Go to HRM and Recession to find more.

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The recession can be a very interesting period for the HRM Function. The HRM Professionals can design, develop and implement a lot of new HRM Processes in the recession, which are simple and really efficient. But they need to have a clear vision of the HRM behavior in the recession to be really successful.

The HRM Management has to define the HRM Vision for the Recession. The employees in Human Resources have to understand the goals for the difficult period of the recession. Many activities in the organization can be cancelled, but the HRM Employees have to understand the reasons.

The HRM Vision for the Recession is needed for the employees of the HRM Function as they should serve the organization as the change agents. Many procedures, policies and processes can be cancelled during the recession or they can be strongly changed and the HRM Employees have to be able to explain the reasons for the change or cancellation of the policies.

The HRM Management has to push the top management to define the vision of the organization for the recession as the roles in the organization can be clearly defined. The top management has to set the vision for the strategic initiatives as the whole organization can share the same goals. It is very painful for the top management to define such goals, but the employees and managers can support the painful way to prosperity, when they believe and trust their leaders.

The HRM Function can serve as the navigator and facilitator for employees, but the HRM Vision for the recession has to be defined and clearly communicated and explained to HRM employees. The HRM Management has to communicate the full story as the HRM Employees have usually access to confidential information and they can build a good picture of the organization´s health very quickly.

The HRM Vision for the Recession should be about the trust and honesty. The HRM Employees have to understand the need to make changes and to make the cuts in the procedures they introduced and run for the organization. The HRM Management has to be proud to announce the cutting of job positions in the HRM Function and to explain the reasons for selecting the employees to be fired.

The HRM Vision for the Recession can play a significant role in the success of the HRM Function in the recession. The HRM Management Team has to set it as a priority and the vision has to be transformed into actions quickly.

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The headcount is one of the main drivers for the personnel costs. The HRM Function cannot decrease base salaries; the only really significant driver for the decrease of personnel costs is the number of employees in the organization.

The HRM Function has to have the analysis of the FTE development in the organization and the HRM Function has to be able to provide the evidence to any headcount addition in the organization.

The FTE allocation is also very important. The number of employees can be fine on the company level, but many organizations do not have the correct split among different units. The HRM Function should be able to provide the benchmarking of FTEs in the organization.

The HRM Function has to be sure about its power in the recession. The HRM Function has to be able to provide the business leaders with a lot of different HRM Benchmarks. The HRM Function is able to compare different units among each other and the HRM Function has to have the courage to present the results in the front of the top management.

The headcount is a really difficult topic to tackle in the recession. The recession is very difficult time for the organization, but the HRM Function is the real facilitator for the top management and the HRM Function has to provide the organization with the right and best solution for the FTE management.

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The HRM Recession Quick Wins should include the following actions:

1. Stop and prioritize the recruitment process. The vacancies should be cancelled and all the vacancies should be strategically re-shifted. The organization can need a completely different set of jobs to survive the recession. Why the continuing recruitment process should make the situation even worse?
2. The FTEs in the organization has to be evaluated. The number of FTEs can be fine, but the structure has to be reviewed. There is no company in the world, which cannot decrease the number of FTEs. The HRM Function has to offer the methodology for the FTEs review and the HRM Function has to act as the facilitator in the process of the FTEs review.
3. The bonus schemes have to be reviewed. The bonus scheme can support the organization in the time of the strong growth, but it can de-motivate employees in time of the recession. The HRM Function has to prepare a good analysis of the bonus scheme performance and its impact on the motivation of employees. The HRM Function can propose additional changes to the bonus scheme to provide the employees with some kind of the stability.
4. The talents have to move around the organization to play their strategic role in the change of the organization during the recession. The organization needs to awake its creativity and the shift of the talents can help a lot.

The HRM Recession Quick Wins are not hard, but they need a lot of courage from the HRM Function. The HRM Function has to reflect itself and it has to be proud to say, it made some mistakes in the past. The recession is always about the restart and the HRM Function needs to restart its processes quickly at the beginning of the recession.

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The talent management is about the selection of the group of key employees with the high potential to develop, learn and grow in the organization. When the recession comes, this group of employees can generate, design and develop the ideas, which can help the organization to survive the recession successfully.

The top management has to empower the talents to change the organization. The top management has to support their effort in pushing new ways of business through the organization. The talents need a support from the top management.

The top management has a very important role in the recession for the organization. Their communication is essential and their trust to the talents is also very important. The organizations do not hire new employees, but the recognized talents are always welcome.

The organizations, which empower their talents, have a better chance to go through the recession successfully with the new evolving leaders. The talents know about their qualities and when they feel a possibility to develop their skills and competencies, they will look for the opportunity to show their potential in other organization. This is a task for Human Resources to support the role of the talent management and to show the connection of the talent management and successful fight with the recession.

