HR Practices During Recession

An Indian Perspective

Executive Summary The study hereby undertaken tries to illustrate the problems and steps taken in the HR context during recessionary times in India. Given the current economic environment of uncertainty with a threatening Greek debt crisis and on the trail of a massive U.S. economic crisis, it was of particular interest to us to dig deeper and explore about the practices and the rationale behind each of them. We begin with analyzing the situation of the labor market in India during 2008-09 recessions in terms of the job losses, decrease salary and the related HR practices taken up by organizations. After this initial finding from secondary sources, we move towards the findings of the practices that were actually being done in industries which were substantially affected by recession. We try our best to present the actual field details of several employers whose managers we interviewed as part of the study. We then try to zero in the common threads of rationale that were underlying in each of these practices across companies. Given these practices, it was only logical to study the reaction of employees to these practices. For this we arranged one on one interviews with employees of four companies and tried to capture theirreactions and those of other employees across the company. From this along with online interview reports we tried to gauge the reactions and the corresponding causes for the same. Moving on from the interactions with senior managers HR and general managers after going through a lot of articles over the internet, we analyzed in the current situation the role of the HR and the change from that of when economic conditions were stable. Finally we would like to say that we have tried to collate all our findings and have tried to give to the reader a coherent picture of the policies, the intentions and the reactions of employees to the same so that she/he gets a base to start thinking upon the implications of any HR action on employees and find the best way of managing company profitability with employee engagement.

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......................................................................................................................................................................................... 21 Appendix .......................................................... 24 2|Page ....... 15 General reactions amongst employees ......................................................................................... 15 New roles of HR in this situation ....................................................................................................................................................................................................................................................................................................... 19 Conclusion ..................... h............................................................................................. 9 Managing top performers/Appraisals....................................................................................................... 17 Limitations of the Study................................................... 8 Training and Development...... 22 Appendix 1 ................................................ e.................................................................................................................................................................................................................... d.............................................................................................................................. 22 Appendix 2 ................................................................ Change in Recruitment Practices ........................................... 7 Retrenchment/layoff ...... g...................................... 11 Change in working hours ....................... 13 Employee Reaction to these measures ......................................................................................... 5 a...................... 3 Review of Literature .................................................................................... 5 HRM Practices across Industries: From the Experts Themselves ............Contents Introduction ............................................................................................................................................. 13 Employee Engagement ........................................................................................................................................................................................... b.......................................................................................................................... 10 Changes in award of benefits ......................... 3 Methodology ..... 20 Bibliography ........................................ f..................... 6 Changes in the HR/Recruitment staffing ..................................................................................................................................................................................... 3 Labor Situation in India during Recession .............................................................................. c.........................................................................................................................................

They employed a production based pay which made it easier for the companies to schedule flexible hours and manage pay according to production. After some amount of collective brainstorming bin our group. We then try to analyze the rationale behind all of these practices and try to understand the implications of these practices on employees across industries. The usual training practices which were based on building organizational culture and included sightseeing were cut down. companies in China focused on cutting down their workforce. one for employers and the other for employees and then contacted them over telephonic conversation for seeking an answer to the issues and the underlying causes for the same.Introduction With the memories of 2008-09 economic crisesfresh in our minds and an impending Greek debt crisis leading to the possibility of a similar such situation. It was ensured that the retained employees had high spirits even during this period. Review of Literature During the 2008-09 recessions. Methodology The method of data collection in our case involved first doing a review of existing literature that touched upon various HR practices across countries and looked up for several Labor Ministry and other reports and interviews on the internet. Outsourcing was also used to reduce additional employment. In training and development. Performance appraisals however were carried out in the same frequency as previously. 2010) 3|Page . 118 companies had put hiring on freeze but no company had terminated labor contracts before their expiry. a talent retain strategy was employed by most firms in which certain mid management employees were selected and were provided continuous on the job training. renewal of terminated contracts wasn‟t done. We also try and gauge how these practices have helped to align with the organization‟s strategy at that point and how successful have they been in terms of the objectives they sought to achieve. we prepared a structured set of 2 questionnaires. A survey of 195 firms found that 124 firms had already done or were planning to reduce their workforce because of reduced overseas demand. the motivation for taking up this study is evident. (Shen. Herein we try to look at various practices in the HR domain that have taken place across organizations in India and try to compare them with those taken in other countries during the same period. However.

