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March 2009 “Top HR Priorities & Strategies in Global Financial Meltdown”

CONTENTS

Chapter no. TABLE OF CONTENTS Page no.

--- Acknowledgement 02

A Objectives 03

B Research Methodology 04

1 Introduction 06

2 HR Managers & Recession 13

3 BPO Industry: An Overview 25

4 BPO Industry & Recession 35

5 HR Strategies in Crises Era 43

6 Conclusion 54

7 Suggestions &Recommendations 56

----- Bibliography 61

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ACKNOWLEDGEMENT

We are fortunate enough to study in National Law University, Jodhpur


in the guidance of the MAMAGEMENT FACULTY.

It gives me immense pleasure, having done a project on an interesting


and knowledgeable topic like “Top HR Priorities & Strategies in Global
Financial Meltdown: Special reference to BPO sector”. We deem it a
great privilege to thank all those people who helped me to complete this
project work.

This project has not only widened my horizon as far as academics are
concerned but also helped me to enlarge my knowledge bank. Strategic
Human Resource Management is not topics, which could be handled
with certain amount of casualty. It requires a deep study and hard
work, which is key to success. There are many people associated with this
project without which this project would not have been possible.

We are very thankful to Dr. Vadantam Leela, for giving us such an


important live project, which can be made use of in the practice. This
project work would never have been an achievable task, had we not been
under the great shelter of guidance of respected Dr. Vadantam Leela,
who helped us till the very last minute (at the oddest of hours) of the
final dictate and supported me summing up the work without whom this
work would not have reached this place.We wish to express our deep
sense of gratitude to such a cheerful, energetic and enthusiastic person.

Dr. Vadantam Leela always stands by us in solving all my queries. Her


support has always motivated us & revealed a right path to pursue the
Research work in a Systematic manner.

We express my profound thanks to, Mr. BHARTH KUMAR Group


General Manager, ADECCO Flexione Workforce Solutions Ltd,

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Hyderabad, for giving us valuable advice and guidance and sparing


valuable time in clarifying various points raised by us.

An ample use of various reference readings has been very frequently


made while compiling data for this project. We are very much grateful
to the library staff of the university for their unfailing co-operation.

We are very much under obligation to mention here, the contributions of


our Friends who the driving force of the whole labour and extra labour
put into the project.

Finally, we feel very much gratified to the administration of the


National Law University, Jodhpur for providing the uninterrupted
accessibility to internet without which it is not possible to imagine the
completion of this project work.

Above all it gives us immense pleasure to thank authors of various books


who indirectly helped me in gaining knowledge about insurance
industry.

At last but not the least, we express our sincere sense of gratitude to my
Parents for their blessings, that is always a source of Inspiration for us,
and the Almighty without whom there won’t be any existence of ours.

--Nishant Gehlot
--Amit Kumar Kashyap

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March 2009 “Top HR Priorities & Strategies in Global Financial Meltdown”

STATEMENT OF OBJECTIVES

1. To find out how is the economic crisis impacting the Indian Industry in respect of HR
planning and strategies

2. To identify that how to adjust HR management and strategy during financial crisis and
BPO sector.

3. To analyse suggest what should be positive HR Management and strategies during


Financial Crises to reduce its effect.

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RESEARCH METHODOLOGY

The research will be based on doctrinal & non-doctrinal method under which data in form of
various facts and figures with respect to the economic crises and scenario of recession effecting
Indian Industry will be resorted to whenever necessary.

The nature of the data that has been used in the project under study is both primary and
secondary in nature.

Primary data

Personal meetings, interview method with the concerned persons will be used to collect the
primary data.

Secondary data

Offer documents, fact sheets, news papers, magazines published from time to time and Internet,
Company sources.

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1. INTRODUCTION

The term financial crisis broadly alludes to a range of situations where financial institutions or
assets suddenly lose a large part of their value. The current financial crisis is an event that occurs
once in 100 years. Indeed, the world has not witnessed such a massive financial collapse for a
very long time already1. The current financial crisis is not of a cyclical nature. The financial
turmoil is the symptom of the structural imbalances in the real economy.

RECESSION

The kind of globalisation we are all part of, there is virtually nothing
that can go without an impact. So if there is a shakeup in US, tremors
are virtually felt across the world2. This is also true for the coming
crisis, which due to the nature of inclusion to the global economy
would impact revenues and therefore investments.

Reasons for the Economic Meltdown.

 Negative impacts of borderless markets (globalization).

 Criminal borrowing.

 Incompetent practices.

 Weak regulations.

 Lack of transparency.

1 www.financialexpress.com/news/redefining-recession/361656/.html as visited on 22 Feb 2009.

2www.expressindia.com/latest-news/Recession-clouds-the-Great-Indian-Dream -of-US-
degree/429620/.html. as visited on 22 feb 2009.

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 Corruption.

 Unrestricted mortgage activities and lending to those with bad credit history.

 Decreased consumer spending as a result of massive job losses.

 Questionable greed.

 Break neck expansion craze.

 Stiff competition by corporate bodies.

 Lack of proactive strategy by the executive, legislature and the financial experts to deal
with the symptoms at an earlier stage.

 Absolute freedom of the market economy.

In present situation ,The reason were ,These are housing loans given to people who, by
definition, are unlikely, relatively speaking, to repay them. However, since housing prices were
consistently rising, the banks faced little risk: if the debtor defaulted on the loan, the bank could
simply seize and sell the house. Then, housing prices started falling, so that soon the banks could
not recover the loans and started losing big amounts of money. In a world where commerce is
delicately interlinked, these losses had a domino effect, with many important financial
institutions collapsing.3 The US government recently spent $700 billion bailing banks out, but,
despite the government's intervention, the damage is likely to be immense.

IMPACT OF RECESSION ON INDIA

3profit.ndtv.com/2009/03/09180015/Recession-may-be-longest-in-US.html as visited on 18 feb


2009

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As the financial meltdown became clear on October 6, 2008, many employees rushed to find
new career opportunities in the retail and distribution/transportation industries. The ripple effects
of this recession in the economy of US can also be seen in the economy of India4.

Negative Impacts OF GLOBAL FINANCIAL MELT DOWN.

 Closure of enterprises because of lack of access to borrowing from banks and high
interest rates.

 Massive job losses and accentuated unemployment (In the aftermath of the South Asian
crises in the 90s, job losses rose from 5,015 in 1996 to 38,217 in 1997).

 Erosion of the middle class.

 Decreased consumer spending.

 Decreased capacity utilization.

 Increased cost of available goods.

 Hyperinflation.

 Bad debts.

 Recession.

 Negative impact on our foreign reserve

It is vivid from the above that there is no hiding place for any of the world economies from the
negative impacts of the economic meltdown. If unaddressed, the multiplier effects of all the
indices will make life unbearable for the masses of this nation.

FINANCIAL TURMOIL & HRM

4http://www.mayin.org/ajayshah/PDFDOCS/APS2008_crisis_and_response.pdf as visited on 21
feb 2009.

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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 hierarchy5. The worldwide economic scene is foreboding. Labor
markets in every corner of the earth are undergoing change. Take a quick look at the statistics
below:

 In Europe, the Middle East and Africa, outlooks declined in 12 of 17 countries from just
3 months earlier.6

 In the U.S., employers reported the weakest outlook in 5 years.7

 Another U.S. survey found hiring in October indicated the toughest U.S. labor market in
4 years while exempt and non-exempt job vacancies were down significantly.8

 U.K. survey forecasts unemployment to double by the end of 2010.9

 The U.S. Department of Labor itself reported that unemployment kept rising in its fastest
pace in more than 5 years during September.

In light of these statistics, HR is feeling the pinch, and is undergoing its own trend; that of
Modernization. World economies face challenges during these difficult times; it is easy to see
commonalities. The world continues to shrink as technology
creates invisible bridges connecting people around the globe. In
the center of the global melting pot is HR. 10

5 hr-horizons.blogspot.com/2009/01/managing-hr-in-recession.html as visited on 12 feb 2009.

6 Global Manpower Employment Outlook Survey Q4/2008.

7 Ibid.

8 Leading Indicators of National Employment Survey, Society of Human Resource Management,

October 2008.
9 Ernst and Young ITEM Club, October 2008.

