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