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HR Practices During Recession

An Indian Perspective

Executive Summary The study hereby undertaken tries to illustrate the problems and steps taken in the HR context during recessionary times in India. Given the current economic environment of uncertainty with a threatening Greek debt crisis and on the trail of a massive U.S. economic crisis, it was of particular interest to us to dig deeper and explore about the practices and the rationale behind each of them. We begin with analyzing the situation of the labor market in India during 2008-09 recessions in terms of the job losses, decrease salary and the related HR practices taken up by organizations. After this initial finding from secondary sources, we move towards the findings of the practices that were actually being done in industries which were substantially affected by recession. We try our best to present the actual field details of several employers whose managers we interviewed as part of the study. We then try to zero in the common threads of rationale that were underlying in each of these practices across companies. Given these practices, it was only logical to study the reaction of employees to these practices. For this we arranged one on one interviews with employees of four companies and tried to capture theirreactions and those of other employees across the company. From this along with online interview reports we tried to gauge the reactions and the corresponding causes for the same. Moving on from the interactions with senior managers HR and general managers after going through a lot of articles over the internet, we analyzed in the current situation the role of the HR and the change from that of when economic conditions were stable. Finally we would like to say that we have tried to collate all our findings and have tried to give to the reader a coherent picture of the policies, the intentions and the reactions of employees to the same so that she/he gets a base to start thinking upon the implications of any HR action on employees and find the best way of managing company profitability with employee engagement.

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Contents
Introduction ................................................................................................................................................... 3 Methodology ................................................................................................................................................. 3 Review of Literature ..................................................................................................................................... 3 Labor Situation in India during Recession .................................................................................................... 5 HRM Practices across Industries: From the Experts Themselves ................................................................ 5 a. b. c. d. e. f. g. h. Change in Recruitment Practices ...................................................................................................... 6 Changes in the HR/Recruitment staffing .......................................................................................... 7 Retrenchment/layoff ......................................................................................................................... 8 Training and Development................................................................................................................ 9 Managing top performers/Appraisals.............................................................................................. 10 Changes in award of benefits .......................................................................................................... 11 Change in working hours ................................................................................................................ 13 Employee Engagement ................................................................................................................... 13

Employee Reaction to these measures ........................................................................................................ 15 General reactions amongst employees .................................................................................................... 15 New roles of HR in this situation ................................................................................................................ 17 Limitations of the Study.............................................................................................................................. 19 Conclusion .................................................................................................................................................. 20

Bibliography ............................................................................................................................................. 21
Appendix ..................................................................................................................................................... 22 Appendix 1 .............................................................................................................................................. 22 Appendix 2 .............................................................................................................................................. 24

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Introduction With the memories of 2008-09 economic crisesfresh in our minds and an impending Greek debt crisis leading to the possibility of a similar such situation, the motivation for taking up this study is evident. Herein we try to look at various practices in the HR domain that have taken place across organizations in India and try to compare them with those taken in other countries during the same period. We then try to analyze the rationale behind all of these practices and try to understand the implications of these practices on employees across industries. We also try and gauge how these practices have helped to align with the organizations strategy at that point and how successful have they been in terms of the objectives they sought to achieve.

Methodology The method of data collection in our case involved first doing a review of existing literature that touched upon various HR practices across countries and looked up for several Labor Ministry and other reports and interviews on the internet. After some amount of collective brainstorming bin our group, we prepared a structured set of 2 questionnaires; one for employers and the other for employees and then contacted them over telephonic conversation for seeking an answer to the issues and the underlying causes for the same.

Review of Literature During the 2008-09 recessions, companies in China focused on cutting down their workforce. A survey of 195 firms found that 124 firms had already done or were planning to reduce their workforce because of reduced overseas demand. 118 companies had put hiring on freeze but no company had terminated labor contracts before their expiry. However, renewal of terminated contracts wasnt done. They employed a production based pay which made it easier for the companies to schedule flexible hours and manage pay according to production. Outsourcing was also used to reduce additional employment. In training and development, a talent retain strategy was employed by most firms in which certain mid management employees were selected and were provided continuous on the job training. The usual training practices which were based on building organizational culture and included sightseeing were cut down. Performance appraisals however were carried out in the same frequency as previously. It was ensured that the retained employees had high spirits even during this period. (Shen, 2010)