10www.insala.com/Articles/talent-management-software/hr-priorities-for-2009- and-beyond.asp
as visited on 2 march 2009

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What universal priorities are rising to the top and what are the strategies the HR Managers are
undertaking is now of great importance. The current recession is shifting priorities and
redefining the list of hot “issues” and concerns in HR today.
Many business organizations, however the size, are getting the hardest hit. No wonder, the
efforts are zeroed in on cutting costs in all areas of business operations to avoid closing shop.
Unfortunately, the first on the list has always been streamlining human resource.11
It is not that it is a wrong decision to make; however, this action adds more strain to the already
faltering economy by further adding to the bloated unemployment rate. So, how does HRM
(Human Resource Management and Managers) help the organization cope in a recession? What
is the role of HRM in crucial times like these?
The developments in the global financial and banking sector in the last year have had a profound
impact on the global financial system including the outsourcing industry in India. The strong
forces that are now reshaping the U.S. economy, are also being felt by HR professionals
responsible for planning, designing and implementing total reward strategies- including pay,
benefits and careers, within their organizations.12

Downsizing is now a common business practice and the market is flooded with job seekers.
Organizations are reviewing whether they have the right kind of people and the right number of
people and how they can emerge from this new hurly-burly successfully. There is a tremendous
pressure of cost upon the Employer today. With limited resources, the right balance between
performance, talent and cost factors has become even more critical. Employers have to strive to
invest in a total reward program package that has the greatest impact.

RECESSION & BPO INDUSTRY: INDIAN SCENARIO

The IT enabled services (ITES) and Business Process Outsourcing (BPO)constitute the fastest
growing industry in India. BPO industry is considered to be a part of the ITES industry. The
Indian ITES sector is expected to generate nearly 2 mn jobs in the country in the next few years.

11 www.hrmbusiness.com/2008/11/hrm-role-in-recession.html as visited on 3 march 2009

12 www.das.state.or.us/DAS/HR/docs/advice/Issues.pdf as visited on 28 feb 2009

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The revenues from this industry, which stood at $1.4 bn in 2002, are expected to rise sharply to
$24 bn by 2008 according to a Nasscom-McKinsey report.13

Today, India is the hottest destination for any company which wants to outsource its business
processes. But what can be the reason for India being so popular with the companies worldwide?
The attractiveness of India can be contributed to three basic factors - Cost, People and
Environment. India ranks first among a host of desirable nations in terms of cost (which includes
employee cost, infrastructure cost, management cost and the tax structure). It beats all its
competitors on the people front as well.14 The people factor is evaluated on the lines of size of
the job market, workforce education level, language barriers, past outsourcing experience and
employee retention.

Organisations in the IT-BPO sector are facing an uncertain environment where areas such as cost
of delivery (pressure on pricing and billing rates) revenue realization are getting impacted. The
HR Manager is needed to examine vital strategic areas that he should focus on as he manages
through the current recession. These areas can have an immediate business-impact: increasing
workforce productivity, innovation, workforce flexibility, workforce planning and metrics.

The primary points of focus for companies in the current environment are cost efficiencies,
performance and productivity, employee engagement, innovative business practices and gearing
up for the upturn15.

HR managers have to look at how they can drive utilization, control discretionary spending and
HR budgets, improve employee productivity, tighten the linkage
between performance and pay, understand what engagement means

13

http://www.icmrindia.org/free%20resources/articles/CHALLENGES%20FOR%20THE%20INDIAN%20
BPO1.htm as visited on 28 feb 2009.

14 Ibid.

15blog.nasscom.in/nasscomnewsline/wp-content/uploads/pdf_/NASSCOM_ Research_jan.pdf
as visited on 27 feb 2009

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in today’s context, explore new work design models, drive and reward innovation and recognise
and retain key talent. In the companies, which survive the recession, the HRM Role is very
important.

HRM Strategic Review

Strategic HRM is how an organization uses its people to help form and execute its business
strategy16. The role of human resource management is changing & is changing very fast, to help
companies achieve their goals. The company's plan of how it will balance its internal strengths &
weaknesses with external opportunities & threats in order to maintain a competitive advantage,
earlier this role was performed by the line managers, but now it is carried by the HR manager
Strategies increasingly depend on strengthening organizational competitiveness & on building
committed work teams, & these put HR in a central role.

In the fast changing, globally competitive & quality oriented industrial environment, it's often the
firm's employees – its human resources – who provide the competitive key. And so now it is a
demand of the time to involve HR in the earlier stages of development & implementing the
firm's strategic plan, rather than to let HR react to it. That means now the role of HR is not just to
implement the things out but also to plan out in such a manner that the employees can be
strategically used to get edge over the competitors, keeping in mind the fact that this is the only
resource (HUMANS), which cannot be duplicated by the competitors.

The recession is an opportunity for HR professionals to step and contribute strategically. In the
classical strategy paradigm, we begin by looking at the macro economic environment. Then we
look at the micro-environment - what affects us and our competitors.17 Next, we establish which
strategic factors HR influences directly. Finally, we drop down to our tactics. The recession is
about the creative Human Resources Management. The HRM Function is asked to bring new

16 www.spiritsglobal.com/new/files/ STRATEGIC%20HUMAN%20RESOURCE%20MANAGEME. As
visited on 17 feb 2009

17blogs.siliconindia.com/HRSPACE/STRATEGIC_ROLE_OF_HR_DURING_ RECESSION-bid-
zOtfI5p86308302.html as visited on 22 feb 2009

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ideas, to change the HRM Processes and to develop or change the procedures.18 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 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.19

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.

18www.24-7pressrelease.com/press-release/globalhunts-view-on-managing-hr- in-recession-
84206.php as visited on 12 feb 2009

19www.ideamarketers.com/?Managing_HR_in_Recession&articleid=478613 - 74k as visited on 26


feb 2009

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2. HR MANAGER’S & RECESSION

In time of the recession, the HRM Role is to make cost cuts and the HRM Function has to
provide the list of the policies and the procedures to be cancelled or discontinued. The employees
do not like it, but the company has to return to the healthy basis for the future growth.

Economic meltdown is the contraction of the


economy for two consecutive quarters while
economic crisis is a state in which an
economy witnesses slowdown of economic
activities, increased level of unemployment,
decreased consumer spending, low level
investments, low level of trading activities
and the loss of the value of assets by a
segment of the financial institutions, which persists over a long period of time.

The HRM Function has to be able to identify the top potential in the organization quickly as the
company needs to make the cuts in the human capital of the organization. The HRM Function
needs to provide the tools to managers to inform their key employees about the security, the
company wants to offer to key employees.

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The HRM Function is not a department to make employees happy, the role of HRM Function is
also about the cuts in the costs of the organization and the HRM Function’s role is about
minimizing the damages to the organization.20

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 agents21. 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.

20 humanresources.about.com/od/new/Most_Recent_Articles_and_Site_ Recommendations.htm
- 194k as visited on 26 feb 2009

21www.emeraldinsight.com/Insight/viewContentItem.do?contentType=Article&hdAction=lnkhtml

&contentId=1520023 as visited on 12 feb 2009

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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 quickly22.

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.

The point has to be focused by HR management during recession are as follows:

 To optimize the manpower strength.

 To take strategic initiatives to increase the productivity and efficiency of the entire
organization.

 To work on compensation benefits.

 Redesign training and development programs.

 Ensure our organization’s policies and handbooks are up to date. Remember that an
annual review of our employee handbook for compliance by an experienced professional

22 Supra note 19

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is highly recommended. Also, each employee having a copy of the employee handbook is
not enough. They have to be able to read and understand the content. Be sure that we
provide employees a handbook in a language they can read and understand.

 Layoffs are never easy. Ensure we are familiar with our legal responsibilities in a lay off
to minimize our organization's risk. Be sure that we have properly defined the criteria we
are using to determine who will be let go.

 Alternative Workweek Schedules and Flexible Scheduling can maximize production and
cut-back on overhead costs for organizations. Be sure we follow all of the DLSE rules
when deciding if an Alternative Workweek Schedule or Flexible Scheduling is right for
our organization.

 Cutting Pay may be an option to consider to save on today’s costs. Is this really an option
for our organization? How are our pay scales as related to the market? Are we willing to
risk losing key employees whose talents may be needed by other organizations, because
we chose to reduce their pay at this time? Remember, we should not cut pay without a
recovering strategy of how we will re-adjust when the economy has turned.

 Downsizing does require internal document maintenance for our organization. As jobs
are modified and responsibilities are increased changes also must be made to our job
descriptions.