During the Asian financial crisis. Instead of layoffs the companies in Russia gave “partial employment”. companies fixed the upper age limit for occupying a post so that a high performing employee on achieving a fixed set of goals and targets was promoted to the post. (Sahdev. The HR functions which till that point of time related to managing growth thenbecame focused on downsizing the organization. 2004) In the UK the role of HR changed from the short term focus on personnel management to that of the strategic long term goal of human resource management. workers were trained on a multitude of capabilities. This lead to arbitrary removals which not only hurt the employee morale but also resulted in companies losing out on talent.However in Russia the degree of formalization of performance appraisal is very low. The involvement of HR in strategic decisions changed to be a “conformist innovator” or an “architect”. The HR department also was actively involved in internal consultancy and was thus seen as a revenue generating center instead of a cost center. Zelenova. Further the recession resulted in companies going back to traditional Russian practice of irregular work hours. In order to create more promotion opportunities. This helped in incentivizing top performers. Among the various roles the HR function the following four roles have been highlighted: a partner in strategy execution. an administrative expert. the unions lost their strong influence to guarantee jobs and the workers were in more direct touch with the management. This practice is called „Shunto‟. had higher employee morale and were able to retain talent due to formal performance appraisal system. (Benson. an employee champion and a change agent. However in an alternate survey in Russia which had higher MNC participation it was found that most of them were able to place their laid off employees elsewhere. In this period mutation of HR practices was observed. (Gurkov.Management also put a lot of emphasis on collective bargaining where they negotiated with the unskilled laborers and fixed pay and promotion system after consultation with them. 2012) 4|Page . 2011) During the recession of 2008 it was predicted that the unemployment level in Russia would reach a historic high of 15% but actual rates were 9%. & Saidov. The employees were however not very happy with these part time work arrangements as this resulted in reduction in pay. Workers were paid bonuses for learning skills that were in demand in the market. Due to these practices.Japan empathized on retaining top talent. New technologies like tele-working were also practiced. Many Russian employees voluntarily took unpaid holidays instead of facing the prospect of being laid off.

2009) The effect was equally felt amongst both contract and non-contract workers and across industries. reduction in training expenses. it was observed that many practices though not limited to an industry however depended whether the organization operated in the private or public sector. Here it became imperative for the HR to get involved in a lot of discussions and deliberations with employees and clarify with them the reasons for the measures being taken and reaching to a common point of agreement. the phase resulted in the underutilization of full capacity and many industries where incentives and bonuses were linked to production also saw a halt in these practices. layoffs/ reduction in work force. several practices that were common across sectors on further probing revealed that the intention behind them all was the same irrespective of them being in the private or public domain.(Ministry of Labour. the FMCG sector (Bikanerwala Foods). HRM Practices across Industries: From the Experts Themselves As part of this curriculum. The industries that we touched upon were the steel industry (Vizag Steel Plant). the oil and gas sector (ONGC) and the IT industry (a software MNC that who obliged on conditions of anonymity). Apart from them a variety of HR practices were undertaken which directly and indirectly affected the workers in industries. The average monthly earnings during this period went down by 3. Some of these were the freeze on hiring that took place. The huge job losses.Employment across both export and non-export units went down by 1. the reduction in salaries and benefits resulted in a feeling of insecurity amongst employees as it had affected their daily life as well as their investment plans for the future. Also. The people interviewed were either senior HR managers or general managers.Labor Situation in India during Recession The 2008 economic crisis was felt widely across several industries in India resulting in more than 65500 job losses in the period of August-October 2008. 5|Page . insurance sector (ICICI Prudential Life).45%. reducing the number of working days in a week and the cutting down of various benefits amongst others. GoI.01% especially affecting the manual workforce. However. we interviewed people across industries both in the government and private sector. restrictions in the travel policy of companies. From the interactions.

