Performance Management During Economic Slowdown

PERFORMANCE MANAGEMENT DURING ECONOMIC SLOWDOWN SHAIFALI GARG,Sr. Lecturer, Institute of Management studies ABSTRACT

Performance management is the systematic process of planning work and setting expectation, continually monitoring performance, developing the capacity to perform, periodically rating performance in a summary fashion and rewarding good performance. In times of global slowdown, managing performance has always been a major challenge for the industry. The steps taken by Jet Airways and TATA automobile is an indicator of a greater risk of social disturbances caused by it. The issue like talent shading and potential employee’s engagement has to be handled appropriately. This Paper seeks to identify how in times of slowdown, it is important for the HR department to come up with alternate innovative strategies to ensure performances by all its emloyess, while still keeping a check on the rising costs. The paper also discuss different ways of achieving the above stated goals and also looks into some of the methods already adopted by organizations to deal with this problem. Simultaneously, the paper suggests a proper and continuous talent management system should be formulated to deliver the twin benefits of lowered cost as well as increased productivity, which is especially welcome in a constrained business environment.

“Many of the things You can count, Don’t count. Many of the things You can’t count Really count!” Albert Enstein

INTRODUCTION

The present realization of an economic slowdown possibly leading to a recession has compelled many organizations to tighten and control spending on their operation and work activities through all measures possible. The outlook of potential expenditure on their human resources which often form a significant proportion of their respective resources

has even caused some organization and their recruitment and retention initiatives by freezing hiring and going in for massive layoffs.

The likes of TCS, wipro and keane are either going slow on recruitment or are hiring more number of trained hands,TCS,which recruits about 18000 employees every year, has decided to make significant cuts in recruitment patterns every year, has decided to tide over the current global economic crisis. The high-end pay packages have also taken a backseat with investment banks withdrawing from the placement process. for instances ,Lehman Brothers which made an offer of 18 lakhs to a Delhi university(DU)graduates in2007 backed out from the process after its bankruptcy. As the economic slowdown has also affected the use of credit cards, the BPO sector, call centers in particulars; have also reduced recruitment, human resources outsourcing company convergys laid off nearly 400 people after it closed on of its Mumbai centers. Companies like patni, Fidelity and 24/7 are shedding low performers and will continue to cut staff and freeze hiring. Kingfisher Airlines also stopped the intake of pilots till further notice owing to downfall of aviation industry in India.

“But, is this a smart decision?”

True, the knee-jerk reaction to a slowdown pressure often compels them to take steps like downsizing and layoffs but these steps like downsizing and layoffs but these steps in turn tend to negatively affect the organization’s overall long term strategy, also these short sighted decisions carry the risk of ending all important dialogue with existing and potential employees.

Hence, even in a slowdown, these organizations need to assess the impact of their spending on performance to determine its return and effectives .sure, cutting a percentage of the salary or deleting a holiday gift program may cut expenses from the bottom line .but they may also have a more significant longer term impact on profitability as employees disconnect from the organization.

PERFORMANCE MANAGEMENT DURING ECONOMIC SLOWDOWN

The concept of managing performance through promoting taken in a constrained environment requires to be a driven by practices which lead to financially sound decisions rather than decision taken in haste which impact the organization ‘s long term strategy.Infact, HR practices right from the recruitment to retention stage should be backed by ways which eliminates waste while still retaining a motivated workforce.

The seven –steps strategy to enhance performance during economic slowdown is :

STEP 1: ELIMINATE THE FINANCIALLY UNSOUND HUMAN CAPITAL PRACTICES In general ,a large number of companies invest in human capital practices that make financial sense, certain practices applauded by conventional wisdom-360 degree review, development training and implementing human resource technologies with “softer” goals in mind-do not always add economic value when implemented in a misguided way. Until employers align their human capital management Practices with their, employees needs, they will continue to waste resources on strategies that diminish, rather than increase, shareholder value. But rather than eliminating or replacing these practices, all other employee related expenses like salaries, bonus or other benefits allowances become the first to be targeted for cuts owing to their visibility in the system. Hence, the process of employee related expense cutting should be very well planned and reviewed before implementation. The process should(i)

Review all employee related expenses and assess those that do not make a significant difference to the employees.

(ii)

Survey employees to determine the benefits that have greatest value.

(iii)

Cut those that add least value

(iv)

Build value by adding small high –impact benefits at a time when the rest of the business world is cutting.

The positive emotional response to an “addition”(related to performance) at the time of cuts cannot be underestimated ,As it is ,in today’s intellectual era, spending wisely, holding employees accountable for performance and building a more positive workplace is the key to surviving and thriving in a slowdown economy. Also, innovative ways to cut down cost without compromising an employees salaries or learning anddevelopment should be taken up. For instance ,sterlite technologies has stopped all travel related to in-house meeting,and all meeting would be conducted via conferencing.

STEP 2: RETENTION –TALENT RETENTION Economy slowdown is generally marked by larger scale layoffs and recruitment freezing across the organizations. Hence, the employees prefer to stick to the present employers rather than switching to different jobs which are already scarce. Hence, retention for the organization is comparatively easier during the slowdown. Still, these organizations need to remain alert in order to retain top perform to ensure productivity in the times to come. Hence, retention as such be treated as an ongoing process even during the slowdowns. Strategies for retaining top talent (i) identify top performers and high-potential employees (ii)

Track turnover rates of these key employess separately from overall turnover figures.

(iii)

Have senior executives talk individually with key employees to communicate the employee’s value to the company.

(iv)

Invest in proven retention practices including development opportunities for key employees.

STEP-3 COMPENSATION –STRATEGIC STEPS FOR FIXED AND VARIABLE COMPONENTS

Economic STEPS 4: MOTIVATION- LITTLE THING MEAN A LOT

STEPS 5: TRAINING ANDDEVELOPMENT INITIATIVES

STEPS 6: RIGHT RECRUITMENT –AS PER BUDGETARY PROVISIONS

STEPS 7: EXIT-REDUNDANT WORK FORCE

CONCLUSION

Integrated HR Practices