 On the other hand the HR Management has to find some innovative solutions during the
recession like,

 To identify the real key employees and to intact them in the organization

 To identify the real top potentials and to strengthen their development program

Main HR Recession Initiatives

The HR Function has to conduct several HR Recession Initiatives as soon as the recession is
recognized in the organization. The organization can grow rapidly, when the recession ruins

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companies around our organization. But, when the organization feels the pain from the recession,
the HRM Function has to start several HR Recession Initiatives.

The HR Recession Initiatives have to be focused on the analysis of the current situation and the
unlocking the potential for the future growth.

The HR Recession Initiatives are not just about the cost cutting, the recession initiatives have to
be focused in more areas:

 Cost Cutting

 Key Groups of Employees

 Process Efficiency

 Honest Information for Employees

 Management Consulting

The HR Recession Initiatives have to be balanced well. The cost cutting is about the immediate
activities to decrease the personnel expenses of the organization, but the HR Recession
Initiatives have to be focused on the future as well.

The employees are told to be the best capital of the organization and the HR Recession Initiatives
cannot be focused on the full destroy of the human capital of the organization. The employees to
be fired have to be selected carefully and the rest of employees have to sure about the future of
the organization. The organization has to guarantee the future for the most important employees
– the key employees, high potentials and the managers.

The HRM Function has to focus on the honest communication in the recession. The HRM
Function has to inform the employees fairly about the bonuses, salaries and number of
employees in the organization in advance as the employees can prepare themselves.

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The HRM Function has to have a good balance in the HR Recession Initiatives. The employees
and managers have to feel the fairness and transparency in the initiatives as they can build the
trust to the HRM Function.

HRM Priorities and Recession

The recession changes the priorities of the organization. The change of the organization´s
priorities should be reflected in the HRM Function priorities and HRM Strategy as well. The
HRM Function cannot live alone; it has to follow the general business strategy.

The HRM Priorities in the Recession can change quickly or they need to be adjusted at least. The
organization has no resources to add to the new initiatives and the HRM Function can be asked
to produce cost savings on current programs.

The HRM Management has to make a quick scan of current procedures and policies to be
prepared for the cancellation or change, when asked to make an urgent cost cut. The recession is
about cost cuts and designing efficient, cheap HR Processes.

The HR Priorities have to be assessed using a simple tool for selecting the processes and policies
to be discontinued. The best tool is to use the simple matrix, which divides the processes and
procedures according their costs and impact on the organization.

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Generally, the HRM Function should cancel the processes and procedures with the highest costs
and lowest impact on the organization. The HRM Function has to be very careful as cancellation
of some policies can be very sensitive for employees. Those are the processes and procedures
with the highest impact.

The recession changes HRM Priorities

The HRM Function has to make a quick response to changed conditions by the cancellation of
the least important procedures and policies, but the HRM Function has to change the HR
Strategy to have a consistent approach during the whole recession period.

The HRM Function has to adjust the HRM Priorities in the recession very sensitive way as the
employees feel some security and consistency and that they can trust the organization and its
success in the war with the recession. The HRM Function has to keep the role of the employee
advocate and this should be reflected in the decision matrix as well. The recession is not a chance

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to change and cancel everything; the corporate culture should not be touched by the change of
the HRM Priorities during the recession.

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.

On the other hand, the top management understands the effort to innovate the HRM Processes
better. The top management is in the search for the potential cost savings and they count every
single penny brought by the line management.23 The HRM Costs are usually a very significant
cost to the organization and the HRM Function has to be proactive.

The HRM Function has to focus on unpopular innovations during the recession as the role of
Human Resources during the recession is to save money to the organization. The top
management expects all the support functions to bring innovative solutions, which will have to
make the organization stronger, when the next growth era comes.24

The HRM Innovation during the recession has to focus on the following topics:

1. Reduce the number of employees in the organization

2. Strategic initiatives to increase the productivity and efficiency of the whole organization

3. Redesign of the compensation scheme

4. Cancellation of several benefit schemes

5. Training and Development Programs cutting

23www.uk.sagepub.com/repository/binaries/bookSellers/AI/SeasonalSep07- Feb08.pdf as visited


on 19 jan 2009

24www.managementparadise.com/forums/effective-methods-communication-ec /75973-hr-
recession.html as visited on 18 feb 2009

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March 2009 “Top HR Priorities & Strategies in Global Financial Meltdown”

On the other hand the HRM Function has to find innovative solutions for the following
topics:

1. Identifying the real key employees and to keep them in the organization

2. Identifying the real top potentials and to strengthen their development program

The second two topics have to be done with the minimum additional costs and it is a really hard
task to accomplish. The HRM Function has to have priorities in mind and the strategic impact of
the HRM Innovations in the recession time. The role of the HRM Function is not to cut the costs
for the time being, but to make the organization stronger and ready for the future growth.

Recession and Employees’ career options

The employees are the most important assets of the organization. In times of the recession, the
employees have to be secure about their future and the organization should announce a clear plan
to them.

The HRM Function is responsible for the employees as their employee advocate and the change
agent. The HRM Function has to be involved in all the communication plans, the communication
toward employees25.

The recession brings a panic to the organization. The rumors about the recession and the layoffs
spread quickly around the organization and the HRM Function has to monitor the emotions in
the employee population. The rumors are the most important danger for the successful survival
of the recession. When the employees start to speak about the recession, the key employees and
top talents can leave the organization within several weeks, as they feel no future in the
organization.

The role of the HRM Function in Recession for the employees is being their real advocate. The
HRM Function should prepare the proper communication and it should manage to get the buy in
from the top management.

25blogs.siliconindia.com/Humanresources/Is_HR_up_to_managing_global_talent_crisis-bid

rQf8d51O91859877.html - 43k as visited on 27 feb 2009

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The employees feel the danger from the recession, the top management has to inform all the
employees honestly about the outlook for the organization and it has to provide them with the
vision to follow.26

Affected HR Processes by the Recession

The recession affects different HRM Processes. Some HR Processes can be affected by the
recession very hardly and other processes can be completely immune from the recession impact.
The HRM Function has to react very quickly and the response has to include the whole HRM
team as all employees have to help the most affected employees to keep the level of the
satisfaction.

The organization needs to save the costs and it needs to identify and potential additional source
for the cost saving and starting a new growth era27. The HRM Function has to prepare a new
HRM Vision and a new HR Strategy for the coming period as the cost cutting is not the only way
to build a stronger organization fighting with the recession.

The most affected HR Processes are the following:

1. Recruitment - The first HR Process with the change in the recession. The job vacancies
are cancelled and the HRM Function should come with a new recruitment strategy. The
organization can hire a new set of skills and competencies to strengthen the position of
the organization on the market

2. Training – The training are cancelled as it is a quick cost cut. The training can be later
focused on more specialized training session and more internal training courses can be
introduced.

www.mid-day.com/.../080109-Recession-Survival-Tips-Hiring-in-2009- Firms-iTalk-Work-Sanjay-
26

Dutt-HR-heads-Psychol... - 21k as visited on 29 jan 2009

27 Supra note 16

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3. Compensation and Benefits – The department can be asked to bring a new


compensation scheme, which will save the costs and motivate employees to be more
proactive.

4. HR Front Office – The HR Front Office have to be present at clients all the time as they
will need a strong guidance and facilitation during the recession.

The HR Processes are heavily affected by the recession, but the HRM Function has to take this
as the opportunity to change and to bring new ideas on the scene. The recession is the best time
to design a completely new approach of the organization to its human capital.

The HRM Function should be ready for the recession, which comes from time to time. The HRM
Function should be always very careful about the costs added to the organization as cost cutting
always hurt. The HRM Function has always to predict, the recession will come and the nice
initiatives can be then very painful initiatives. The HRM Function has to prepare the HRM
Recession Quick Wins.

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

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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.

HRM Communication in Recession

The HRM Function is always responsible for the mass communication to employees in the
recession. The HRM Function should be responsible for the consistency, transparency and
fairness of the crisis communication to employees. The recession is usually not about the good
news, but the HRM Function has to be the employee advocate and the messages should provide
the employees with the clear outlook of the future.

The crisis and recession communication have to be targeted, as not all the employees should
receive the same amount of the information. The Sales employees should have completely
different details from the Operations guys.

The HRM Communication in the Recession is about defined and agreed target groups. The
organization cannot publish the details about its business position to all the employees, but some
groups of employees have to know more to feel comfortable and more secure.

