HRM has to act quickly in the economic crisis. As many organization fight for their survival and the credit crunch spreads all over the world, the HRM has to support the business in protecting the cash flow and to help to cut the overall operational costs of the organization.
The HRM Function has to proactively analyze all the costs associated with the personnel in the organization. The costs have to be divided into three groups:
- Can be immediately cancelled (training, development, recruitment)
- Can be immediately cancelled, but the costs will not disappear immediately (benefit plans)
- Hard to cut costs (number of employees)
In the beginning of the economic crisis, the first steps are always about the costs of the organization. The other initiatives can follow, but the organization has to get all the costs under the full control and the personnel costs are usually seen as the best source for cost savings.
The economic crisis pushs the HRM Function to learn more about calculating, monitoring and managing the costs. The HRM Function cannot ask the managers to save the costs, it has to cut the costs on its own.
The HRM Function has to make some tough decisions:
- The recruitment has to be stopped.
- The promotions have to be re-evaluated and just the key promotions can be done.
- No salary reviews, guys.
- Training focused just on key personnel; the rest of training activities is cancelled.
- No party contributions.
- And finally, the HRM and top management will review the number of FTEs in units.
The HRM Function has to react quickly in the economic crisis. The more time the solution needs, the less it is suitable. The HRM Function with excellent reporting and monitoring has a huge advantage as it can prepare all the proposals quickly and the decision can be done based on the exact numbers.
