sure about the future of the organisation. When employees are let go, should be treated with dignity and respect. If Lay-offs are not well managed, those who are made redundant may complain bitterly online in forums and social network websites. We have to make sure that they leave on good terms with as much support as possible including CV preparation, outplacement services and offering them to help to get future jobs.

2. Minimize the need for layoffs by Resources Realignment

Understanding business and its future are key. A strategic HR professional must anticipate Future needs of the businesses- Look at the current business, future projects, pipelines, expansion plans then look at the resources and other demographics so you can realign resources for future needs. For this, it is also important to inculcate the culture of Flexibility amongst employees so that when the time comes, they are flexible enough to take up the new responsibility.By spending more time on strategy for long-term workforce planning, HR professionals might be able to reduce the need for layoffs and their long-lasting negative repercussions for sure.

3. Rightsizing Workforce

Rightsizing is different than Downsizing. It is much more thoughtful and strategizes actions of restructuring or reorganizing an organisation by reducing or rearranging its workforce and processes in order to streamline the business so that it can make a profit more effectively. Precisely, downsizing means having reduced the workforce, while rightsizing is just adjusting the workforce to get it to the right size – this could mean decreasing/increasing the number of workers. Rightsizing is generally done on an ongoing basis with long term vision, while downsizing is a specific action and is a short-term one.

4. Managing Communication

Communication is another important aspect. It minimizes rumors, which if not managed properly, can lead to grave consequences. Employees don’t like to be kept in the dark.” When we hide the information, it becomes harder to deal with the recessionary period. It is very important whether it is communicating with the employees who are being laid off or communicating with them who are surviving. Here, the role of HR is to build employees’ trust in leadership through honest, effective and frequent communication, regardless of the circumstances. Redundancy can undermine morale among the employees who are not dismissed, and it might lead to job insecurity as well. Hence, communicate, communicate and communicate!

5. Optimize Performance

It is imperative to make layoff decisions based on performance rather than seniority. Retaining your top performers can strengthen the main goal of rightsizing and Optimizing Performance by increasing operational efficiency and productivity. Under this strategy, HR should also have a retention plan for high performers which ensures that an organization has optimized its manpower. During a recessionary period, it is vital to ensure all employees are performing at optimum levels. HR may need to discuss a freeze on salary raises, salary adjustment as well as potentially renegotiate the terms wherever possible looking at all the aspects.

6. Smart Hiring during Recession

It is possible that Businesses may require to hire new people during recessionary times. There might be some requirements of key people in the business who can support the organisation to deal with tough time, survive in the current situation, increase the efficiency of the people staying and bring organisation back into the shape. Hence, it is important that HR recruits, screens and hires talents who are rightly qualified in their field and can bring a significant amount of potential to the business. Being the commander of Recruitment, HR must ensure that the right person is hired at the right place who is coming with a long term perspective and not likely to leave early.

7. Show Respect and Gratitude

We cannot get the best out of frightened people. The recession brings fear to the organization when the HR does not make the right steps to fight against the de-motivation. Hence, it’s important to show respect and gratitude to employees who are staying and taking on more responsibilities. The employees who are staying look for the security, compassion, and assurance that NOT TO WORRY so it is vital for an HR person to invest more and more time in building trust in people. They should be felt that they are chosen to be in the organisation as their credential and performance are valued and they must contribute back to the success of the organisation.

“The Strategy of dealing with recession does not end here. As an HR professional, every step that we are taking during the recessionary period must be thoughtful and decisive.”

The recession should be considered as an opportunity for HR professionals to step into the Business and contribute strategically with a thoughtful approach by promoting innovative ideas in the area of people management. Time is changing, business expectations are increasing and in this diverse time, HR Professional must play a highly proactive role in managing the issues of recession by helping to manage the workforce to maximize the productivity and profit for the organisation.

Hire, Fire and Re-hire is going to be an integral part of business HR same as Expansion, Recession and Depression is the cycle of the economy and amidst show must go on. 

Some of the data reflect, layoffs have become ubiquitous in India…

• In 2019, Japanese multinational Nissan Motors fired 1,700 professionals, South Korean conglomerate Samsung sacked over a hundred people, and in the months leading up to folding operations, Jet Airways laid off scores of employees across different levels.
• In addition, unicorn startups like Ola and Quikr reduced headcount amid restructuring efforts. And there were reports that said digital payments giant Paytm was going to lay off 500 employees, too.
• In the first two weeks of 2020, Walmart India let go off a third of its top executives and hotels group OYO handed pink slips to 2,400 employees and said more will be let go of over the next three months.
• In early March 2020, it says, Oyo Hotels & Homes will fire about 5,000 employees across the globe, with a significant number of the dismissals taking place in China.
• General Motors will begin laying off around 1,500 employees in Thailand in June, after announcing the sale of its production plants in the country.

Reference: https://economictimes.indiatimes.com/topic/Layoffs, https://scroll.in/

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