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The HRM Communication is one of the strongest tools for the retention of key groups of
employees. The talents and key employees have to receive more information from the
organization to keep their own security and their value for the organization.

The organization needs to raise the level of the motivation and the honest communication is one
of the best tools for motivation. But the HRM Function has to act as the consultant to make sure,
the employees are not de-motivated and frustrated by the amount of messages and the details
provided.

The HRM Function has to provide the advice on the communication channels used as not all the
messages should be sent via email. The HRM Function is the only function in the organization to
have a general picture of the target groups and it can provide useful consultancy in the
description of the target communication groups.

The HRM Communication in Recession is about a clear description of the organization´s


position on the market, the economic outlook for the next period and about the strategic products
and services, which will be the leading the growth in the era after the recession. The employees
should know about these topics as they can prepare themselves.

Talent Management in Recession

The talents are the best assets in the recession, as the organization needs to mobilize the entire
top potential in the company to bring new and innovative solutions to fight with the recession.

The talent management is under a huge pressure in the recession. Each manager tries to protect
the resources in the unit and the HRM Function has to leverage the resources of the organization.

The talent management has to define a clear group of employees to be separated from their
current units in the finding a new successful way to the future. The HRM Function has to have a
mandate from the top management in the decision about the staffing of the special task force to
define a new and bright future of the organization.

Talent Management under Pressure

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The talent management works nice in the time of the economic growth. In the recession, the
talent management gets under a huge pressure from the line management and the top
management, as their interests is not aligned, at least fully.

The HRM Function has to be able to mobilize all the talents across the whole organization and
the line management can be fully confused by such an activity. The top management can have a
nice plan to use the top talents of the organization to have a new opportunity to win the war with
the recession, but the line management likes to have the talents in their units to have the smooth
operations certainty.

The talents usually like the challenges and the recession is the challenge for them. The HRM
Function has to find the plan to allow the top potentials to be freed from their current units and to
propose a good plan to the line management to keep their satisfaction and buy-in.

The talent management is usually set as the long-term activity of the HRM Function. The
recession makes the whole talent management a lot quicker. The talents have to be set to new
teams, they have to learn to co-operate quickly and they have to learn to make quick decisions.

The talent management in the recession is about the quick assessment of the top talents of the
organization and assigning them to the special tasks from the top management. The role of the
line management has to be minimized as they have no chance to prefer their own task above the
strategic tasks of the top management.

Recession and Recruitment

Recruitment is one of the most affected HR Processes by the global recession on the market. The
companies do not offer vacancies, the number of job applicants grows rapidly and the
organization has to manage the recruitment smartly.

The organization has to change the focus of the recruitment and the recession is a good moment
to focus on the recruitment process development and redesign.

The talents on the job market

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The recession is a good moment to hire the top potentials from the job market and other
competitors. The HRM Function has to act quickly to hire the best class employees before their
current employers take the action to protect them.

The HR Recruiters should always ask the managers and key employees of the organization about
the excellent people, they know on the job market. The HR Recruiters should have a list of the
job candidates, who can be asked to join the organization.

The talents are usually known in the industry and the recession can make them to be more
sensitive to the job offers from the competitors. When the organization has a clear plan for the
fight with the recession.

The talents from the job market do increase the personnel expenses of the organization, but they
can bring new sources of the revenue and they hugely increase the trust of the existing
customers.

The role of the HRM Function is in the quick reaction to the recession, making the proposal to
the top management and having a good contact with the recruitment agencies to start the hiring
process as soon as possible.

The HRM Function has to co-operate closely with the top management, as the talents from the
job market need to know the clear plan and clear expectations from them. The HRM Function
cannot communicate the clear expectations itself, but it can co-operate with the middle
management of the job positions, which can be created for the top talents from the job market.

The HRM Function has to monitor the personnel expenses added to the payroll of the
organization as the company does not exceed the agreed rules and the HRM Function has to co-
operate closely with the recruitment agencies to get the best class employees from the job
market. The recession is a tough time and the top talents from the job market will definitely help
to win the battle on the market.

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3. BPO INDUSTRY : AN OVERVIEW

Business Process Outsourcing28 (BPO) is the delegation of one or more IT-intensive business
processes to an external provider that in turn owns administers and manages the selected process
based on defined and measurable performance criteria. Business Process Outsourcing (BPO) is

28An organization entering into a contract with another organization to operate and manage
one or more of its business processes.

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one of the fastest growing segments of the Information Technology Enabled Services (ITES)
industry.

Few of the motivation factors as to why BPO is gaining ground are:

 Factor Cost Advantage

 Economy of Scale

 Business Risk Mitigation

 Superior Competency

 Utilization Improvement

Different Types of Services Being Offered By BPO's

 Customer Support Services

Customer service offerings create a virtual customer service center to manage customer concerns
and queries through multiple channels including voice, e-mail and chat on a 24/7 and 365 days
basis.

Service Example: Customers calling to check on their order status, customers calling to check for
information on products and services, customers calling to verify their account status, customers
calling to check their reservation status etc.

 Technical Support Services

Technical support offerings include round-the-clock technical support and problem resolution for
OEM customers and computer hardware, software, peripherals and Internet infrastructure
manufacturing companies. These include installation and product support, up & running support,
troubleshooting and Usage support.

Service Example: Customers calling to resolve a problem with their home PC, customers calling
to understand how to dial up to their ISP, customers calling with a problem with their software or
hardware.

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 Telemarketing Services

Telesales and telemarketing outsourcing services target interaction with potential customers for
'prospecting' like either for generating interest in products and services, or to up-sell / promte and
cross sell to an existing customer base or to complete the sales process online.

Service Example: Outbound calling to sell wireless services for a telecom provider, outbound
calling to retail households to sell leisure holidays, outbound calling to existing customers to sell
a new rate card for a mobile service provider or outbound calling to sell credit or debit cards etc.

 Employee IT Help-desk Services

Employee IT help-desk services provide technical problem resolution and support for corporate
employees.

Service Example: of this service include level 1 and 2 multi-channel support across a wide range
of shrink wrapped and LOB applications, system problem resolutions related to desktop,
notebooks, OS, connectivity etc., office productivity tools support including browsers and mail,
new service requests, IT operational issues, product usage queries, routing specific requests to
designated contacts and remote diagnostics etc.

 Insurance Processing

Insurance processing services provide specialized solutions to the insurance sector and support
critical business processes applicable to the industry right from new business acquisition to
policy maintenance to claims processing.

Service Example:

 New Business / Promotion:

Inbound/outbound sales, Initial Setup, Case Management, Underwriting, Risk assessment, Policy
issuance etc.

 Policy Maintenance / Management:

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Record Changes like Name, Beneficiary, Nominee, Address; Collateral verification, Surrender
Audits Accounts Receivable, Accounting, Claim Overpayment, Customer care service via
voice/email etc.

 Data Entry Services / Data Processing Services

Service Example:

 Data entry from Paper/Books with highest accuracy and fast turn around time (TAT)

 Data entry from Image file in any format

 Business Transaction Data entry like sales / purchase / payroll.

 Data entry of E-Books / Electronic Books

 Data Entry : Yellow Pages / White Pages Keying

 Data Entry and compilation from Web site

 Data Capture / Collection

 Business Card Data Entry into any Format

 Data Entry from hardcopy/Printed Material into text or required format

 Data Entry into Software Program and application

 Receipt and Bill Data Entry

 Catalog Data Entry.

 Data Entry for Mailing List/Mailing Label.

 Manuscripting typing in to word

 Taped Transcription in to word.

 Copy, Paste, Editing, Sorting, Indexing Data into required format etc.

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 Data Conversion Services

Service Example:

 Conversion of data across various databases on different platforms

 Data Conversion via Input / Output for various media.

 Data Conversion for databases, word processors, spreadsheets, and many other standard
and custom-made software packages as per requirement.

 Conversion from Page maker to PDF format.

 Conversion from Ms-Word to HTML format

 Convert Raw Data into required MS Office formats.

 Text to PDF and PDF to Word / Text / Doc

 Data Compilation in PDF from Several Sources.

 E-Book Conversion etc.

 Scanning, OCR with Editing & Indexing Services

Service Example:

 High speed Image-Scanning and Data capture services

 High speed large volume scanning

 OCR Data From Scanned page / image

 Scan & OCR paper Book in to CD.

