RECESSION and hr final

8/7/2019 RECESSION and hr final

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Ills And Pills Of Recession

HRM Page 1

Recession

A Recession is a contraction phase of the business cycle. A recession is a

decline in a country's gross domestic product (GDP), or negative real economicgrowth, for two or more successive quarters of a year.

National Bureau of Economic Research (NBER) is the official agency in

charge of declaring that the economy is in a state of recession. It define

recession as significant decline in economic activity lasting more than a few

months, which is normally visible in real GDP, real income, employment,

industrial production, and wholesale-retail sales. For this reason, the official

designation of recession may not come until after we are in a recession for sixmonths or longer.

Recession may be caused by Currency Crisis, Inflation,

National/Government Debt, Speculation ,War which may result to Bankruptcy,

Reduced sales, Stock market crash, Unemployment, Lower production etc. A

recession normally takes place when consumers lose confidence in the growth

of the economy and spend less. This leads to a decreased demand for goods

and services, which in turn leads to a decrease in production, lay-offs and asharp rise in unemployment. Investors spend less as they fear stocks values

will fall and thus stock markets fall on negative sentiment.


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HRM Page 2

In Current recession the main causes are US Sub Prime Lending,

Tightening of Liquidity, Rising oil prices and Capital Flights in emerging market.

Due to this it has become difficult for an individual to borrow, Unemploymenthas increased, Profitability has declined, Stock Price fallen and consumer

confidence has declined. RBI took measures recently to reduce Repo and

reverse repo rate so as to increase money supply in the hands of people.

Recession not always result in losses but also benefits(opportunity) like,

Lower interest for borrowing, lower interest rates, lower inflation, home at lower

price. Some of the sector which has major impact of recession is financial

services, export-import sector, IT sector etc. But another company leastaffected by recession during this phase also are Job portals like Naukri,

Monster etc


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HRM Page 3

Recession And Human Resource Management

The recession is about the creative Human Resources Management. The

HRM Function is asked to bring new ideas, to change the HRM Processes and

to develop or change the procedures. And this effort has to be cheap or it has to

cut the costs of the organization. The HRM Innovation is easy in times of the

business growth, but the recession is not good for big innovative HRM

Initiatives.

The HR Management has to focus on unpopular innovations during the

recession as the role of HR during the recession is to save money to the

organization. The senior management expects all the support functions to bring

innovative ideas and solutions which will lead to stronger organization, when

the next growth era comes.


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HRM Page 4

Affect Of Recession On Human Resources Processes

The recession has affects many HR Processes and they need to beadopted to the new situation and they have to be ready for the new reality. The

impact of the recession is not the same and many HR Processes can continue

their regular operation without any adjustment.

1.recruitment process:The recruitment process is the first HR Process to be affected by the

recession. The recruitment freeze is usually the first top management decision,

when the sales numbers goes down. As the top management wants to keep the

cash-flow under the control, the recruitment freeze is the first logical decision.

The recruitment after the recruitment freeze is more selective and the

company has to clearly decide about its priorities as the organization does not

carry additional people on its payroll. The top management decides about the

new strategy and the management is allowed to hire just the missing skills and

competencies.


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HRM Page 5

2.training and development:The training and development is the second HR Process to be affected by

the recession. The management decides about the cuts in the investments and

Human Resources have to find a way, how to keep the knowledge in the

organization.

The company can survive without training and development for a limited

period of time. The cost savings can be huge and the organization feels no

impact of the lower training budget. But the period has to be really limited as

the organization does not lose the talents and the internal know how.

3.compensation and benefits:The compensation and benefits is the HR Process, which is heavily

affected by the recession. The bonuses are not paid and the base salaries are

under a huge pressure. The compensation and benefits specialists are under

the pressure as they have to identify the areas in the organization to realize the

redundancies.

The recession is a good opportunity for Human Resources to introduce

the changes to the organization. But the reaction of HR has to be quick as the

internal opposition has no chance to form their forces.


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HRM Page 6

The Point HasTo Be Focused By HR Management During

Recession Are As Follows:

1. To optimize the manpower strength.

2. To take strategic initiatives to increase the productivity and efficiency of the

entire organization.

3. To work on compensation benefits.

4. Redesign training and development programs.

SolutionsToThe HR- Recession Problem:

1. Stop and prioritize the recruitment process.2. The bonus schemes have to be renewed.3. The talent has to be moved around the organization.4. Indentifying the real key employees and to keep them in the organization.5. Indentifying the real top potentials and to strengthen their development

program.