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Japan empathized on retaining top talent. During the Asian financial crisis, companies fixed the upper age limit for occupying a post so that a high performing employee on achieving a fixed set of goals and targets was promoted to the post. This helped in incentivizing top performers. In order to create more promotion opportunities, workers were trained on a multitude of capabilities. Workers were paid bonuses for learning skills that were in demand in the market.Management also put a lot of emphasis on collective bargaining where they negotiated with the unskilled laborers and fixed pay and promotion system after consultation with them. This practice is called Shunto. Due to these practices, the unions lost their strong influence to guarantee jobs and the workers were in more direct touch with the management. (Benson, 2004) In the UK the role of HR changed from the short term focus on personnel management to that of the strategic long term goal of human resource management. The involvement of HR in strategic decisions changed to be a conformist innovator or an architect. The HR functions which till that point of time related to managing growth thenbecame focused on downsizing the organization. The HR department also was actively involved in internal consultancy and was thus seen as a revenue generating center instead of a cost center. Among the various roles the HR function the following four roles have been highlighted: a partner in strategy execution, an administrative expert, an employee champion and a change agent. (Sahdev, 2011) During the recession of 2008 it was predicted that the unemployment level in Russia would reach a historic high of 15% but actual rates were 9%. In this period mutation of HR practices was observed. Instead of layoffs the companies in Russia gave partial employment. Many Russian employees voluntarily took unpaid holidays instead of facing the prospect of being laid off. Further the recession resulted in companies going back to traditional Russian practice of irregular work hours. New technologies like tele-working were also practiced. The employees were however not very happy with these part time work arrangements as this resulted in reduction in pay.However in Russia the degree of formalization of performance appraisal is very low. This lead to arbitrary removals which not only hurt the employee morale but also resulted in companies losing out on talent. However in an alternate survey in Russia which had higher MNC participation it was found that most of them were able to place their laid off employees elsewhere, had higher employee morale and were able to retain talent due to formal performance appraisal system. (Gurkov, Zelenova, & Saidov, 2012)

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Labor Situation in India during Recession The 2008 economic crisis was felt widely across several industries in India resulting in more than 65500 job losses in the period of August-October 2008.Employment across both export and non-export units went down by 1.01% especially affecting the manual workforce. The average monthly earnings during this period went down by 3.45%.(Ministry of Labour, GoI, 2009) The effect was equally felt amongst both contract and non-contract workers and across industries. Also, the phase resulted in the underutilization of full capacity and many industries where incentives and bonuses were linked to production also saw a halt in these practices. Apart from them a variety of HR practices were undertaken which directly and indirectly affected the workers in industries. Some of these were the freeze on hiring that took place, layoffs/ reduction in work force, restrictions in the travel policy of companies, reduction in training expenses, reducing the number of working days in a week and the cutting down of various benefits amongst others. The huge job losses, the reduction in salaries and benefits resulted in a feeling of insecurity amongst employees as it had affected their daily life as well as their investment plans for the future. Here it became imperative for the HR to get involved in a lot of discussions and deliberations with employees and clarify with them the reasons for the measures being taken and reaching to a common point of agreement.

HRM Practices across Industries: From the Experts Themselves As part of this curriculum, we interviewed people across industries both in the government and private sector. The people interviewed were either senior HR managers or general managers. The industries that we touched upon were the steel industry (Vizag Steel Plant), the FMCG sector (Bikanerwala Foods), insurance sector (ICICI Prudential Life), the oil and gas sector (ONGC) and the IT industry (a software MNC that who obliged on conditions of anonymity). From the interactions, it was observed that many practices though not limited to an industry however depended whether the organization operated in the private or public sector. However, several practices that were common across sectors on further probing revealed that the intention behind them all was the same irrespective of them being in the private or public domain.