Bikanervala Foods Pvt. Ltd. ICICI Prudential. each post was identified by the management as being a permanent or temporary post depending on the level of involvement of the person occupying the post in the core activities of the organization. Campus recruitment was also stopped. At the time of hiring. Here the hiring of mid managerial level employees was cut down but no significant change happened in the hiring of unskilled workers. 6|Page .The mode of interaction with all of these executives was by telephonic interviews on a consistent set framework of questions that are provided in the annexure to the document. Software MNC Hiring of completely was frozen. The hiring of interns from engineering colleges was also stopped during this period. Further probing on the underlying causes behind these practices was also done and finally we have tried to collate the responses of several industries as and when applicable under particular practices and have drawn a common thread that was evident in each of them. There were cases when replacements for people who had resigned were rejected. people were transferred from other teams. The firms that are working in the public sector domain are Vizag Steel Plant and ONGC. Bikanervala Foods and the software MNC operate in the private sector. The various HR practices that were taken up during that period were: a. The need for new workers was then not there in the industry and the recruitment of junior level executives was frozen. Any additional requirement of unskilled labor was filled by the hiring of contractual workers instead of permanent workers. If developers were required. Change in Recruitment Practices Vizag Steel Plant During this period of recession the demand for steel underwent a huge dip amongst increases in the price of raw materials which led to the steel plants functioning at lesser than full capacity and thus decreased production. In case of extreme necessity approval from top management was necessary.

000 to 30. 16000 employees in ICICI Prudential Life lost their jobs between 2007 and 2010. This was primarily done by inadequate recruitment. recruitment of permanent staff (for example class IV employees) was almost negligible. Thus employee strength fell from 30000 to 14000. The reduction in permanent staff and focusing on contract workers is a means to cut the excess cost on the firm. all the firms witnessed very less recruitment in terms of permanent staff. ICICI Prudential The insurance sector had seen a rapid growth during 2000-2008 and the major players in the sector had built up excess capacity in anticipation of rapid growth. ICICI which like other companies had built excess capacity engaged in “right sizing”. the recruitment head which was classified as a temporary position 7|Page . Ltd. b. Hence. ICICI bank on the other hand did not retrench employees but did stop hiring. if any was fulfilled by increasing the intake of contract workers especially in the low skills areas. Hiring for officers is mainly carried out at the entry level and there was no significant effect on their hiring practices. The reduction was carried out by not recruiting proportionate numbers in comparison to the number of employees retiring or leaving the firm. It can also be observed that the overstaffed organizations like ONGC and ICICI insurance have reduced their employee strength that had accumulated over the years. This would ensure that the firm is maintaining the right number of employees.It was the HR‟s strategy to remove the bottom 20% of the employees. The shortfall. High rates of attrition had been observed in this sector changed during the recession.ONGC The total strength of the employees in the organization was reduced from around 40. At the same time there was a hiring freeze.000 over the last decade. Under these circumstances. As can be observed. During this period the hiring was on freeze with no hiring of executive employees. Changes in the HR/Recruitment staffing Bikanervala Foods Pvt. The campus placement involves heavy hiring cost and can be avoided by not opting for the particular measure as had been done by VSP. The bottom 1% candidates during a six month appraisal period were retrenched. relying more on the contract workers.

30. A target versus achievement matrix was formulated and those people who were unable to meet their targets continuously for three months were retrenched. Some of the mediocre performers were given a sabbatical for a period of 6 months after which they were reabsorbed. However in private firms like ICICI 8|Page . Retrenchment/layoff Software MNC Retrenchment was not done. However. Ltd. The reason cited was that the strong union had opposed the sacking of one of their leaders recently and had stopped production for a week.” c. The company maintains that under performing employees were asked to leave but they were counseled about alternative career opportunities. Bikanervala Foods Pvt. reports suggest that retrenched employees had approached Labor ministry. “It was highly uneconomical paying a salary of Rs. The company had projects planned prior to recession period and existing staff were allocated to these new projects. The HR manager said. retrenchment never happened for permanent workers in the unskilled labor sector.was vacated as a measure of cost cutting. Vizag steel plant and Bikanervala). It can be easily observed that in situations where there is a strict government regulatory or in cases where the union is strong retrenchment was not a possible option (cases of ONGC. While company dubbed the attrition as normal attrition. this was not followed because of the strong regulatory government framework in which the both of them operated. This was identified as the primary cost cutting methodology in the firm. Employees were assigned a set of goals to achieve in a period of 3 months with constant monitoring being done at the end of each month. interestingly. ONGC There was no retrenchment/layoff as it is against the government policies to retrench employees in a public sector enterprise.000 to a person whose work itself hadbeen put on hold. In the public sector undertakings of Vizag Steel Plant and ONGC. ICICI Prudential Thousands of employees were retrenched during the recession.

