Human Resource Development Approaches and Practices: Minimizing Cost
The process of critically analyzing human resources development approaches and practices within an economic climate that focus on cost minimization and budget reduction entails numerous considerations. Werner and DeSimone (2008) argue that in order for the global economy to recover from the recent recession, human resources development approaches and practices are seen as unsuitable for contemporary business. Arguably, investing in leadership development should be put on hold. This assists the management to meet its primary goal on reducing budgets and cost cutting. On the contrary, human resource investment in such occasions is more imperative and should be a continuous process which should be even more integrated within the daily running of business.
According to Werner and DeSimone (2008) the recovery from the recession pushed most of Chief executives and managing directors to the edge. The frequent fluctuations in the stock market destabilized most of the companies. This built confusion in the market resulting to drastic drop in the value of shares in the entire stock market. To counter the share value turbulence, the management decided on slashing of training budgets. The common casualties of such economic times are the management trainees. At a time of recession, training of personnel is an important tool for the reinforcement of a company’s customs. It leads to saving on costs and preparation for economic recovery.
Harsh economic conditions keep on creating exceedingly tough and tough environments for firms to run businesses. From a recovering recession, much ambiguity remains on the nature and pace of recovery. The way to restructure business functions on human resources has always been crucial in determining the future of any firm. This applies to majority of firms. For others, fresh setbacks arise as the consequences of recession that extend beyond renewed focus on development. The key issues arising from depression and expected recovery include budget reduction, cost minimization and other risk mitigation processes. The harsh economic condition assist in analyzing the effects of guiding principles, practices and functions related to human resource departments (Werner and DeSimone, 2008).
When observing a long-term plan and mission on a business, a recession only shows a miniature of a company’s general record. Companies with insight and forecast use the moment to reduce transactions to reconcile their programs. These entail training program among other cost in the minimization plan. Instead of seeking temporary risk mitigation through cost cutting on organization’s training budget, some firms will recognize training as what enables them retain their staff, polish skills, and continually develop.
The role of Human Resources in business recovery
According to Werner and DeSimone (2008), as the world recession brought down all the businesses, leadership development funds were cut and in other businesses eliminated. The assumption behind the move was that there is no relationship linking investment in executive development and enduring capacity for expansion.
In different analysis, many businesses weathered the long recession but their capacity for growth had been given-up due to short-term cost cutting. The approach taken by the firms in recession was to cut cost in the short term through cost minimization. In order to sustain indispensable services and recover critical recession the initial objectives to recovery are; to minimize risks of disrupted operations and to establish a restoration plan on all the system to continue running the business even when inflation is high. There are different approaches to leadership development in corporate members that are responsive.
Laird et al., (2003) state that they fall in to various categories like postponement of various programs; this is done through complete cutting back of developmental roles in the organization, postponing the already program in existence, completely cutting back costs by switching to reliance of program delivery externally. Recession can also be used as an opportunity to develop managers by focusing on innovation changing management and leadership. The approaches as constant with cost cutting mode of recessions.
In many cases, many companies go down due to the economic constraints as was observed during recession and the top management of manifold organizations was forced to consider redesigning and retrenchment of an unproductive leader. Regardless of long forecast period, not many firms would risk implementing on an activity that would bring about additional risk at such a time of recovery. On frozen state organizations are solely avoiding risks hence they seldom pursue opportunities that are on the rise. Laird et al. (2003) illustrate that the firm is able to take an edge over the other competitors can start with short term resolution. This will put the organization in a position to capitalize on opportunities which have long term impacts. By sharing investing in employees, sharing information, and companies with constantly upgrading philosophies that make their employees remain focused on the long-term goals of the firm and at the same time get people tool while getting people the tools to make small improvements on individual levels; (Laird et al., 2003)
Approaches of Human Resource Management Development in a Declining Economy
It is essential to balance on the staying on the budget at the same time holding all the human resource personnel. The most common basic knowledge is that good employees is pivotal to businesses endeavors and are not expendable. Employees should be kept intact and away from competitors at all times. The executive primarily differentiate between good employees with potential from those who lag the organization behind due to inability to handle pressure.
According to Wilson (2005) those employees who help to brave out recessionary storm are worth maintaining while the weak employees are a liability to the business. One way to maintain employees is directing them to other departments. This is done until the recession tides are over and the balance of the business return to normal. By changing the department you avoid retrenchments while they acquire additional knowledge on handling the different departments. It is also important to listen to the staff. This will help to nip any impending obstacle in the bud. It inspires confident in the staff and view their leader as one whom they can trust. Through listening to them you get feedbacks which enable you to adjust the business policies easily.
Wilson (2005), argue that keeping the staff motivated and full of activity, helps them to concentrate on the business. Training the staff sharpens their knowledge about the product they handle. Excellent ways of keeping them motivated are by organizing trips and small get together parties which would keep their mind diverted from stress. Transparencies play an enormous role. It is always important to lay all the cards on the board. Explaining to them that what is happening is resultant to recession, this helps to retain the best employees. Such employee retaining tips would help workers to put in extra effort which is required for the smooth running of the business.
The chief focus in recession in every organization is primarily cost reduction; it is also the main cause of layoff it is also one of the main causes of layoff to reduce the cost. According to Sims (2007) there are two ways in cost minimization in time of recession; firing of some employees and dividing the responsibility amid employees at a similar cost. The two methods of reducing the cost in recession period are:
Sims (2007) gives an excellent instance on working on recession which can be demonstrated by China. China has relatively high number of human capital but none was retrenched during the recession this helps the country to produce goods with low cost of production and this is the ultimate goal of any organization. 3-4 people in China work for a similar amount of money in comparison to Europe or the USA where just one person pockets the amount. Hence there is cost neutralization rather than cost minimization. Suspending human resource recruitment is just a single way of cost reduction; there are other several ways like neutralizing the manpower by lowering the salaries until the company has fully recovered from a recession. Sims (2007) argues that it is the function of the HRM to employ at the lowest costs and spend less in training, rewarding and evaluating, this would mean responding positively to the recovery of an organization.
According to Sims (2007) the executive should have the contingency plan. There should be a brain storming session with the entire management to come up with a strategic plan. View of employee performance evaluation to establish key staff that the company is bound to maintain. The flow of communication should run downwards from the most senior to the most junior. Laird et al. (2003) state that the company should also put in place good counseling programs, this helps to maintain good working environment. In case the management wants to lay-off staff they should ensure that there are no other functions for them available in other functions in the organization. The process of managing change should be well advocated for, these entails unpopular innovations. The role of human resource during the recession should be to save money and the organization for being written off. The senior manage in any organization expect support from the entire staff.
Brewster, C.et al. (2004) Human resource management in Europe: evidence of convergence? Oxford: Butterworth-Heinemann.
Werner, J. and DeSimone, R. (2008) Human Resource Development. Stamford: Cengage Learning.
Laird, D. et al. (2003) Approaches to training and development. New York: Basic Books.
Wilson, J. (2005) Human resource development: learning & training for individuals & organizations. London: Kogan Page Publishers.
Sims, R. (2007) Human resource management: contemporary issues, challenges, and opportunities. Charlotte: IAP Inc.