Role and the Importance of Human Resource Managers in Recessionary Times

How HR Managers Have to Deal with the “People” Side of Recessions

With the Indian Economy as well as the Global Economy in deep recession, it is important for organisations to deal with the effects of the recession.

They might have to lay off workers and professionals as well as cut down on costs, in addition to suspending hiring. Moreover, they might have to ask their employees to take pay cuts apart from holding back bonuses and other perks till the time the economic situation improves.

All these decisions concern real people and hence, the Human Resource (HR) managers in such organisations have a vital role to play as far as managing the after effects and the side effects of such difficult decisions are concerned.

Indeed, one can go so far as to say that the HR managers have a vital role to play in these times as they are in the “frontline” or in other words, have to directly deal with the employees who are being laid off.

Therefore, it is important to consider how they must act and deal with the unpleasant decisions that all organisations have to take in recessionary times.

Moreover, they might have to liaise with the media and the regulators as well since they have to explain why and how they are laying off workers and at the same time, sweeten the press statements and media releases to sugar coat the bitter pill.

Complying with Laws, Reporting, and Dealing with Legal Challenges

When laying off workers, HR managers have to be especially careful not to let the unions and the other bodies representing such workers to strike work or otherwise, create trouble for their companies.

Indeed, among all sectors, since manufacturing is bearing the brunt of the recession, HR managers or Labour Officers as they are called in manufacturing firms have to walk a tightrope to ensure that they do not fall afoul of the laws regulating hiring and firing of workers.

For instance, many countries, including India, have explicit laws that prohibit firms from laying off workers at will and hence, HR managers have to show the regulators that they have done their due diligence as far laying off workers is concerned.

Further, they have to report the reasons for laying off to the authorities and hence, reporting in the proper format and after due process is followed must take precedence in such matters.

On the other hand, the unions might take the firms to court for laying off workers and hence, this is another area of concern as far as the law is concerned.

To sum up the regulatory challenges, firing of workers at will is not easy despite there being sound economic reasons to do so and hence, HR managers have to tread a fine line between protecting the interests of their employers and on the other hand, ensuring that the employees do not get a raw deal.

Motivating the Remaining Employees and Ensuring Full and Optimal Productivity

Having said that, firing of workers is not the only challenge that HR managers have to deal with in recessionary times. They also have to ensure that the existing employees are working to their full capacity as this is one way of ensuring that the organisations are productive.

In other words, as the workforce shrinks, the remaining workers have to shoulder the burden of the entire output targets and hence, the HR managers have to face the challenge of motivating the remaining workers to be extremely productive.

Indeed, it goes without saying that this poses a challenge as the existing workers might refuse to work overtime without benefits and hence, they might need to be coaxed to do so.

In addition, holding back bonuses and perks is often the case during times of economic gloom.

Therefore, this is another headache for the HR managers as they have to ensure that employees are not demoralised and otherwise worked up, lest they end up agitating and striking work.

Indeed, among the most pressing challenges is the one that concerns how HR managers deal with pay cuts, no bonuses, no perks, and no extra pay for overtime.

As mentioned earlier, these are regulatory as well as people challenges since the laws have to be obeyed and at the same time, the interests of the organisations have to be taken care of.

Leading by Example, Media Management, and Optics so that There is Positive Coverage

On the other hand, as the saying goes, charity begins at home and hence, HR managers like the Senior Leadership, must set an example by taking pay cuts when they are being imposed on the workers.

In addition, they must walk the talk and practise what they preach by laying off even other HR staff and at the same time, cope with the increased workload that results from the same.

Indeed, there is nothing more outrageous than the sight of the HR managers and the Senior Leadership wallowing in luxury and comfort when the employees are suffering.

In this context, it is worth noting that the media might pounce on this contradiction and play the images of say, Vijay Mallya frolicking when the employees are suffering or Naresh Goyal living it up when the employees are not paid salaries.

Therefore, HR managers have to handle the Optics and the Media as well during recessionary times and though the Corporate Communications function liaises with the media, more often than not, they depend on the HR managers for inputs.

To conclude, recessionary times are painful to all and the HR managers in particular, have a vital and important role to play in mitigating and softening the pain and the hard blows caused by a crashing economy.


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The article is Written By “Prachi Juneja” and Reviewed By Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. We are a ISO 2001:2015 Certified Education Provider. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to ManagementStudyGuide.com and the content page url.


Human Resource Management