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HRM Page 7

Recommendations While Your Employer Facing Negative

Challenges During Recession:

1. Top management should know the contingency plan.

2. Do the brainstorming session with your top management and contribute in

their strategic planning.

3. A complete or partial job freeze, however, communicate to the workforce that

the company many continue to recruit key individuals even in difficult times

4. Review the employee performance evaluations to determine the key people

that company cannot afford to lose.

5. Flow of Communicate should be from top to down that will help in making

conducive atmosphere within the organization

6. Make prepare yourself for individual and group concerns therefore there

should be a proper counseling session.

7. To maintain a calm atmosphere

8. Review all HR policies, processes and procedures to ensure that they are

purposeful and contribute directly to the success of the company.

9. Suppose the company has to lay-off staffs ensure that there are no other

opportunities for them in other functions or divisions of the organization.

10. Advise managers to deal the process of managing change.

Managing Human Resources (HR) in a difficult economic environment is

even more demanding than working in times of rapid growth. Therefore the

task of HR is very important to maintain equilibrium throughout the hierarchy.


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HRM Page 8

How To Intact Your Employee During Recession:

Here is how to keep your employees with you and away from your competitors

during tough economic times.

y Differentiate Between Your Good and Average Employeesy Redirect Your Employees to Other Departments (Job Rotation)y Listen To Your Employees

y Keep Them Motivated and Busy (Communicate-Communicate andCommunicate)

y Show them the long term visionThe above steps will enable the employer to hold its team together during

a recession, and will even make bond between all of you stronger. Employees

should be motivated enough to stick to the employer during tough times and

put in the extra effort required for the organization growth.


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HRM Page 9

Hr Beating Recession 5ThingsTo Do

During recessions it is often HR and in particular, OD and Learning and

Development, who find themselves cut early in the redundancy process, that

is unless they have particular skills or know how in redundancy procedures.

Seen as a costly overhead divorced from the business, HR is an easy target. As

an HR professional, how do you make yourself indispensible during times of

redundancy ensuring you and your function, remain relevant?

1.Speak language of CEO and FD talk strategy and cost:A major criticism of HR is that it is seen to be too soft and wishy washy

and fails to understand hard business issues. Although this may not be true

in every case it is a sad reality that the number of senior HR taking their

rightful place on the Board of organizations has not grown significantly over

the past 20 years. One step away from the Board puts you one level away on

influence and impact.

Change peoples perceptions of you by speaking the language of the CEO

and Finance Director. Start talking in hard numbers talk about costs

hidden costs, capital costs, and ROI, investment. Initiate and lead top team

workshops to revisit the business goals in response to recession. If youre not

on the Board, offer to facilitate the workshop or meeting to understand the

issues and get closer to the decision makers.


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HRM Page 10

2.Be proactive in cutting your own costs:Play the good corporate citizen and revisit your own budget before

anyone else does. Identify areas of saving for instance, suggest using internal

facilitators such as senior managers to deliver training courses. This not only

saves costs but it means the courses are usually more relevant and specific to

the business. Encourage and facilitate online training and distribute free

resources and material readily available. For instance, subscribe to McKinsey

quarterly and provide weekly or monthly synopses on each article. Better still;

send targeted articles to the relevant departments for instance, an article on

how to reshape a customer department to the Customer Services Director.

Measure ROI on each and every HR intervention using established

models such as Kirkpatricks Model (1959). Reject every intervention which

does not reach level 4 impacting the performance of the organization.

3. Focus on the longer term:

During times of economic uncertainty it is typical for individuals and

organizations to focus on the short term getting cash in the door is critical.

This short termism which develops means that it is easy to forget the deep

skills and know how that has developed over the years and is critical to day to

day delivery of the business. Understand the core competencies the business

needs to deliver its strategy over the longer term and then undertake an audit

of the skills out there in the business. Highlight those individuals who have

those core competencies and ensure they are not the first ones to be made

redundant. Ask how long it will take the business to replace an engineer with

15 years experience in a particular expertise area as opposed to a new graduate

with 6 months experience? Take a strategic approach to redundancy by

focusing on the longer term and speaking in business terms.


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HRM Page 11

4.Get close(r) to your customers:HR is rightly criticized for developing and maintaining closer associations

and networks with other HR folk than with their own customers. Getting close

and personal with customers is critical in a recession. Customers dont stop

buying during a recession, they just buy more cleverly. HR needs to

understand what service/info/skills they are looking for, get these in writing

and develop a business case for why HR still has a relevant role to play.