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The mode of interaction with all of these executives was by telephonic interviews on a consistent set framework of questions that are provided in the annexure to the document. Further probing on the underlying causes behind these practices was also done and finally we have tried to collate the responses of several industries as and when applicable under particular practices and have drawn a common thread that was evident in each of them. The firms that are working in the public sector domain are Vizag Steel Plant and ONGC. ICICI Prudential, Bikanervala Foods and the software MNC operate in the private sector. The various HR practices that were taken up during that period were: a. Change in Recruitment Practices Vizag Steel Plant During this period of recession the demand for steel underwent a huge dip amongst increases in the price of raw materials which led to the steel plants functioning at lesser than full capacity and thus decreased production. The need for new workers was then not there in the industry and the recruitment of junior level executives was frozen. Any additional requirement of unskilled labor was filled by the hiring of contractual workers instead of permanent workers. The hiring of interns from engineering colleges was also stopped during this period. Software MNC Hiring of completely was frozen. Campus recruitment was also stopped. If developers were required, people were transferred from other teams. In case of extreme necessity approval from top management was necessary. There were cases when replacements for people who had resigned were rejected. Bikanervala Foods Pvt. Ltd. Here the hiring of mid managerial level employees was cut down but no significant change happened in the hiring of unskilled workers. At the time of hiring, each post was identified by the management as being a permanent or temporary post depending on the level of involvement of the person occupying the post in the core activities of the organization.

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ONGC The total strength of the employees in the organization was reduced from around 40,000 to 30,000 over the last decade. The reduction was carried out by not recruiting proportionate numbers in comparison to the number of employees retiring or leaving the firm. The shortfall, if any was fulfilled by increasing the intake of contract workers especially in the low skills areas. Hence, recruitment of permanent staff (for example class IV employees) was almost negligible. Hiring for officers is mainly carried out at the entry level and there was no significant effect on their hiring practices. ICICI Prudential The insurance sector had seen a rapid growth during 2000-2008 and the major players in the sector had built up excess capacity in anticipation of rapid growth. High rates of attrition had been observed in this sector changed during the recession. ICICI which like other companies had built excess capacity engaged in right sizing. The bottom 1% candidates during a six month appraisal period were retrenched.It was the HRs strategy to remove the bottom 20% of the employees. 16000 employees in ICICI Prudential Life lost their jobs between 2007 and 2010. Thus employee strength fell from 30000 to 14000. At the same time there was a hiring freeze. ICICI bank on the other hand did not retrench employees but did stop hiring. As can be observed, all the firms witnessed very less recruitment in terms of permanent staff, relying more on the contract workers. The reduction in permanent staff and focusing on contract workers is a means to cut the excess cost on the firm. It can also be observed that the overstaffed organizations like ONGC and ICICI insurance have reduced their employee strength that had accumulated over the years. This was primarily done by inadequate recruitment. This would ensure that the firm is maintaining the right number of employees. The campus placement involves heavy hiring cost and can be avoided by not opting for the particular measure as had been done by VSP. b. Changes in the HR/Recruitment staffing Bikanervala Foods Pvt. Ltd. During this period the hiring was on freeze with no hiring of executive employees. Under these circumstances, the recruitment head which was classified as a temporary position

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was vacated as a measure of cost cutting. The HR manager said, It was highly uneconomical paying a salary of Rs. 30,000 to a person whose work itself hadbeen put on hold. c. Retrenchment/layoff Software MNC Retrenchment was not done. The company had projects planned prior to recession period and existing staff were allocated to these new projects. Bikanervala Foods Pvt. Ltd. This was identified as the primary cost cutting methodology in the firm. Employees were assigned a set of goals to achieve in a period of 3 months with constant monitoring being done at the end of each month. A target versus achievement matrix was formulated and those people who were unable to meet their targets continuously for three months were retrenched. Some of the mediocre performers were given a sabbatical for a period of 6 months after which they were reabsorbed. However, interestingly, retrenchment never happened for permanent workers in the unskilled labor sector. The reason cited was that the strong union had opposed the sacking of one of their leaders recently and had stopped production for a week. In the public sector undertakings of Vizag Steel Plant and ONGC, this was not followed because of the strong regulatory government framework in which the both of them operated. ONGC There was no retrenchment/layoff as it is against the government policies to retrench employees in a public sector enterprise. ICICI Prudential Thousands of employees were retrenched during the recession. While company dubbed the attrition as normal attrition, reports suggest that retrenched employees had approached Labor ministry. The company maintains that under performing employees were asked to leave but they were counseled about alternative career opportunities. It can be easily observed that in situations where there is a strict government regulatory or in cases where the union is strong retrenchment was not a possible option (cases of ONGC, Vizag steel plant and Bikanervala). However in private firms like ICICI