 ADOBE PDF Conversion Services.

 Conversion from paper or e-file to various formats

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 Book Keeping and Accounting Services

Service Example:

 General Ledger

 Accounts Receivables and Accounts Payable

 Financial Statements

 Bank Reconciliation

 Assets / Equipment Ledgers etc.

 Form Processing Services:

Service Example:

 Insurance claim form

 Medical Form / Medical billing

 Online Form Processing

 Payrol Processing etc.

 Internet / Online / Web Research

Service Example:

 Internet Search, Product Research, Market Research, Survey, Analysis.

 Web and Mailing list research etc.

Business Process Outsourcing: THE TOP RANKERS

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WNS has emerged as the top BPO in India, pushing Wipro Spectramind to the second position,
according to a survey done by NASSCOM. The basis of ranking is the revenues generated by the
BPO companies in 2007-08, as per US GAAP. A list of top fifteen BPO companies in India is
given below.

 WNS Group

 Wipro Spectra mind

 Daksh e-Services

 Convergys

 HCL Technologies

 Zenta

 ICICI OneSource

 Emphasis

 EXL

 Tracmail

 GTL Ltd.

 vCustomer

 HTMT

 24/7 Customer

 Sutherland Technologies

The parameters for the survey was: Employee Size (Operation level executives), Percentage of
last salary hike, Cost to company, Overall Satisfaction Score, Composite Satisfaction, Company
Culture, Job Content / Growth, Training , Salary and Compensation , Appraisal System, People,

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Preferred Company: (Percentage of respondents of a company who named their own company as
the preferred one), Dream Company: (Percentage of respondents in the total sample who
preferred a particular company).

Challenges for a HR Professional in BPO which are generally faced by them.

Brand equity: People still consider BPO to be "low brow", thus making it difficult to attract the
best talent.

 Standard pre-job training: Again, due to the wide variety of the jobs, lack of general
clarity on skill sets, etc, there is no standard curriculum, which could be designed and
followed.

 Benchmarks: There are hardly any benchmarks for compensation and benefits,
performance or HR policies. Everyone is charting their own course.

 Customer-companies tend to demand better results from outsourcing partners than what
they could actually expect from their own departments. "When the job is being done
10,000 miles away, demands on parameters such as quality, turn around timeliness,
information security, business continuity and disaster recovery, etc, are far higher than at
home. So, how to be more efficient than the original?

 Lack of focused training and certifications

The Indian BPO industry is heavily leveraged on the US Banking sector. Some of them even
focus exclusively on investment banks. With the banks down and some of them even out, the
BPO segment is right on top of the list of industry segments affected.29 Diversified BPOs and
those with no exposure to banks - if there are any - may not feel the pinch as horribly. With
credit card defaults expected to balloon, the worse is not yet over for this industry.

29economictimes.indiatimes.com/articleshow/msid-3155773,prtpage-1.cms as visited on 19 feb


2009

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4. BPO INDUSTRY & RECESSION

BPO industry is considered to be a part of the ITES industry. The Indian ITES sector is expected
to generate nearly 2 mn jobs in the country in the next few years. The revenues from this
industry, which stood at $1.4 bn in 2002, are expected to rise sharply to $24 bn by 2005.30

30 NASSCOM REPORT 2008.

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Today, India is the hottest destination for any company which wants to outsource its business
processes. But what can be the reason for India being so popular with the companies worldwide?
The attractiveness of India can be contributed to three basic factors - Cost, People and
Environment. India ranks first among a host of desirable nations in terms of cost (which includes
employee cost, infrastructure cost, management cost and the tax structure). It beats all its
competitors on the people front as well.

The people factor is evaluated on the lines of size of the job market, workforce education level,
language barriers, past outsourcing experience and employee retention31. When it comes to
environment (which includes country risk, infrastructure, cultural compatibility, proximity etc.)
however, India lags behind countries like Canada, Australia and Ireland

Crisis effect on BPO

In the medium-to-long term, the sub-prime crisis will accelerate global outsourcing adoption as
financial institutions are counting on outsourcing to cut costs, according to the Everest
Research Institute in Dallas.

According to Everest Research’s study, the financial downturn could mean increased numbers
of clients for outbound and inbound call centers, which might even receive new clients who are
looking for more cost effective ways of running their business. Similar evolutions might occur in
the fields of customer service, sales and technical support.

No matter what the crisis brings, IT service spending might not feel drastic cuts since high-tech
leaders look for ways to protect their budgets, and moreover, outsourcers and service providers
could help them contain costs and streamline operations.

According to Forrester Research, the majority of IT executives report they are re assessing how
to invest what is left of their 2008 IT budgets. Many have decided to cut overall IT spending, but
relatively fewer are reducing the amount they put toward outsourcing IT services. The survey
shows that while 46% of 258 Global 2000 enterprises have already cut back their IT budgets,
only 21% of these companies have cut back on their IT services expenses. That means IT

31 www.citehr.com/35144-hr-bpo-industry.html as visited on 16 feb 2009

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executives that currently invest in outsourcing will continue that trend during cost-cutting
times, and companies that might not have previously considered sending IT services to an
external provider might turn to the delivery model to avoid adding head count or investing in
new technology.

According to NASSCOM32 , the united States are some of largest contributors to the revenues of
BPO companies, with around 60% of all the revenues. The US financial sector, in turn, is one
of the largest customers and the liquidity crunch that has hit these companies will directly cause
them to start cutting costs - with customer care and backroom operations being the first they will
give up

As per view of Dr Srinivas Kandula33, global HR head at iGATE, there are two obvious reactions
to the economic conditions -- one the hiring demand has come down. Earlier the hiring was more
supply based, most companies hired as many as people the market would supply for the business
that they may still be in the pipeline. But now hiring is more of demand based and focus is on
getting business first and hiring later. The second reaction is that the readiness of people to move
(attrition rate) has also come down.

The real problem in the industry is the general apathy or inability of the people to upgrade their
skills. Given the current slowdown scenario, organizations will take bold steps to weed out
inefficient people However, there is no need to worry or panic.

Employment is one of the BPO aspects that will significantly be affected by the crisis. According
to NASSCOM, the BPO industry offers employment to 700,000 people in India alone. As of this
moment, companies are not expecting to fire their employees any time soon. However, the
explosive growth of the BPO industry is pretty much over. Although companies still expect to
hire more people, they will not need nearly as many employees as in the last couple of years

32The National Association of Software and Services Companies – an Indian entity connecting
Indian software industry to the BPO sector

33 Dr Srinivas Kandula, Global HR Head of iGATE Corporation, is perhaps one of the few HR heads
in the ITeS Industry in India with a doctorate in HR. He has been singularly responsible for iGATE
moving up to No. 1 rank in the DQ-IDC Best Employer in India survey from its 29th position in 2006.

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BPO market still growing

The research company TPI estimates that the global outsourcing market will reach $88 billion
in 2008, up 10% from the previous year. Specifically business process outsourcing is expected
to increase a total of 14% up to $22 billion, and information technology outsourcing is forecast
to be up about 9%, bringing revenue to $66 billion. TPI representatives claim that infrastructure-
oriented management of servers, desktops and other IT components is expected to go unchanged,
but application development work could be potentially impacted.

There will be a downturn in discretionary projects in the short term, they say, but application
maintenance will not be affected.

Surviving is crises

So, what should companies do in times of financial crisis?

First, they should realize that they need to have strategic thinking, and secondly, they should
look more closely at their core-business components. This way, the risks they are taking with
outsourcers will be smaller and companies can be more focused on what can really bring gains to
the business.

For example, during crisis, companies can successfully outsource HR or Customer Support
operations to professional providers of BPO in these fields, thus gaining both from the reduction
in costs, and from the competitive advantages these providers bring. Even in the middle of a
financial crisis, those companies using outsourcing can still help the total spending go
down.

However, by focusing only on cost reduction, companies might be missing benefits that can be
created from global outsourcing partnerships.

In the end, how can companies still manage to go mostly unaffected through this crisis, and
benefit from BPO services? It is easy for companies to panic because of the financial crisis and
jump at outsourcing opportunities, simply with the goal of cutting some cost. In many situations,
they have jumped at the lowest cost option, which has done them more harm than good.

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Outsourcing clients have to think more smartly and strategically: they need to find solutions
for new growth, concentrate on their core-business and not just on reducing short-term
costs. If companies use outsourcing to become more competitive, it is more than just “shipping
jobs offshore”: it is an effectivemeans to face the crisis.