5.Encourage use of experienced interims or consultants whohave worked in recessionary times:

Its been nearly 18 years since our last recession. A generation of

workers does not have the skill set or the experience to lead their organization

safely through a recession and out the other side. Identifying this and having

an action plan to counteract this will mean you are seen as proactive, strategic

and indispensible and definitely too valuable to lose as we move into

recessionary times.


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HRM Page 12

Case examples

Religare Security limited

Religare Enterprises Limited (REL), is one of the leading integrated

financial services groups of India. The company offers a diverse bouquet of

services like

Equities

Commodities

Insurance broking

Wealth management

Portfolio management services

Personal financial services

Investment banking

Institutional broking services

The services are broadly clubbed across three key business verticals-

Retail, Wealth management and the Institutional spectrum. Religare

Enterprises Limited is the holding company for all its businesses, structured

and being operated through various subsidiaries.


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HRM Page 13

Vision:

. To build Religare as a globally trusted brand in the financial services domain

and present it as the Investment Gateway of India'

Mission:

Providing complete financial care driven by the core values of diligence and

transparency.

Brand Essence:

Core brand essence is Diligence and Religare is driven by ethical and dynamic

processes for wealth creation


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HRM Page 14

Major HR policies before recession:

1.Leave Policy :As per Religare Policy, An employee can avail following leaves in a year

starting 1st Jan ending 31st March which must be sanctioned(unless its not

an emergency)

y Maternity leave:Maternity leave is provided as per provisions of the Maternity Benefit Act.

All female employees who have completed at least 80 days of service will be

eligible for maternity leave.Individuals will be entitled to a maximum of 12

weeks of maternity leave with pay of which not more than six weeks can be

taken before childbirth. However the entire period of 12 weeks can be

utilized post delivery.

y Casual leave:Casual leave is restricted to a maximum of three days on one occasion.

In case the individual remains absent beyond three days of casual leave the

entire leave will be adjusted against annual leave. Casual leave cannot be

combined with any other kind of leave. Casual leave cannot be accumulated

and will lapse at the end of the year.

y Sick leave:All Sick leaves in excess of 3 days should be supported by medical

certificate from a Registered Practitioner. Sick leave can be combined with

Annual leave.


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y Privilege leave:Privilege leave may be accumulated to a maximum of 120 days at any

time. Privilege leave can be encashed on the basis of Basic salary. Privilege

leave can be combined with sick and maternity leave. It can be availed only

after completion of at least 6 months in the org. In the event of a

probationer requiring privilege leave for compelling reasons, clearance must

be obtained from Regional Head. Such leave will be debited against

prospective entitlement. In case employee leaves before earning that leave

the wages paid for such period will be recovered at the time of settlement.

LEAVE RECORD

HR will maintain the leave record in Delhi and designated persons at various

locations would send the monthly attendance data along with leave

applications to Corporate HR. Details of leaves with leave applications availed

by employees will be sent to HR by Branch heads at the end of the month.

LEAVE RULES

In case of some emergency where prior sanction is not possible, information on

telephone/in writing must be sent to the concerned authority. Any absence

from office for more than 2 days without any intimation will lead to disciplinary

action.


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HRM Page 16

If an employee is absent from the services of the company without prior

written permission or intimation or overstay the sanctioned leave for 7

consecutive days , he/she will be deemed to have abandoned the service

voluntarily without giving due notice and the name will be struck off the rolls.It must be understood that leave is granted at the discretion of the

management. Employees must be prepared to adjust their leave in keeping

with the exigencies of their work.

Leaves cannot be claimed as a matter of right where the

exigency of service so requires.

2. Local Conveyance Policy:


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HRM Page 17

3.New Health Insurance Policy:Religare cover its employee under Group Health Policy with New India

Assurance Co. Ltd. It covers not only its employees but also their dependents

(as mentioned). The policy helps employees to take care of heavy financial

burden of treatment in hospitals for illness, disease or accident involving

surgery or not.


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HRM Page 18

The Salient Features of the Policy are given below:

1. The claim will only be admissible when there is a hospitalization for aminimum period of 24 hours. However, this time limit is not applicable to

specific treatments where due to technological advances hospitalization is

required for less than 24 hours only and surgical procedure is involved for

e.g. Cataract operation.