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insurance retrenchment was done on a large scale as part of cost cutting measures. Even in Bikanervala retrenchment was carried out heavily in the mid management. At the same time it is interesting to observe that software MNC was not forced to retrench probably due to impending projects A performance assessment was carried out so as to identify non performers in performers to ensure transparency in the system of retrenchment d. Training and Development Vizag Steel Plant Training is a very continuous process in steel plants aiming at constant improvement. So, the cost of doing away with training was more than giving training to employees. However, some training programs that involved meetings in top notch hotels were cut down and more stress was given to on the job training. Software MNC There was reduction in the budget allocated to trainings related to soft skills, like presentation exercises and outbound team building exercises. Training in technical subjects was not suspended and were generally done by an in house team. However other service organizations with large workforce had cut down on number training classes offered. Bikanervala Foods Pvt. Ltd. Very similar to Vizag steel plant, workers were mainly given on the job training. Expensive arrangement of meetings with professionals from other industries was held back and internal training was focused on. Given the reduced focus on costly formal training methods, the training head which was a contractual post was retrenched. ONGC Training and Development is a thrust area for the organization as the job entails risky endeavors. Hence, the training programs for the staff mainly deal with safety precautionsand on the job training programs. In order to reduce the training and development expenses, some training programs that arent directly related to the core job (for example management development programs for mid level executives, training programs in foreign locations are reduced to some extent)

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ICICI Prudential The company did not cut down on training per se but the training costs did go down as there was a fee on entry level hiring. Earlier the company used to spend huge amounts of money in training the new recruits by tie ups with various institutes. The stop on hiring helped the company save on those costs. In general during downturn firms continued with on job technical training. The intention was to improve the productivity of the present employees. However as they were under tremendous pressure to reduce costs all managerial and training programs that are not directly related to the job were reduced. The logic behind differentiating hard skills and soft skills development is the large cost disparity between the training involved in both. An exception to this is the ICICI insurance which imposed a fee on entry level training as a cost cutting measure. e. Managing top performers/Appraisals Vizag Steel Plant The appraisal system comprises two components: first related to the amount of production and the next to individual performance. The first part had to be cut down as the overall production decreased. For the other part linked to personal performance, employees were consulted and it was mutually agreed upon deferring it to the next year with slightly higher values. Performance linked promotions were also deferred and promotions that happen in a period of three to four years were delayed further by a year. Software MNC Appraisals and variable pay distribution was made more strict. The variable component of compensation was linked to performance of the company as well as the individual. Employees with high ratings were only given some amount of the variable pay. People who were not able to meet the minimum required ratings were denied this pay. Under normal circumstances, each employee received a minimum amount as annual variable component. Promotions were also difficult. For the lower level developers, in whose case promotions were done by duration, were not curtailed. For higher levels, a vacancy had to exist and it had to be approved sometimes by the VP of the respective departments. Compensation benchmarking with other companies was done more frequently.

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Bikanervala Foods Pvt. Ltd. As mentioned earlier, the target-achievement grid helped in identifying top performers and not only were they retained but also given adequate bonuses and raises to reduce their likelihood of switching to other firms. ICICI Prudential The company relied on its appraisal system to identify the bottom 1% of the performers. These were the candidates for retrenchment but were given opportunities to improve. The assessment was made on a continuous basis (every 6 months) to identify the under performers. The top performers were differentiated by the appraisal process and they were rewarded with a view to retain the top talent during the times of recession. In order to retain top managerial talent around 3000 managers were moved to ICICI bank and 300 to ICICI securities and General Insurance divisions. Also a system of long term pay (an incentive) was started which was given to high potential employees. This was done with a view to retain top talent. Careful assessment was done to find why the employee was rated higher in appraisal and on what parameters did he excel in order to determine who the high potential employees were. Organizations in general implemented changes in the performance appraisal system. While in certain cases the performance based promotions were deferred with mutual consent, in other cases appraisals and variable pay distribution was made stricter. Very careful assessment was also done to identify the higher ratings while appraisal. Promotions were also made rigid with approvals from the higher management. This measure was implemented with the idea of identifying the best performers in the firm Star performers at top managerial level leaving the firm during the periodwere rewarded bonuses and incentives to stay in the firm for a longer run. Other trends observed were regular benchmarking with competitors. Both these measures have the rationale of retaining the best performers with the firm. f. Changes in award of benefits Vizag Steel Plant Due to government regulations, PSEs could not decrease the amount allocated to spending on fringe benefits. However, there was no increment to these benefits pertaining to magazine allowance, canteen, education allowance, spending on health, township