Many of the smart businesses that still survive this economic crisis will come out of it more
competitive and more globally integrated. Outsourcing alone is not the answer to overcome the
crisis; but those companies that sign an outsourcing engagement with the right objectives in mind
will gain:

 Access to new talent

 Better process planning

 New technology

 Global markets

There is a proliferation of service providers eager for business, and most of them will offer
attractive short-term cost savings. However, clients must focus on forging a partnership with a
provider that will work with them to add an approach that is a lot more competitive to their
business over a multi-year contract.

Key points companies must consider when taking up outsourcing contracts

Global approach

One of the significant differences between the current economic recession and those of
the past is the fact that all of today’s financial markets and economies across the globe
are much more integrated than they used to be. The Internet and global communications
revolution have created unprecedented access to global talent. The need to enter new
global markets quickly has never been as pressing as it is in today markets, and the right
service partners can help we grow our business globally. Having an infrastructure that

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can support foreign payrolls, accounting procedures, local regulations etc. can save our
company months of painful work to expand in new markets.

Focus on common standards and bundling applications

Engaging an outsourcing provider that can provide common processes around a solid
ERP backbone is critical. Smart companies are moving closer to developing commons
standards to support processes that can enable them to operate and compete as global
entities, and this current economic pattern is accelerating this dynamic. When we have
rapid access to our global financial, HR, supply chain, customer and product information,
we are in a position where we can make informed decisions more rapidly to enter new
markets and mobilize our resources and partners accordingly to respond to our existing
and future customers.

Discipline for the revenue cycle

A good BPO provider can add discipline to our collections and speed up our cash flow,
eliminate bad debt and come up with a more time-friendly cash supply. On the other side,
quality procurement processes help we keep the cash we currently have. This is critical in
today’s tougher environment.

Cost-containment as an ongoing objective

A good outsourcing partner should be able to help we sustain cost savings over a long
period, not simply at the onset of an engagement, through ongoing quality and process
improvements. For example, we may save $10 million in the first year of our
engagement, but how about the subsequent years? Those initial costs we saved will come
back multiplied in the future if we do not constantly refine our processes across our
global supply chain.

Vertical and horizontal insight

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Setting up strategic outsourcing arrangements should be made with providers who can
understand our organization both vertically and horizontally. Vertically they should be
able to view and understand the service relationship from strategic level up to the actual
day-to-day operations and tasks that they perform. Horizontally, they should be able to
increase our cross functional integration.

5. HR STRATEGIES IN CRISES ERA

The severity of the financial crises cannot be over-dramatized, and a focus on human capital
strategy as a means of overcoming the challenges is paramount to the future of the financial
services sector.

HR strategies to reduce effects of the crisis are as follows.

Communication

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Dedicate time to positive reasoning. Hold town hall meetings involving staff and management
on ways to tackle the challenges of the downturn. Hear the staff out. Take time to listen to the
employees for confidence building.

During such engagement, declare immunity to cover all staff, in which any staff that offers to
critique the organization is insulated from witch-hunting sanctions and victimization. This gives
room for sincere invectives and inputs, which may turn the organization around for good.

Staff should be encouraged to objectively give their assessment of where the organization was,
where it is and where they believe the organization should be and what should be done to survive
the recession.

After listening to the staff, thank them for valued contributions and promise to work with their
inputs. Reiterate the vision and mission statements of the organization. Appeal to staff to do
everything possible to actualize the goals and objectives of the organization. They should show
more personal and collective commitment, loyalty and dedication to the organization for
improved productivity. Seek their support for the strategic action plans. At the same time,
strengthen the two ways communication process and dedicate time to feed backs.

Positive team culture

Stress shared vision, strategies and belief in team culture, improved symbiotic team spirit
because of the positive value addition of synergy. HR Managers should at this time radiate and
give hope and lift their staff from negativity to positivity. A positive team culture stresses
collectivism, and symbiosis. Do well to stress the importance of every team member.

Learning

Learning is the key that opens the individual employee to knowledge beyond his/her immediate
reach. It helps to bring a strong barrier against failures and landmines that may bomb the

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organization out of existence. It assists the worker to open up to new initiatives, ideas and best
practices.

Design programmes that put the organization on top of the pack and enable the organization have
a competitive edge. Staff may not necessarily be moved from their places of work because of the
innovations in as e-learning and intranet services are becoming a way of life. Encourage staff to
participate in workshops and conferences to enable them compare notes on experiences and learn
from others. Where only a few staff can attend, those who attended should be given an
opportunity to share their learning experiences with their colleagues at a forum.

Leadership focus during the downturn

 Transparency.

 Accountability.

 Courage to effect necessary changes.

 Training.

 Proactive strategy.

 Sacrifice.

 Incremental changes.

 Address issues of insecurity.

 Credible leadership.

 Mentoring.

 Coaching.

 Nurturing.

 Sifting down process between the effective staff.

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 Walk-the-talk.

Performance incentives

 General Motivation techniques: Positive and negative sanctions

 Performance Incentive Bonus (PIB)

Review of organizational structure and procedures

 Reduce complex structure to a simple structure.

 Increased autonomy to improve decision making process.

 Concentration on core areas.

 Elimination of tribal, political and racial considerations in the appointments of chief


executives and recruitment processes.

 Review of recruitment policies. It is a well known fact that in most parastatals of


government in Nigeria, there are periods of employment freeze, unfreeze, refreeze and
retrenchment at the fiat of the executive arm of government.

 Review financial management procedures to optimize profitability.

 Improve cost culture and asset utilization.

Redefinition of business value system

This is a moment to re-examine the organization’s business value system, goals, roadmaps,
strategies and practices to align with the anatomy and physiology of the organization. The vision
of the organization should be cascaded down the ladder so that there will be a total buy-in; into
the new ways of achieving the vision even at these difficult times. A shared vision sets the tone
for the conscious will power to achieve the impossible.

Succession planning

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The chief executives of many parastatals of government are removed and replaced at will. The
high turnover of the top management is the bane of poor performance of some organizations. It
makes planning difficult, truncates strategic plans processes and kills any organization’s
initiatives to achieve a well tailored succession plan, which is a Sequa-non for organizational
success. There should be a reversal of this unwholesome process.

Attitudinal change

 Paradigm shift in work culture and values.

 Stop the attitudes of being busy doing the wrong things. The aim is to change from
busyness to effectiveness as being busy does not connote effectiveness. Being busy and
working hard without focus does not translate to results the organization needs to be
effective.

Job rotation

 Temporary postings to areas of unsaturated staff.

 Equal opportunities.

 Redeployment.

Pre-retirement seminars

 Pre retirement workshop.

 Incentives for early retirement (discourages swearing affidavits to cheat on age).

Personal income management

Almost all staff are now very heavily indebted to the banks with slimmer income. It is often said
that the “take home pay of workers no longer take them home”. Staffs of various organizations

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have found themselves in this conundrum in Abuja because of the need to purchase personal
houses in other to avoid the cut throat high rents in the FCT.

Engage external consultants to talk to staff on personal income management and the need to
prepare for retirement. HR managers should help enforce the one-third rule of loans over which a
staff cannot approach the organization for loans so that staff will be able to maintain and cater
for their immediate families at this critical time.

Proactive HRM

 Application of emotional intelligence strategies.

 Fair HR practice in the use of the carrot and stick approach.

 Assessment of the competencies of employees and productivity level. Do not wait for the
end of year.

 In-plant knowledge sharing forum should be enthroned to encourage staff to share their
knowledge in an in plant workshop. This will assist the organization to source for and
maintain a knowledge pool in the organization.

 Change management. Change will be effected in bits and not radically so as not to further
stress the staff.

 Review the organization’s customer management processes.

 Enthrone an integrated research and development processes.

Performance evaluation

Enthrone an effective performance management system.

 Performance evaluation should focus on:

1. The organization.

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2. Departments.

3. Customer service.

4. Teams’ performance.

5. Processes.

6. Individuals.

 Solutions to challenges rather than sanctions, condemnation and the blame trade.

 Seek to be understood before seeking others’ understanding.

 Consider individual strengths, experience, priorities, inner motivation (is he a loner,


extrovert) and confidence in assigning tasks.

 Acquire the skills to align the staff skills and competency to align with the organizational
objectives.