2. The expenses payable includes Room, Boarding & Nursing Expenses asprovided by the hospital/nursing home including registration and service

charges, Surgeon, Medical Practitioner, Consultants and Specialists fees

respectively.

3. The pre-existing condition means a medical condition which existed on thedate of cover in the policy for which insured employee received medical

advice and treatment or symptoms are such for which an ordinary person

would seek medical advice or treatment. Hence if any claim is arising due to

said conditions will be payable subject to certain conditions. However, there

is waiting period of 30 days for new joinees from addition in the policy

(which happens on 6th of every month).

4. The treatment taken in hospital/nursing home arising from or traceable topregnancy, child birth, including normal caesareans section only for first

two children with maximum sum insured of Rs 50,000 per case is

admissible . However, there is waiting period of 9 months for new joinee

from the day of addition in the policy.


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HRM Page 19

5. The new born baby is covered from day one and available sum insured for itwill be shared from available sum insured for maternity coverage i.e. Rs

50,000.

6. Relevant Medical Expenses incurred during period up to 30 days prior tohospitalization on disease/illness/injury sustained will be considered as a

part of claim.

7. Relevant Medical Expenses incurred during period up to 60 days afterhospitalization on disease/illness/injury sustained will be considered as a

part of claim.

8. The claimant will receive Rs.1000/- per day for hospitalization period inaddition to an admissible hospitalization expenses.


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HRM Page 20

4. Other Benefitsy Marriage gift

All employees of the company, on the occasion of theirs or their wardsmarriage, shall be given a gift in the form of a gift Cheque worth Rs. 5100/-.

The HR department shall coordinate the exercise and get the gift Cheque,

flowers and a greeting card signed either by the Functional Head or the

Managing Director.

y Late sittingsi. As far as possible, late sitting at work must be avoided. Still, however,

if employees are required to overstay at work beyond two hours, they

will be provided local conveyance reimbursement at the rate of Rs.

2.50 per k.m. to the maximum of Rs. 50/- per day.

ii. In case employees are required to attend office on an off-day, they shallbe eligible for claiming reimbursement of Local Conveyance at the rate

of Rs. 2.50 per kilometer to the maximum of Rs. 100 /- per day.

Besides, the employee shall also have the provision of claiming Mealexpenses @ Rs. 30 /- per day.

iii. These shall be applicable only till the Executive grade and not abovethat.


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HRM Page 21

5. Medical Policy

Medical Reimbursement: The medical reimbursement is applicable to all the

employees in the Executive Grade & above.

GUIDELINES

1. Actual medical expenses will be reimbursed against receipts/vouchers forall the employees and their family. The family includes:

y Spouse and dependent childreny Dependant Parents (In case of male and unmarried female employees)

2. An individual can claim medical reimbursement from the date of joining onpro-rata basis.


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HRM Page 22

3. Employees in Grade Executive & M1 have an option to include for medicalreimbursement in the remuneration (Cost to Company). The entitlement

depends on the grade of the employee.

The employee can choose from the options which are mentioned below

S.

No

Earlier

Grade

New

Grade

Amount(per

annum)

1 Jr.

Executive

L8 NIL

2 Executive L7 5,000

3 Executive L6 7,500

4 M1 L5 10,000

5 M2 L4 15,000

6 M3 L3 15,000

7 M3 L2 15,000

8 M4 L1 15,000


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HRM Page 23

6.Exit Policy1.Incase employee plans to leave the organization, he must inform the

organization 45 days before his date of leaving (except emergency case )

with the written reason for leaving the organization.

2.If employee has been terminated than he must return all the organizationbelongings within a period of 7 days. If he doesnt comply with it he may

be liable to legal actions. He would be payed his dues only when he

returns these belongings.


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HRM Page 24

Changes Done In Hr & Business Policy In This Recession Phase

1. Exit policy has changed. Now employee requires giving only 7 days timeperiod to leave the organization.

2. Employees job is directly proportional to the business he gets. Eachemployee must get business minimum up to 1.5 times the salary he or

she is taking. If he or she doesnt do so, he must be given warning letter

for showing performance for next 2 months; after that he doesnt

perform, than he may be terminated.(This policy is verbal to all managers

not in written)

3. For the local conveyance reimbursement only L8, L7 and L6 categoryemployees are applicable.

4. No leaves are sanctioned by managers. Since we are hard pressed withtime and cant employ back up for every employee for a period of 6

months no leaves must be sanctioned.