some training programs that involved meetings in top notch hotels were cut down and more stress was given to on the job training. Bikanervala Foods Pvt. So. Software MNC There was reduction in the budget allocated to trainings related to soft skills. Training and Development Vizag Steel Plant Training is a very continuous process in steel plants aiming at constant improvement. some training programs that aren‟t directly related to the core job (for example management development programs for mid level executives. In order to reduce the training and development expenses.insurance retrenchment was done on a large scale as part of cost cutting measures. At the same time it is interesting to observe that software MNC was not forced to retrench probably due to impending projects A performance assessment was carried out so as to identify non performers in performers to ensure transparency in the system of retrenchment d. Expensive arrangement of meetings with professionals from other industries was held back and internal training was focused on. Hence. ONGC Training and Development is a thrust area for the organization as the job entails risky endeavors. Training in technical subjects was not suspended and were generally done by an in house team. Ltd. Even in Bikanervala retrenchment was carried out heavily in the mid management. workers were mainly given on the job training. the training programs for the staff mainly deal with safety precautionsand on the job training programs. training programs in foreign locations are reduced to some extent) 9|Page . However. Very similar to Vizag steel plant. the cost of doing away with training was more than giving training to employees. However other service organizations with large workforce had cut down on number training classes offered. the training head which was a contractual post was retrenched. like presentation exercises and outbound team building exercises. Given the reduced focus on costly formal training methods.

People who were not able to meet the minimum required ratings were denied this pay. Compensation benchmarking with other companies was done more frequently. Employees with high ratings were only given some amount of the variable pay. The stop on hiring helped the company save on those costs. For higher levels. in whose case promotions were done by duration. e. An exception to this is the ICICI insurance which imposed a fee on entry level training as a cost cutting measure. For the lower level developers. In general during downturn firms continued with on job technical training. Performance linked promotions were also deferred and promotions that happen in a period of three to four years were delayed further by a year. Promotions were also difficult. 10 | P a g e . Software MNC Appraisals and variable pay distribution was made more strict. For the other part linked to personal performance. The variable component of compensation was linked to performance of the company as well as the individual. a vacancy had to exist and it had to be approved sometimes by the VP of the respective departments. each employee received a minimum amount as annual variable component. Earlier the company used to spend huge amounts of money in training the new recruits by tie ups with various institutes. Managing top performers/Appraisals Vizag Steel Plant The appraisal system comprises two components: first related to the amount of production and the next to individual performance. However as they were under tremendous pressure to reduce costs all managerial and training programs that are not directly related to the job were reduced. The logic behind differentiating hard skills and soft skills development is the large cost disparity between the training involved in both. were not curtailed. The first part had to be cut down as the overall production decreased.ICICI Prudential The company did not cut down on training per se but the training costs did go down as there was a fee on entry level hiring. Under normal circumstances. The intention was to improve the productivity of the present employees. employees were consulted and it was mutually agreed upon deferring it to the next year with slightly higher values.

f.Bikanervala Foods Pvt. education allowance. Changes in award of benefits Vizag Steel Plant Due to government regulations. Careful assessment was done to find why the employee was rated higher in appraisal and on what parameters did he excel in order to determine who the high potential employees were. spending on health. Very careful assessment was also done to identify the higher ratings while appraisal. ICICI Prudential The company relied on its appraisal system to identify the bottom 1% of the performers. Both these measures have the rationale of retaining the best performers with the firm. In order to retain top managerial talent around 3000 managers were moved to ICICI bank and 300 to ICICI securities and General Insurance divisions. While in certain cases the performance based promotions were deferred with mutual consent. Promotions were also made rigid with approvals from the higher management. township 11 | P a g e . Ltd. However. The top performers were differentiated by the appraisal process and they were rewarded with a view to retain the top talent during the times of recession. the target-achievement grid helped in identifying top performers and not only were they retained but also given adequate bonuses and raises to reduce their likelihood of switching to other firms. This measure was implemented with the idea of identifying the best performers in the firm Star performers at top managerial level leaving the firm during the periodwere rewarded bonuses and incentives to stay in the firm for a longer run. Organizations in general implemented changes in the performance appraisal system. These were the candidates for retrenchment but were given opportunities to improve. in other cases appraisals and variable pay distribution was made stricter. there was no increment to these benefits pertaining to magazine allowance. This was done with a view to retain top talent. As mentioned earlier. Also a system of long term pay (an incentive) was started which was given to high potential employees. Other trends observed were regular benchmarking with competitors. The assessment was made on a continuous basis (every 6 months) to identify the under performers. canteen. PSEs could not decrease the amount allocated to spending on fringe benefits.