 Monitor performance (don’t wait until the end of the year).

 Reward top performers and ascertain collateral damage if any.

 Investigate and sanction poor performance.

 Watch out for the aftershocks of performance evaluation.

Any of the following models could be used to address the performance challenges that
organizations may face during the periods of financial crisis:

 The Balanced Scorecard

The Balanced Scorecard (Kaplan and Norton provides the theoretical framework for the
34
Balanced Scorecard (BSC) with four perspectives - financial measures, customer knowledge,

Kaplan R S and Norton D P (1992) "The balanced scorecard: measures that drive
34

performance", Harvard Business Review Jan – Feb pp71-80.

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internal business processes, and learning and growth. The BSC helps the organization to strike a
balance between short, medium and long-term objectives. The BSC is a tested tool change
processes.35

The Balanced Scorecard (BSC) is a performance management tool which began as a concept for
measuring whether the smaller-scale operational activities of a company are aligned with its
larger-scale objectives in terms of vision and strategy.36

By focusing not only on financial outcomes but also on the operational, marketing and
developmental inputs to these, the Balanced Scorecard helps provide a more comprehensive
view of a business, which in turn helps organizations act in their best long-term interests.

Organizations were encouraged to measure, in addition to financial outputs, those factors which
influenced the financial outputs. For example, process performance, market share / penetration,
long term learning and skills development, and so on.

The four perspectives

The grouping of performance measures in general categories (perspectives) is seen to aid in the
gathering and selection of the appropriate performance measures for the enterprise. Four general
perspectives have been proposed by the Balanced Scorecard:

1. Financial perspective;

2. Customer perspective;

35Kaplan, R. S., & Norton, D. P. (2004). Strategy maps: Converting intangible assets into tangible
outcomes. Boston: Harvard Business School Press

36 Voelper S., Leibold M., Eckhoff R., Davenport T. (2006), The tyranny of the Balanced Scorecard
in the innovation economy, Journal of Intellectual Capital, Vol. 7, n° 1, pp. 43-60.

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3. Internal process perspective;

4. Innovation and learning perspective.

The underlying rationale is that organizations cannot directly influence financial outcomes, as
these are "lag" measures, and that the use of financial measures alone to inform the strategic
control of the firm is unwise. Organizations should instead also measure those areas where direct
management intervention is possible. In so doing, the early versions of the Balanced Scorecard
helped organizations achieve a degree of "balance" in selection of performance measures. In
practice, early Scorecards achieved this balance by encouraging managers to select measures
from three additional categories or perspectives: "Customer," "Internal Business Processes" and
"Learning and Growth."

 ULRICH MODEL

David Ulrich is a real HR Guru, who defined the most common HR Roles model, which
commonly used on the market. The model is well known for introducing mainly the aspects of
Human Resources with the highest value added.

The main contribution of the David Ulrich’s HR Model was the start of the movement from the
functional HR orientation to the more partnership organization in HRM Function. Business
Partnering is not possible to implement without a major shift in the HR Organization. The benefit
was a more responsible and flexible organization of Human Resources, which allowed to many
HR Professionals to become real respected business partners37.

37 http://www.paypershop.com/articles-UK/ulrich.html last visited on 17 feb 2009

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The 4 HR Roles defined by Ulrich

The HR Model defined by Ulrich brings for main criteria:

1. Strategic partner

2. Change agent

3. Employee champion

4. Administrative expert

Strategic Partner is about alignment of HR activities and initiatives with the global business
strategy and it is the task of the HR Management and HR Business Partners. Sometimes, it
sounds easy to implement Strategic Partnership, but it needs a lot of effort from Human
Resources.

Change Agent is a very important area of the Ulrich’s HR Model. Change agent is about
supporting the change and transition of the business in the area of the human capital in the
organization. The role of Human Resources is the support for change activities in the change
effort area and ensuring the capacity for the changes.

Administrative Expert changes over the period of time. In the beginning, it was just about
ensuring the maximum possible quality of delivered services, but nowadays the stress is put on
the possibility to provide quality service at the lowest possible costs to the organization.

Employee Champion is a very important role of Human Resources. The employee advocate
knows what employees need and HRM should know it. The employee advocate is able to take

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care about the interest of employees and to protect them them during the process of the change in
the organization.

Pitfalls in 4 HR Roles

All the HR Roles defined by Ulrich are essential for the success of the whole HRM Function.
The stress must be put to all the areas, there is no chance to select one and to excel in this one
concrete area.

Many HRM Managers forget to balance the approach and they decide to be a real star in one of
the needed components and they forget about the danger not meeting the basic requests and
expectations in the rest.

The HRM Recession Quick Wins should include the following actions:

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?

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.

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.

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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.

HRM Innovations in Recession

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.

On the other hand, the top management understands the effort to innovate the HRM Processes
better. The top management is in the search for the potential cost savings and they count every
single penny brought by the line management. The HRM Costs are usually a very significant cost
to the organization and the HRM Function has to be proactive.

The HRM Function has to focus on unpopular innovations during the recession as the role of
Human Resources during the recession is to save money to the organization. The top
management expects all the support functions to bring innovative solutions, which will have to
make the organization stronger, when the next growth era comes.

The HRM Innovation during the recession has to focus on the following topics:

1. Reduce the number of employees in the organization

2. Strategic initiatives to increase the productivity and efficiency of the whole organization

3. Redesign of the compensation scheme

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4. Cancellation of several benefit schemes

On the other hand the HRM Function has to find innovative solutions for the following
topics:

1. Identifying the real key employees and to keep them in the organization

2. Identifying the real top potentials and to strengthen their development program

The second two topics have to be done with the minimum additional costs and it is a really hard
task to accomplish. The HRM Function has to have priorities in mind and the strategic impact of
the HRM Innovations in the recession time. The role of the HRM Function is not to cut the costs
for the time being, but to make the organization stronger and ready for the future growth.

6. CONCLUSION

The conclusion that could be drawn from our economic position based on the global financial
indices, our monoculture oil economy, the need for the readjustment of government spending
because of the uncertainty in oil prices, the increasing interest rate and high unemployment
situation; the depression in the capital market is that HRM needs a new approach in strategies
and direction. CEOs should not wait for a time like this to cut their perks as the $1 salary
proposals of the CEOs of the United States auto giants. This sacrifice and radical cost
curtailment measures would have started long ago. HR Managers will need to change their own

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conditioning, paradigms and lead by examples. HR managers should not be afraid of proffering
radical but workable solutions to their CEOs even at the expense of their own conveniences.
Failure to do this will ultimately lead to losing the perks and area of influence we may be
protecting because when the baby dies (the organization); every nanny or babysitter (the
workers) goes home. The organizations that will come out stronger after the meltdown are the
resilient, proactive and adaptive change HR practitioners. Now is the time to walk-the-talk.

Crisis or no crisis, there will always be plenty of companies in need of good quality BPO
services that would help them get a competitive edge over the rest of the market they operate on.
The current predictions about the BPO industry show that in the future we will see a slowdown
in the general growth of the market, but without any real signs of a consistent failure. While
some traditional BPO providers are sinking – India being the most notable example - , others are
rising – as is the case of Romania, for example. In their efforts to reduce costs and cope with the
crisis, companies will have to understand that they can turn the crisis to their advantage, and
benefit from the decreased costs of BPO services. As to the BPO providers, their chance to
survive is to diversify their service portfolio as much as they can, to be able to offer assistance in
more fields, other than their traditional ones.

7. RECOMMENDATIONS

 Focus on productivity:

Our goal as an HR professional is to increase the productivity of the workforce by providing


advice and programs that can directly increase the effectiveness of employees and managers. To
do this we need to develop metrics to capture the productivity of our workforce. These include
the ratio of dollars spent on people-related costs compared to the dollar value of the output or

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revenue produced by employees. Then we should identify barriers to increased productivity and
develop a rapid plan to remove them. Once we have done this, our department needs to provide
managers with the tools that we know have been proved to increase productivity.

 Talent and Performance management:

This is the time to have a holistic process is in place where employee objectives are linked to
business goals. Securing existing talent and investing in them will ensure that a company
becomes more competitive so that when the economy picks up they are much better placed to
move forward. Tackling poor performers head on, and removing from the workforce as part of a
change management program or stand alone process, can help a business survive so long as fair
capability and disciplinary procedures are used to prevent costly legal mistakes. Poor performers
can reduce profits dramatically through low productivity and disengagement. Talent
management can help ensure employee engagement. Talent needs to be nurtured and rewarded
accordingly to ensure employees don't jump ship and join a competitor. Having clear HR
processes in place such as succession planning and career paths are the basic building blocks
together with the right training and development. There is the need to look at creative ways to
reward staff, when increased financial compensation is not available. Communication to staff
about companies' actions in this area will help employees to understand the “hows” and “whys”.