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among others in the period. Various measures like the limit on the number of free minutes over the phone were also introduced. Software MNC There were no changes in benefits like insurance, but distribution of goodies like shirts and bags were stopped. Special gifts at time of festivals were reduced to distribution of sweets. Money for team lunches and outdoor events was removed from team budgets. Team based performance rewards were stopped and individuals with exceptional performance were rewarded monetarily with spot awards. Bikanervala Foods Pvt. Ltd. Though the top performers were awarded bonuses, the mediocre performers did not have any bonuses/raises. The usual gifts during Diwali were also compromised as signs of cost cutting. ONGC There was no drastic cut in any of the benefits as the firm is a relatively cash rich firm. However, during downturn, foreign trips/tours of employees were reduced to a minimum possible extent. Conferences in lavish hotels were also reduced. ICICI Prudential There were cuts in incremental benefits. 2008 was a year of no bonus not only in ICICI prudential but also other insurance companies. While promotions did happen the increases in salary were not at the same rate as the pre recession period. Also promotions were linked to time worked in the organization. Earlier if a promotion was given in one year now it was given in two years. The HR says, Earlier, if you did not promote people in one year, they would have quit and gone. Today, jobs are not so easily available. Thus in some ways the recession is helping the company institute some changes that were not possible earlier. Also as a part of cost cutting the mobile expenses of employees were cut. There were also a freeze on paid International holidays but instead more holidays were given for domestic vacations. Cuts in incremental benefits and extra benefits depended on the financial position of the firm. While extremely rich firms like ONGC could do away with retaining most of the extra benefits, ICICI faced the cuts with a much bigger impact. The benefits denied included gifts during special occasions, conferences in lavish hotels etc.

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However high expenditure benefits like paid international holidays were frozen in all organizations.As there was a dearth in job opportunities across the industry, the firms could afford to cut on the extra benefits without the fear of employees leaving the firm g. Change in working hours Software MNC Although the working times were not changed, the amount of work allocated was increased. The company aimed to release new products when the recession was over and so had engaged its workforce in the development of pre-planned new projects. Neither were changes made in number of working days not were the employees asked to take forced vacations. Bikanervala Foods Pvt. Ltd. With the retrenchment of a number of workers, the amount of work per employee went up thereby leading to higher number of working hours per person. However, there was no reduction in the number of working days in the company to save on administrative costs such as production and electricity. ICICI Prudential There was no change in working hours but the remaining employees after retrenchment were pressurized to put in more work. More responsibilities were entrusted to current employees. The HR believed that people would put in more work as it was difficult for employees to find work elsewhere. The rationale behind was that instead of stressing for more working hours, the firms were stressing on more productivity during those working hours. More responsibilities were also entrusted to current employees. In case of Bikanerwala as there were cases of retrenchment the working hours were forced to be increased due to loss of labour so as to match the existing demand h. Employee Engagement Vizag Steel Plant The involvement of the HR department was extensive with the executive as well as union employees. They regularly sought the opinion of executive employees while introducing new practices such as delay of benefits and leaves. The unionized employees were taken into confidence and were apprised of all the events and were explained about the

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measures being taken. A formal forum was formed in which the HR department became the point of contact to address the grievances of the labor union and communicate it to the top management. Also, the management led by example with the CEO refusing to take salary for 2 months so as not to curb several welfare measures. Software MNC Emails with information related to company performance were sent out that had planned and actual revenue figures. Meetings at project levels were organized where employees were told of how their products had been contributing to the revenue. Bikanervala Foods Pvt. Ltd. Although no formal forum for interaction was established, the HR department was in continuous touch with the employees. Those who were retrenched were informed by the HR and the top performers were given confidence that they need not have job insecurity fears. The HR people were always available for communication to assuage the fears of employees and also served to address their grievances. ONGC No specific extra initiative was taken during downturn, but the HR actively engages with the employees at all levels on a routine basis regarding the compensation and benefits, performance of the company, performance related pay structure etc. All the employees are kept in confidence on the decisions related to compensation and benefits by regular engagement and detailed communication from both the HR department and the top management. ICICI Prudential The HR communicate to the employees that the bottom performers are likely to lose their jobs. The criteria were also clearly defined. However counseling was provided to employees who were asked to leave so that they could seek alternative careers. HR also called upon employees for more commitment to help the company tide over difficult time. The policies were a clear signal that top performers will be rewarded and more work would be expected of them while the bottom ones will be asked to leave. The role of HR was different in different firms. While in majority of the cases like ICICI and the software MNC, they tried to take the employees into confidence and alleviate