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The leader in the recession has to communicate the vision of the future and has to allow the employees to bring innovative proposals to cut the costs and to make the changes in the current processes.

The real leader listens to employees in difficult time. The leader is inspired by the employees and helps to employees to transform their ideas into innovative solutions.

The leader in the recession has to put more value on the employees and their inspiring ideas. The leader has to listen to employees during the whole career in the organization, but the recession is a special and difficult moment in the life of the organization and the leader has to make the employees the priority number one.

The leader has to demonstrate the willingness to overcome the recession and to build the organization stronger and prepared for the new challenges in the future. The trust of employees is the key to the success and the leader has to work on strengthening the trust every single day.

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The bonus schemes are built for the moments of the economic growth, they are not built for the moments of the economic crisis. The HRM Function has to take the quick action about the bonus schemes usually as the employees can get nervous about their total income.

The employees can start the Microsoft Excel and they can make a quick calculation of their expected total cash for the year. Generally, the employees can expect a lower total cash income for the year, but they expect some kind of the communication from the top management. When the top management is silent, the employees feel frustrated and they do not trust their managers.

The bonus scheme does not motivate employees, when they feel, their total cash income is in danger. In the moment of the economic crisis, the employees need the honest communication from their managers and they can survive several periods without excellent bonuses.

The silence from the managers is the worst solution in the organization. The employees do not trust the organization and they start to search for other job opportunities on the job market. The top management does not like to announce the news about the company results and the bonus scheme, but they have to announce it. The potential damage is much smaller than from keeping the status of the organization in the economic crisis in silence.

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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:

1. The recruitment has to be stopped.
2. The promotions have to be re-evaluated and just the key promotions can be done.
3. No salary reviews, guys.
4. Training focused just on key personnel; the rest of training activities is cancelled.
5. No party contributions.
6. 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.

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The HRM Function has to follow on the following main areas of concern:

• Policies, which can be cancelled and the cancellation brings immediate savings to the organization. It hurts, but it is needed. You would be surprised how many policies are run in organization, which have on influence on the overall employee satisfaction and how costly for the organization they can be.
• Compensation Budget has to be deeply analyzed to find the potential to cut the costs with no significant influence at the employees. The employees are sensitive to their base salary, but the bonus can be lowered and the savings for the company can be huge. The new FTEs are usually the first item to be cut and the salary review budget is the next in the queue.
• The most important thing the HRM Function is about quick and dirty classification of all the employees in the company:
  • Key Employees
  • Top Players
  • Low Performers
  • Rest of the Organization

The segmentation is very important and the HRM has to put very strict limits on each of the categories as the managers has to identify the groups of employees with the significant decrease of investments and the group, which will be really kept as a group of key employees.

Many organizations have their segmentation from the time of the constant growth, but this has to be strongly reviewed as the numbers can be different. The managers do not like this task, but they have to do it as the groups of key employees and top players can be recognized and the special initiatives and special communication can be sent to them.

The most difficult item is about having just one shot. The HRM Function has to get the full support and buy-in from the top management and the managers has to do the identification right and at the same time without sharing any information with their subordinates.

The HRM Function has one goal in the recession – it has to decrease the personnel expenses of the organization. The managers have to understand to this goal and they have to support the HRM Function in this effort.

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The fluctuation is seen as a danger for the company. The fluctuation is not dangerous, when the organization has a clear plan for the protection of know how and knowledge in the organization. The employee can leave the company, but the organization has to keep the knowledge to make sure, the smooth operation can continue.

When the managers speak about the fluctuation and the danger resulting from the employee turnover, they usually speak about the know how in the danger. It is very important role of the managers to keep the know how in the organization. The role of the manager is to protect the organization against the danger of losing know how.

The manager has to expect some level of the fluctuation and build enough tools for the smooth transition of the know how in the team. The most common managerial tools to protect know how in the team:

1. Process Flow Charts
2. Rotations of employees
3. Shared Responsibility

The process flow charts are the most common tool to protect know how of the organization. They should help the new comer to understand the processes quickly, but it is just a piece of the paper. The real knowledge is not usually described and the process flow chart is really a last chance for the orientation of the new employee. The danger of the fluctuation cannot be cured by the description of the processes.

The rotations are the best cure for the danger of the fluctuation in the team. The employees have no chance to have the unique knowledge as they have to change their roles and responsibilities in the team from time to time. The rotations are very demanding for the manager and employees as they like to have their own responsibilities and to be the real experts in their area of the responsibility. The rotations build shared knowledge in the team and the employees have to be ready to take over the responsibilities of the leaving employee from day to day.

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