However. ICICI faced the cuts with a much bigger impact. “Earlier. ICICI Prudential There were cuts in incremental benefits. 2008 was a year of no bonus not only in ICICI prudential but also other insurance companies. Conferences in lavish hotels were also reduced. foreign trips/tours of employees were reduced to a minimum possible extent. the mediocre performers did not have any bonuses/raises. they would have quit and gone. The benefits denied included gifts during special occasions. Though the top performers were awarded bonuses. during downturn. Various measures like the limit on the number of free minutes over the phone were also introduced. While promotions did happen the increases in salary were not at the same rate as the pre recession period. There were also a freeze on paid International holidays but instead more holidays were given for domestic vacations. Software MNC There were no changes in benefits like insurance. While extremely rich firms like ONGC could do away with retaining most of the extra benefits. Bikanervala Foods Pvt. Ltd. The HR says. Special gifts at time of festivals were reduced to distribution of sweets. Thus in some ways the recession is helping the company institute some changes that were not possible earlier. but distribution of goodies like shirts and bags were stopped. Also promotions were linked to time worked in the organization.among others in the period. Cuts in incremental benefits and extra benefits depended on the financial position of the firm. Earlier if a promotion was given in one year now it was given in two years. ONGC There was no drastic cut in any of the benefits as the firm is a relatively cash rich firm. if you did not promote people in one year. The usual gifts during Diwali were also compromised as signs of cost cutting. 12 | P a g e . Team based performance rewards were stopped and individuals with exceptional performance were rewarded monetarily with spot awards. conferences in lavish hotels etc. Today. jobs are not so easily available”. Money for team lunches and outdoor events was removed from team budgets. Also as a part of cost cutting the mobile expenses of employees were cut.

The HR believed that people would put in more work as it was difficult for employees to find work elsewhere. Ltd.As there was a dearth in job opportunities across the industry. In case of Bikanerwala as there were cases of retrenchment the working hours were forced to be increased due to loss of labour so as to match the existing demand h. They regularly sought the opinion of executive employees while introducing new practices such as delay of benefits and leaves. The unionized employees were taken into confidence and were apprised of all the events and were explained about the 13 | P a g e . Neither were changes made in number of working days not were the employees asked to take forced vacations. the amount of work per employee went up thereby leading to higher number of working hours per person. there was no reduction in the number of working days in the company to save on administrative costs such as production and electricity. The rationale behind was that instead of stressing for more working hours. Bikanervala Foods Pvt. the firms were stressing on more productivity during those working hours. More responsibilities were also entrusted to current employees. The company aimed to release new products when the recession was over and so had engaged its workforce in the development of pre-planned new projects. Employee Engagement Vizag Steel Plant The involvement of the HR department was extensive with the executive as well as union employees. the amount of work allocated was increased.However high expenditure benefits like paid international holidays were frozen in all organizations. ICICI Prudential There was no change in working hours but the remaining employees after retrenchment were pressurized to put in more work. Change in working hours Software MNC Although the working times were not changed. More responsibilities were entrusted to current employees. However. the firms could afford to cut on the extra benefits without the fear of employees leaving the firm g. With the retrenchment of a number of workers.