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their job fears while maintaining high degrees of transparency about the position as well as the employee. In other cases they played the role of a mediatory between the firm on one hand and unions, employees on the other ensuring an amicable process regarding retrenchment, cutting extra benefits etc.

Employee Reaction to these measures In light of all the aforementioned activities that were taken by the organization, the reaction of employees as expected was not positive and feelings of job insecurity creeps in to the minds of those people who have not been subjected to punitive action. The main reasons stated for uncertainty were that the decision making during these times was not seen as transparent and interactions between peer groups about actions being taken in different companies added to the fear. Interviews with employees of some private companies (H.P, Wipro and C.T.S) and in the public sector as well (NTPC Ltd.) showed the common trend of negative mindset amongst the employees although they varied in their degrees of discontent. The main activities that these people observed and were most dissatisfied with were layoffs, reduction in pays and the halt in promotions. The marked reduction in the benefits being offered such as free cab service, unlimited telephone charges reimbursement, facilities of free gymnasiums with instructors, lack of increment in house rent and travel allowance and free food coupons were also not taken in positive light. General reactions amongst employees Employees were concerned because of the effect of these activities on their current as well as their future investment and saving plans. Also, the policy in some companies of not encashing the remaining leaves also affected the planned cash flows of employees and thus led to dissatisfaction amongst them. Some of the most general trends that came out of the interviews with employees were: Given some measures of reducing administrative costs, H.P implemented the reduced workday policy wherein employees had to work for 10 hours for 4 days instead of 8

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hours in 5 days. This resulted in increased levels of stress amongst employees. Also, accompanied this was a 5% cut in pay which did not give a fulfilling experience to employees. The general perception of the management in the organization changed towards not being transparent. Employees in CTS felt that making them sit on benches for a period of 2-3 months would next lead to them being laid off. This led to a number of employees looking for different opportunities in other companies. Some new joinees joining dates in Wipro were delayed by more than a year and they were given the option of joining either the call center arm of the organization or wait for a year. According to the employee, only 20% of the people joined in the call center arm of the organization as they saw it as a loss of their reputation. Though insecurity in terms of jobs was not evident in PSEs, employees were concerned about the deferred promotion and allowances that were mandated by the management A common observed trend was the increased work load amongst high performers who had to undergo a lot of stress which put them more at risk of voluntary turnover. A number of high performers also switched during this phase across industries, for e.g. many employees from Wipro, an IT services company, moved to companies like Cisco, Motorola, Huawei and others during recession. The person interviewed at NTPC reported that freshmen after completing MBA joined in larger numbers during recession but at the wake of opening up of the economy quit the organization to move towards greener private pastures. There was however a marked difference in the attitudes of midlevel executives who had been part of the organization for a lot of time now. They were more engaged in the activities of the organization and were supportive in the actions taken in the face of the situation. They were encouraged at being included in the decision making process and being part of the consultations while taking major organizational level decisions. There was marked polarization that took place at that time. When there was a growing trend of engaging employees, there was a growing core of actively disengaged employees.

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A takeaway from all the interviews conducted was that employees looked at the involvement of HR in communication of the practices being undertaken during this time in positive light. In organizations such as H.P, employees said that the availability of persons from the HR department and their willingness to discuss out problems with employees was reassuring. The formation of formal forums in NTPC gave employees a chance to address their grievances to the top management during these times and addresses by top management directly to executives were seen in positive light as well. Thus, it becomes clear that the HR department must play an instrumental role in engaging with employees by formal and informal means of communication and assuaging their grievances and concerns, a role that is new to the already existing multitude of responsibilities of the HR department.