5. Office has been shifted from Nehru Place to Noida. Bus conveyance hasto be paid by employees @ Rs 1,500 per employee.

6. Benefit of long working hours has been discontinued for the period of 6months.

7. All employees of the company, on the occasion of their marriage, shall begiven a gift in the form of a gift Cheque worth Rs. 4,500/-.

8. Companys Laptop and Mobiles are shared by two to three employees.Two laptops are available in case any employee requires it at same time.


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HRM Page 25

Some Of The Malpractices/Practices Noticed By Us

1. In one of the place, regional head wanted to remove three people under him whowere not signing resignation on their own. But their performance was very low.

And they were in regional head A (name not known as HR person were talking

about this case informally) team for about an year and was the reason for

regional heads bad performance. Regional head told watchman not to allow these

three personnel in the organization for about a weeks time and hence issued

them notice for termination of their services. There case is now handled by legal

department of HR.

2. In other case, one of the manager asked HR executive the way he can throw outan employee who keeps on using employees resources for his personal use

thereby wasting his time in organization. For this HR advised to give a month

notice with proof to employee telling him he need to improve his acts or else he

may be terminated

3. In another case a female employee threatened his male manager through anoutsider that he needs to stop his acts or else acid may be thrown. This was due

to managers pressure on his team for showing performance. Employee was

terminated as soon as the information was provided to HR and police was

informed for the same. This case is fought by Legal department on the behalf of

manager but here employee has not filed case on real scenario. She filed case

saying that his manager misbehaves.

4. Employees bonus due on November has been delayed to March.5. Shifting of employees to Noida office resulted in resignation of27 employees. This

helped organization to downsize but in this process it also lost 3 of its best

employees. Bus service was provided after a months time so that people

themselves leave and hardworking ones remained with organization.

6. In order to improvise on its one of the SBU Fortis sales, they provided discount of10% on billing of medicine and 5% on other items.

7. There were rumors that high management level employees salary may be cutdown to 10-20%.


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HRM Page 26

Result of these policies

1. Employee Satisfaction :Employee Satisfaction was very low. One of the employee told that if

given a chance she will move to other organization even if it pays her equal

salary or low job profile. She was looking for an opportunity outside the

organization

2. LEGAL CASES:Legal department has to handle some of the cases in which their

managers were at mistake. Their burden has increased during this period.

3. Turnover Rate:Turnover rate has increased. Though it is taken positively during this

cost cutting phase but thinking long term is not at all a good idea because it

is also incurring huge cost on recruiting by paying to consultants to cover

some of the important positions


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HRM Page 27

Layoffs in kingfisher

Along with the IT & Financial companies

across the globe going for a massive lay off, Kingfisher Airlines is the latest on

to join the bandwagon. The most happening airline company of India,

Kingfisher Airlines, decided to go pink-slips to its employees and go for a

massive layoff.

Reasons of lawoff:

Due to volatile fuel prices burning a hole in the pocket of Airline

companies, they are forced to go for cost cutting measures. In the aviation

industry, Vijay Mallya-promoted Kingfisher Airlines is cutting 300 jobs, besides

returning surplus aircrafts.

As per the news, the developments are a part of a concerted company-

wide effort aimed at minimizing the impact of the ongoing turbulence faced by

the aviation industry, Kingfisher Airlines has, over the last six months,

embarked on a series of restructuring measures designed to achieve cost

savings and rationalization and operational efficiencies


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HRM Page 28

This move was expected from the in the aviation industry by the

Kingfisher Airline Company. Recent takeover of Deccan Airways which is now

known as Simplify Deccan, and the volatile ATF prices were bound to have its

effect on the aviation companies. Elaborating the reasons behind downsizing of

staff, he said as the process of integration of the two entities (Kingfisher and

Simplify Deccan) nears completion; the carrier examined the complete

organization structure of the airline and mapped the skill sets of the existing

talent pool with the projected talent requirements of the company.

Solutions for employees:

Many employees were counseled on their career path progression and best

utilization of their individual skill sets

As a token of goodwill, the carrier is offering all these employees a severance

package equal to two months gross salary for every completed year of service

(subject to a minimum of 3 months pay-out).


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Conclusion

y The human resource management has to co-operate closely with the topmanagement.

y The ability to attract and retain workers when times are really toughrequires leaders to be at their best.

y Issuing pink- slips and managing layoffs are the biggest challenges thatHr faces.

RECESSION and hr final

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