The policies were a clear signal that top performers will be rewarded and more work would be expected of them while the bottom ones will be asked to leave. Ltd. they tried to take the employees into confidence and alleviate 14 | P a g e . ONGC No specific extra initiative was taken during downturn. the management led by example with the CEO refusing to take salary for 2 months so as not to curb several welfare measures. The criteria were also clearly defined. Meetings at project levels were organized where employees were told of how their products had been contributing to the revenue. ICICI Prudential The HR communicate to the employees that the bottom performers are likely to lose their jobs. performance related pay structure etc. Although no formal forum for interaction was established.measures being taken. HR also called upon employees for more commitment to help the company tide over difficult time. The HR people were always available for communication to assuage the fears of employees and also served to address their grievances. Bikanervala Foods Pvt. A formal forum was formed in which the HR department became the point of contact to address the grievances of the labor union and communicate it to the top management. performance of the company. The role of HR was different in different firms. All the employees are kept in confidence on the decisions related to compensation and benefits by regular engagement and detailed communication from both the HR department and the top management. Those who were retrenched were informed by the HR and the top performers were given confidence that they need not have job insecurity fears. but the HR actively engages with the employees at all levels on a routine basis regarding the compensation and benefits. the HR department was in continuous touch with the employees. Also. While in majority of the cases like ICICI and the software MNC. Software MNC Emails with information related to company performance were sent out that had planned and actual revenue figures. However counseling was provided to employees who were asked to leave so that they could seek alternative careers.

The main activities that these people observed and were most dissatisfied with were layoffs.T. the policy in some companies of not encashing the remaining leaves also affected the planned cash flows of employees and thus led to dissatisfaction amongst them.P. The marked reduction in the benefits being offered such as free cab service. Also. General reactions amongst employees Employees were concerned because of the effect of these activities on their current as well as their future investment and saving plans. the reaction of employees as expected was not positive and feelings of job insecurity creeps in to the minds of those people who have not been subjected to punitive action.) showed the common trend of negative mindset amongst the employees although they varied in their degrees of discontent. employees on the other ensuring an amicable process regarding retrenchment. lack of increment in house rent and travel allowance and free food coupons were also not taken in positive light. Interviews with employees of some private companies (H. H. In other cases they played the role of a mediatory between the firm on one hand and unions.P implemented the reduced workday policy wherein employees had to work for 10 hours for 4 days instead of 8 15 | P a g e . The main reasons stated for uncertainty were that the decision making during these times was not seen as transparent and interactions between peer groups about actions being taken in different companies added to the fear. Wipro and C.S) and in the public sector as well (NTPC Ltd. reduction in pays and the halt in promotions.their job fears while maintaining high degrees of transparency about the position as well as the employee. cutting extra benefits etc. facilities of free gymnasiums with instructors. Employee Reaction to these measures In light of all the aforementioned activities that were taken by the organization. Some of the most general trends that came out of the interviews with employees were:  Given some measures of reducing administrative costs. unlimited telephone charges reimbursement.

This led to a number of employees looking for different opportunities in other companies.  Some new joinees joining dates in Wipro were delayed by more than a year and they were given the option of joining either the call center arm of the organization or wait for a year.   Though insecurity in terms of jobs was not evident in PSEs.hours in 5 days. Huawei and others during recession. for e. moved to companies like Cisco.g.  There was however a marked difference in the attitudes of midlevel executives who had been part of the organization for a lot of time now. employees were concerned about the deferred promotion and allowances that were mandated by the management A common observed trend was the increased work load amongst high performers who had to undergo a lot of stress which put them more at risk of voluntary turnover. This resulted in increased levels of stress amongst employees. When there was a growing trend of engaging employees. They were encouraged at being included in the decision making process and being part of the consultations while taking major organizational level decisions. there was a growing core of actively disengaged employees. Employees in CTS felt that making them sit on benches for a period of 2-3 months would next lead to them being laid off. an IT services company.  The person interviewed at NTPC reported that freshmen after completing MBA joined in larger numbers during recession but at the wake of opening up of the economy quit the organization to move towards greener private pastures.  There was marked polarization that took place at that time. many employees from Wipro. They were more engaged in the activities of the organization and were supportive in the actions taken in the face of the situation. Also. only 20% of the people joined in the call center arm of the organization as they saw it as a loss of their reputation. 16 | P a g e .  The general perception of the management in the organization changed towards not being transparent. According to the employee. A number of high performers also switched during this phase across industries. accompanied this was a 5% cut in pay which did not give a fulfilling experience to employees. Motorola.