New roles of HR in this situation As observed from the above reaction of employees in the context of these HR practices, the role of HR is very important. To some extent, the concerns of employees could be assuaged when they were properly apprised of the activities to make them believe in the transparency in the process. This and many other activities of HR assumed a lot of importance during this period which hitherto had not been given adequate importance. We next critically analyze these changing roles of HR in the subsequent section. a. Communication to employees by HR about the policies During a downturn, it is the responsibility of the HR managers to represent employee interests and advise management and employees on the available contingency plans. As part of the crisis communication preparation, HRM staff needs to know the emergency benefits and assistance available, device some plans if the situation so demands and ensure that they reach the employees and their families quickly. Asdiscussed earlier in the case of Vizag Steel Plant and ONGC, the HR actively engaged with the employees of the organizations at all levels and there were clear and detailed communications about the existing policies and changes, if any. This helped in keeping the employees in confidence regarding the practices followed by the firm and allayed undue

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fears amongst the employees. This also helped in building a positive feeling amongst the employees that the organization would take care of them in every possible manner. b. Leadership role of HR and active involvement in decision making Most of the functions of HR until now have largely been reactive rather than proactive. However, in trying times like the downturn, the need is for the HR department to become more assertive. HR professionals have to be more involved in the strategic decision making of the organization and behave more as integrated players or business partners in the core business.Knowledge and skills in economics, business, crisis management, leadership, consulting, and communications have become necessary pre-requisites for successful managing of the increasingly complex HR function in todays challenging times. HR professionals also need to be more open, consultative and receptive to the business needs. They also need to follow through with the implementation of policies so as to make sure that the policies have the desired impact. c. Involvement with labor unions and collective bargaining Most HR managers have to walk a tight rope and do a balancing act: protect the company's interests, represent management while simultaneously effectively engaging and negotiating with the labor union representatives to ultimately arrive at a collective bargaining agreement that's acceptable to both the management and the labor workforce. This role becomes all the more crucial during downturn as the organizations are often forced to take certain tough measures like layoffs/ reduction in work force, cutting down of various benefits, reducing the number of working days in a week as has been discussed earlier. As discussed earlier, a formal redressal forum was formed in Vizag Steel Plant with HR department as the point of contact. Similarly, in ONGC, HR actively engages with the labor unions and their consent is sought in decisions relating to salary revisions, welfare benefits and other local issues relating to food, rest timings etc. pertaining specially to the on-site work. Hence, keeping the labor unions apprised of the measures taken and keeping them into confidence, is essential to avoid conflicts, strikes and other such unproductive outbursts. HR

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has emerged as the vanguard in managing labor relations and collective bargaining in the recent times. d. Using formal and informal networks to interact with employees Several formal and informal networks/forums are formed to interact with employees. As has been highlighted earlier, a formal forum was formed in Vizag Steel Plant with HR department as the point of contact to redress the grievances of the labor union and communicate it to the top management. Similarly, various informal initiatives are taken up to interact with employees on a regular basis. e. Advising and mentoring line managers on the HR impact of their decisions The success of the human resource policies and practices depend largely on the effectiveness of the implementation by the line managers. The HR professionals should thus play an enabling role by providing information about, interpretation of the various measures taken by the organization so that the line managers can both be in synchronization with the stance taken by the top management and can also effectively communicate the same to their respective teams and employees working under them. Thus we can make out that the roleof HR during growth periods is generally more of a supportive kind wherein it helps the organization to cope with business expansion. During periods of growth, the role of the HR is to ensure that robust recruitment policies are in place and also to ensure that top talent in the company is retained. However, rapid changes in economic climate during downturns make it imperative for HR professionals to adapt quickly to the ever changing circumstances making their job even more challenging and enriching.

Limitations of the Study Although a lot of effort was put in trying to get as much primary data some limitations in terms of time and space held back some steps we would have liked to take up. One was the absence of face to face interaction with employers in their organizations themselves which could have also got us to talk with their employees. Also, it was not possible to get employee responses from the company from which we got the employer responses. To mitigate this however, we tried to probe

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the employee on the HR practices that were undertaken in her/his organization by referring tangentially to the questionnaire prepared for employers.