 Ongoing training and development:

Cutting back on training is a false economy because when key skills are needed in response to
market forces in future, the company will struggle. Training is often the first HR process to go
when things get tough because some companies see this as an unnecessary cost. Consider low-
cost options such as work shadowing and developing coaching and mentoring programs using
existing talent to train developing talent. Evaluate our training partners: smaller, boutique firms
can often offer far more bang for our training buck.

Apportion our resources wisely. Limit activities with limited business purposes. Instead,
organize a sales or other company meeting with a clearly defined profit purpose.

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Bear in mind that those companies with strong customer bonds have the best chances of
weathering the storm. We believe small businesses and organizations have the advantage to
quickly respond and adjust to their customer’s needs. We may find that some of our “boutique”
providers can best serve our needs in recessionary times.

 Increase employee innovation:

Competition in the marketplace has remained constant or increased for most companies even
though business revenues may be down. This means that to compete we need to accelerate
innovation in product and service areas despite having fewer resources and provides HR with a
great opportunity to demonstrate leadership in increasing innovation. How? One way todo this is
to implement specific actions to improve our group’s ability to work with mission-critical
business teams. This way we can help identify barriers to innovation. HR staff can then function
as business consultants by providing tools, training and advice on increasing the rate of
innovation.

 Increase workforce flexibility:

Companies can consider offering more paid time off such as increased holidays or Friday
afternoons off as an incentive to increase employee motivation in these difficult times. Flexibility
is a major motivator and the introduction of flexible working; flex-time, job sharing, and
telecommuting are surprisingly easy ways to improve the bottom line. Reduce expenses that
don't add value. Instead include low-cost but high-impact benefits at a time when the rest of the
business world is cutting back.

Other action steps might include increasing our firm’s ability to rapidly redeploy key employees
to areas where they can have a greater impact. HR can also help managers make their labor costs
more flexible by providing them with a larger percentage of contingent labor that can be more
easily released. Development efforts also need to have more impact as the focus shifts from
recruiting to increasing the capabilities of the employees that we already have. For those
companies who need to cut costs, the issue of employee reward is a big factor. Employees tend
to expect the minimum inflation pay increase and, where appropriate, the bonus they have
always received.

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With the economic downturn this could be the nail in the coffin for some companies. Offering
more tax-efficient benefits that can save the company money could release funds to offer
motivational perks such as company days out or a paid-for social gathering to improve
motivation. If companies involve employees in a survey of their requirements, benefits can be
relevant to both their needs as well as saving the business money. Educating staff in the value of
their total reward package can often be beneficial. This can be achieved through providing total
reward statements either paper-based or online or by financial workshops, on key aspects such as
pensions or financial benefits.

 This too shall pass:

To weather the recession in a truly strategic fashion, HR must increase its workforce planning
capability so the organization can quickly recover when the economy improves. Action steps we
can take include building our image as a desirable employer, preparing managers for changing
workforce demographics and focusing on retaining key performers.

Help our company’s bottom line by communicating more with our supervisors to make sure we
are focused on the right HR priorities to help the business. The key to surviving a recession is to
make sure that we are delivering personal and unique value to our company. Ask ourself some
tough questions to make sure that the work we’re doing has positive impact on our company’s
bottom line such as increasing revenue, decreasing costs, improving profits, and customer
satisfaction.

These must be perceived by our management team as meaningful results. Offer to head up new
projects, committees or initiatives in our organization. Step up our game and energize colleagues
around an important change initiative. Invest some time in mentoring key people in the
organization who may be floundering. A little time and good will can go a long way.

Provide HR leadership and support for emerging initiatives in our organization like environmental
sustainability, green technologies, clean energy, leveraging social media, where there may be less HR
support. If we can help these groups think through the staffing, talent, compensation, change
management or overall implications of their decisions, we’ve added tremendous value to our
organization. And if our HR experience speaks to their needs, we’ve set ourself up well when the

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recovery occurs. But it’s our job to take the initiative, build the bridge to these groups and make our
case.

 Link our HR metrics to the bottom line:


During economic downturns, senior executives require all managers to focus on cutting costs and
increasing revenue. To better comply, the HR function must learn how to convert traditional metrics
such as turnover rate or time-to-fill into dollar impact. For example, instead of simply reporting that
our turnover rate is 7%, we would also report that the cost of that turnover was $11.9 million in lost
productivity or revenue. With this new perspective, HR can show senior managers the hidden costs
of cutting training, as well as the potential revenue effects that great leadership development and
great leadership development and great hiring can have. No matter how bad our bosses are, they do
not enjoy having to lay off people. So give them a break. This isn’t the time to push for that
promotion we think we deserve or to start building the case for that change title or equity increase.
This is just common sense. Proactively try to lighten the leader’s burden. Help them defend our
department. Contribute our ideas for restructuring plans when asked and do some of the heavy lifting
our self.

 Keep communicating:
Be honest with employees. Let them know how we're doing so that they understand the true financial
picture. Often employees are willing to make cuts and changes when they understand the facts. There
are no winners if the business goes down. Talking clearly and honestly with our employees also helps
to reduce the rumor mill. And, don’t forget to reach out to our HR clients and ask them for feedback.

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BIBLIOGRAPHY

 Gross, Steven & Haberman Susan: 2002. Total Compensation in a Recession: HR


Priorities Shift According to New Survey Analysis, Employee Benefits Journal, Volume
27, Number 1 March, 2002)

 Government Accounting Office’s Report: Older Workers: Demographic Trends Pose


Challenges For Employers and Workers. Click on the link for GAO Reports, then on the
link "Find GAO Reports." Under the heading, "Search the GAO Archive at GPO", click
on "Search" for the full text. In the box for searching by report number, enter GAO-02-
85.

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 Abimboye D, (2008); Global Financial Crisis, Newswatch Magazine, Lagos.

 Aluko M, (2008); The Global Financial Meltdown: Impact on Nigeria’s Capital Market
and Foreign Reserves.

 Niven, Paul R. (2006) "Balanced Scorecard. Step-by-step. Maximizing Performance and


Maintaining Results"

 Congressional Budget Office compares downturn to Great Depression. By David


Lightman. McClatchy Washington Bureau. January 27, 2009.

 Hunnicutt, Susan, book editor. The American housing crisis. Farmington Hills, MI :
Greenhaven Press, c2009.

 www.bpowatchindia.com/bpo_white_paper/globalization_evalueserve/ october-01-
2008/role-globalization-it-indust.pdf

 www.dessenceconsulting.com/pdf/BPO_India.pdf

 http://research.cibcwm.com/economic_public/download/smay08.pdf

 http://www.nasscom.in/Nasscom/templates/NormalPage.aspx?id=2659

 www.satyam.com/bpo/documents/seven_hot_specialty_bpo_services.pdf

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Industry_oct.pdf

 www.cms.ac.in/News/2008-09/details.pdf

 www.hclbpo.com/pdf/How%20BPOs%20check%20data%20theft.pdf

 www.pondiuni.org/DDE/HRM_2_Global%20HR%20Practices.pdf

 http://en.wikipedia.org/wiki/Economic_crisis.

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 http://biz.yahoo.com/ap/081024/world_markets.html.

 http://www.bls.gov/news.release/empsit.nr0.html/.

 http://www..economicconfidential.com.

 http://www.balancedscorecard.org/BSCResources/AbouttheBalancedScorecard/tabid/55/
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 http://flowingmotion.wordpress.com/2008/07/24/3-steps-to-positive-hr-with-a-
recessionlooming/. http://hrmadvice.com/blog/2008/09/07/hrm-innovations-in-recession/

 http://www.ipma-hr.org/

 www.merinews.com

 www.bpowatchindia.com

 economictimes.indiatimes.com

 www.ndtv.com

 www.expressindia.com

 www.bpotimes.com

 www.bpoindia.org

 www.nasscom.org

 www.ibmr.org

 www.spiritsglobal.com

 www.sjbealehrconsult.co.uk

 www.businessworld.com

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