New roles of HR in this situation As observed from the above reaction of employees in the context of these HR practices. employees said that the availability of persons from the HR department and their willingness to discuss out problems with employees was reassuring. if any. Thus.P.A takeaway from all the interviews conducted was that employees looked at the involvement of HR in communication of the practices being undertaken during this time in positive light. Communication to employees by HR about the policies During a downturn. the concerns of employees could be assuaged when they were properly apprised of the activities to make them believe in the transparency in the process. We next critically analyze these changing roles of HR in the subsequent section. Asdiscussed earlier in the case of Vizag Steel Plant and ONGC. the role of HR is very important. it becomes clear that the HR department must play an instrumental role in engaging with employees by formal and informal means of communication and assuaging their grievances and concerns. a role that is new to the already existing multitude of responsibilities of the HR department. HRM staff needs to know the emergency benefits and assistance available. This helped in keeping the employees in confidence regarding the practices followed by the firm and allayed undue 17 | P a g e . it is the responsibility of the HR managers to represent employee interests and advise management and employees on the available contingency plans. This and many other activities of HR assumed a lot of importance during this period which hitherto had not been given adequate importance. To some extent. the HR actively engaged with the employees of the organizations at all levels and there were clear and detailed communications about the existing policies and changes. The formation of formal forums in NTPC gave employees a chance to address their grievances to the top management during these times and addresses by top management directly to executives were seen in positive light as well. In organizations such as H. device some plans if the situation so demands and ensure that they reach the employees and their families quickly. a. As part of the crisis communication preparation.

As discussed earlier. c. cutting down of various benefits. and communications have become necessary pre-requisites for successful managing of the increasingly complex HR function in today‟s challenging times. reducing the number of working days in a week as has been discussed earlier. in ONGC. This role becomes all the more crucial during downturn as the organizations are often forced to take certain tough measures like layoffs/ reduction in work force. a formal redressal forum was formed in Vizag Steel Plant with HR department as the point of contact. HR 18 | P a g e . consulting. However. is essential to avoid conflicts. Involvement with labor unions and collective bargaining Most HR managers have to walk a tight rope and do a balancing act: protect the company's interests. in trying times like the downturn. the need is for the HR department to become more assertive. rest timings etc. consultative and receptive to the business needs. Hence.fears amongst the employees.” HR professionals also need to be more open. crisis management. strikes and other such unproductive outbursts. business. They also need to follow through with the implementation of policies so as to make sure that the policies have the desired impact.“Knowledge and skills in economics. represent management while simultaneously effectively engaging and negotiating with the labor union representatives to ultimately arrive at a collective bargaining agreement that's acceptable to both the management and the labor workforce. pertaining specially to the on-site work. Similarly. b. welfare benefits and other local issues relating to food. This also helped in building a positive feeling amongst the employees that the organization would take care of them in every possible manner. HR professionals have to be more involved in the strategic decision making of the organization and behave more as integrated players or “business partners” in the core business. HR actively engages with the labor unions and their consent is sought in decisions relating to salary revisions. leadership. keeping the labor unions apprised of the measures taken and keeping them into confidence. Leadership role of HR and active involvement in decision making Most of the functions of HR until now have largely been reactive rather than proactive.

Also. Limitations of the Study Although a lot of effort was put in trying to get as much primary data some limitations in terms of time and space held back some steps we would have liked to take up. a formal forum was formed in Vizag Steel Plant with HR department as the point of contact to redress the grievances of the labor union and communicate it to the top management. The HR professionals should thus play an enabling role by providing information about. One was the absence of face to face interaction with employers in their organizations themselves which could have also got us to talk with their employees. we tried to probe 19 | P a g e . During periods of growth. e. Using formal and informal networks to interact with employees Several formal and informal networks/forums are formed to interact with employees. rapid changes in economic climate during downturns make it imperative for HR professionals to adapt quickly to the ever changing circumstances making their job even more challenging and enriching.has emerged as the vanguard in managing labor relations and collective bargaining in the recent times. To mitigate this however. d. interpretation of the various measures taken by the organization so that the line managers can both be in synchronization with the stance taken by the top management and can also effectively communicate the same to their respective teams and employees working under them. However. it was not possible to get employee responses from the company from which we got the employer responses. the role of the HR is to ensure that robust recruitment policies are in place and also to ensure that top talent in the company is retained. Thus we can make out that the roleof HR during growth periods is generally more of a supportive kind wherein it helps the organization to cope with business expansion. As has been highlighted earlier. Advising and mentoring line managers on the HR impact of their decisions The success of the human resource policies and practices depend largely on the effectiveness of the implementation by the line managers. various informal initiatives are taken up to interact with employees on a regular basis. Similarly.