Conclusion From the study undertaken, we understood that some measures that look pretty straightforward and direct had a lot of implications for employees. We also noticed how many proposed steps were not taken up on the advice of HR persons citing the negative impact of the decision no the employee as well as the organization reputation. It is evident how the role of an HR professional becomes highly challenging in these times and how flexible the professional has to be in combating these challenges. The HR professional has to deal with the dual role of looking at the organizations profitability as well as leverage relationships with executive employees and also the usually conflicting labor employees. A delicate thread has to be treadedupon by the HR professionals trying to balance financials with consideration for emotions. The evolving role from being a supportive department to that of a critical department in formulation of strategies for organizations poses several challenges in the already competitive environment. We would like to conclude saying that under such circumstances leaving the HR department to function as a standalone entity without support from the top management and employees can only be as good as not implementing the function at all.

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Bibliography
ASYALI, E. (2010). THE IMPACT OF GLOBAL ECONOMIC CRISIS ON HUMAN RESOURCE MANAGEMENT IN THE MARITIME INDUSTRY. DENZCLK FAKLTES DERGS. Benson, J. (2004). The Changing Nature of Japanese Human Resource Management: The Impact of the Recession. International Studies of Management & Organization. Gurkov, I., Zelenova, O., & Saidov, Z. (2012). Mutation of HRM practices in Russia:an application of CRANET methodology. International Journal of Human Resource Managment, 1289-1302. Ministry of Labour, GoI. (2009). Effect of Economic Slowdown on Employment in India. Sahdev, K. (2011). Downsizing and the role of HR. The International Journal of Human Resource Management. Shen, J. (2010). Impact of the 200709 global economic. Asia Pacific Business Review.

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Appendix Appendix 1 Set of questions for telephonic interviewwith employers 1. In the previous recession period were there any changes in any of these activities?

Activity

Already changed it by then

Made changes after recession

Restrictions in companys travel policy Hiring freeze Layoffs/ reduction in work force Company holiday policy Hiring of seasonal workers Training expenses Salary freeze Communication to employees about changes salary and benefits Early retirement window Reduced workweek

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2. As a form of cost cutting, were any deals entered into with recruitment agencies for discounts? Were any alternate agencies offering free recruitment services identified? 3. Again focusing on cost cutting for recruitments, were internet services like video conferencing (e.g. Skype) used for recruitment? 4. Were there any reductions in employee training programs? Was any free training alternative looked into? 5. Given the trend that employees are investing their savings into market securities to suit them after retirement, does your company provide any sort of mentoring/education to employees about their investment options? (E.g. P&G) 6. Were any restrictions placed on salary increments and bonuses? Were there any pay cuts? 7. Given the above, were any special schemes arranged for top performers? 8. Were any services such as payment of health insurance premiums made available for retrenched employees? 9. If there were any layoffs, what steps were taken for appraisal of the employees who were laid off? 10. Were there any changes in the promotional policies such as fixing the maximum age for occupation of a post? 11. Were employees trained on multiple skills to help them adapt to change in work if needed? 12. Were employees involved in forming unions so as to increase their bargaining power given the imposed measures? 13. Given the doubts in the minds of employees during these times, what steps were taken by the HR team to assuage these concerns? Was the HR dept. available to address employees concerns? 14. How were communication about salary cuts and layoffs made to employees?

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Appendix 2 Set of questions asked to employees in organizations 1. Was there any change in your pay structure? If yes, did it happen on a large scale? 2. Were there any changes in the working hours? 3. Were you asked not to come to office for some days? 4. Did your manager interact with you more frequently in the recessional times? 5. Did the top management interact with you (personally, in an assembly or group meeting) regarding position of the company? 6. Was there any change in your job profile (nature of work,responsibilities)? 7. Does your company, reimburse fees for 3rd party professional certifications? If yes, did the policy change in the recessionary times? 8. Was there any change in bonus paid for employee referral? 9. Were you denied an opportunity to travel abroad / customer site citing reasons of cost cutting? 10. Were your performance goals changed? 11. If there was compensation hike, in your opinion was it at par with levels set the in earlier years? 12. In case of workplaces with unions, what was the opinion of the Union leaders? Did the management talk to them regularly? Was there any change in the view of union leaders? 13. Were you or any of your colleagues asked to quit the job? If yes, did the company take any steps to get you employed in another company?

To fresh college graduates, 14. Was your joining delayed? If yes by what time? 15. Were you offered a different role than what was promised earlier?

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