HR During Economic Crisis





What can you expect from HR during economic crisis?

Unless your organization has made the decision to make HR as one of the important functions, you cannot expect much. HR is surely unprepared. It will not have the capability and the capacity. HR will lack the necessary resources. Effective systems and processes are not in place. And many HR people are not truly ready.

Financial crises continue to plague countries, dragging down businesses and reducing wealth to almost nothing overnight.

Does HR need new generation of leaders with different educational and career background? Do organizations need to go for collective HR leadership?

For example, can someone from operations or from finance or marketing perform better in carrying out the HR function?




What is expected of HR during economic crisis

HR's role becomes more important in times of economic crisis or financial downturn.

Organizations can expect these from HR:

  1. To help find ways to reduce costs and to improve the financial outcome of the organization;
  2. To identify people for retrenchment purposes;
  3. To help manage, retain and grow talent as the result of reduced number of people;
  4. To review incentive plan to maximize its motivational effects;
  5. To determine whether it is feasible to combine some jobs under multi-tasking arrangements.

In all of these, do you see adequate measures being demonstrated as the response to the need of the organization? As an employee and an HR executive, how can you play an effective role to help HR during economic crisis?

Economic crises are becoming more frequent. The time may have come for HR to go to forefront and accept a leading role in organizations.

Organizations that accept the fact that people are the most important asset may emerge earlier from the negative impacts of economic recessions and financial meltdown.

HR can help communicate to managers and executives that knowing well "the how" is much more important than the results. You can replicate such successes for the future.

Still, the ideal solution to unpredictable financial meltdown remains elusive. Many organizations seem helpless, not knowing what to do, except to wait until the crisis has run its course. Commentaries abound after the crises which are only helpful to a limited extent.

Are human factors mainly to blame? When corporate entities, for example, Enron, fail, you can easily detect what or who caused the financial shutdown. But this is not always the case.

What about in cases national economies face great difficulties? Can HR play a role and how?

At the end of the day, HR has to find new ways to help organizations become more proactive in the face of recurring economic crises that know no bounds. What happen in one country have effects immediately felt in other countries. This is particularly true when highly developed countries face financial crisis.

Battered economies present unique opportunities for HR to play a greater and more important role in organizations, whether public or private sector. These are golden opportunities presented to HR during economic crisis.

The danger is that if people in HR fail to seize them, they themselves will face the axe.





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