We also noticed how many proposed steps were not taken up on the advice of HR persons citing the negative impact of the decision no the employee as well as the organization reputation. 20 | P a g e . we understood that some measures that look pretty straightforward and direct had a lot of implications for employees. The HR professional has to deal with the dual role of looking at the organization‟s profitability as well as leverage relationships with executive employees and also the usually conflicting labor employees. It is evident how the role of an HR professional becomes highly challenging in these times and how flexible the professional has to be in combating these challenges. The evolving role from being a supportive department to that of a critical department in formulation of strategies for organizations poses several challenges in the already competitive environment. A delicate thread has to be treadedupon by the HR professionals trying to balance financials with consideration for emotions.the employee on the HR practices that were undertaken in her/his organization by referring tangentially to the questionnaire prepared for employers. Conclusion From the study undertaken. We would like to conclude saying that under such circumstances leaving the HR department to function as a standalone entity without support from the top management and employees can only be as good as not implementing the function at all.

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Appendix Appendix 1 Set of questions for telephonic interviewwith employers 1. In the previous recession period were there any changes in any of these activities? Activity Already changed it by then Made changes after recession Restrictions in company‟s travel policy Hiring freeze Layoffs/ reduction in work force Company holiday policy Hiring of seasonal workers Training expenses Salary freeze Communication to employees about changes salary and benefits Early retirement window Reduced workweek 22 | P a g e .

P&G) 6. available to address employees‟ concerns? 14. Were employees involved in forming unions so as to increase their bargaining power given the imposed measures? 13. what steps were taken for appraisal of the employees who were laid off? 10. what steps were taken by the HR team to assuage these concerns? Was the HR dept.g.2. How were communication about salary cuts and layoffs made to employees? 23 | P a g e . Were there any reductions in employee training programs? Was any free training alternative looked into? 5. Again focusing on cost cutting for recruitments. were any special schemes arranged for top performers? 8. If there were any layoffs.g. Were employees trained on multiple skills to help them adapt to change in work if needed? 12. were internet services like video conferencing (e. Skype) used for recruitment? 4. Were any services such as payment of health insurance premiums made available for retrenched employees? 9. Were there any changes in the promotional policies such as fixing the maximum age for occupation of a post? 11. were any deals entered into with recruitment agencies for discounts? Were any alternate agencies offering free recruitment services identified? 3. As a form of cost cutting. does your company provide any sort of mentoring/education to employees about their investment options? (E. Given the trend that employees are investing their savings into market securities to suit them after retirement. Given the above. Were any restrictions placed on salary increments and bonuses? Were there any pay cuts? 7. Given the doubts in the minds of employees during these times.

in your opinion was it at par with levels set the in earlier years? 12. Was there any change in your job profile (nature of work. Were you asked not to come to office for some days? 4. Were you offered a different role than what was promised earlier? 24 | P a g e . Does your company. reimburse fees for 3rd party professional certifications? If yes. Were your performance goals changed? 11. in an assembly or group meeting) regarding position of the company? 6. did the policy change in the recessionary times? 8. In case of workplaces with unions. Did the top management interact with you (personally. Were there any changes in the working hours? 3. Was there any change in bonus paid for employee referral? 9. Did your manager interact with you more frequently in the recessional times? 5. Were you or any of your colleagues asked to quit the job? If yes. Were you denied an opportunity to travel abroad / customer site citing reasons of cost cutting? 10.Appendix 2 Set of questions asked to employees in organizations 1. did it happen on a large scale? 2. what was the opinion of the Union leaders? Did the management talk to them regularly? Was there any change in the view of union leaders? 13. Was there any change in your pay structure? If yes. Was your joining delayed? If yes by what time? 15.responsibilities)? 7. did the company take any steps to get you employed in another company? To fresh college graduates. If there was compensation hike. 14.

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