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International Human Resource ManagementNameCourse CodeInstitutionDate

International Human Resource Management IntroductionThe world faced an economic recession that created a significant uncertainty for workers and businesses towards the end of last decade. The housing bubble burst followed by the collapse of the financial markets leading to very severe consequences especially in America and Europe (Walker, 2007). There have been many theories advanced to explain the causes of the recession. There are some economists who feel that flawed human resource practices were the root causes of the recession. This paper will look at some of the HR issues that led to the financial crisis. Secondly, it will analyse how a manager can respond to the human resource management challenges that face organisations during a recession. The paper will also address how a manager can respond to the human resource management issues that emerge during a recession before looking at some of the positive outcomes of a recession that can benefit a business. The role played by Human Resource Managers in the Recession The main role of the human resource department in an organisation is to manage people. The work of human resource managers ranges from selection, recruitment, induction, training, performance appraisal and compensation among others. The human resource managers are supposed to ensure that organisations get the best talent who can drive the strategic goals that enable the organisation to increase its performance and also attain a competitive advantage. When organisation fails to achieve its goals or starts underperforming, the first stone is thrown at the human resource department, because it is the department responsible for managing the key resources that drive an organisation. When the world was hit by the recession between 2007 and 2009, many causes of the recession were enumerated. One of the causes of the recession was monetary policy. According to economists, most private financial institutions especially in United States of America engaged in opaque, decentralized and competitive mortgage funding. The unethical competition between the lenders led to decline in the underwriting standards. Therefore, the institutions engaged in risky lending. In this situation, financial managers of these institutions engaged in unethical monetary practices driven by greed for money and success. They broke the financing rules to satisfy their own ends. They created shortcuts to make quick money, leading to the painful monetary collapse. The root of the whole problem lies with the human resource department. If an organisation has rogue employees, the blame lays squarely on the human resource department. The department was responsible for the hiring of the employee who perpetrated financial crimes that led to the meltdown. The human resource department should have ensured that due process and proper ethics were followed in every operation within an institution. This would ensure strict adherence to the rules and regulations. However, the laxity of the human resource managers led to a culture of corruption and shortcut that eventually cost many financial companies. For example, my multinational enterprise, the AIG was one of the companies that were adversely affected by the recession. Corruption scandals involving top executives and employees started emerging within AIG in 2005 (Tucker, 2008). Employees committed several accounting crimes with abandon, but little action was taken to punish them or weed them out. By 2007, the company was being weighed down by more than a billion mortgage associated risks. The company had been involved on loose businesses within the mortgage lending industries that violated the insurance rules and regulations with a view to cash in on the housing boom. However, this greed cost the company a lot, because it was one of the leading victims of the financial meltdown. This corruption and illegal businesses that brought down AIG could have been avoided if the human resource managers were serious with their work. Rogue executives who helped the company to make profits were rewarded with extra bonuses because of their excellent performance. A human resource manager needs to have a yardstick of measuring performance. If an employee is helping a company to perform using dirty tricks, then that is not a performer. Such an employee should be punished or even terminated because of their involvement in unethical business. However, blinded by the soaring profits, the human resource managers rewarded these employees and even allowed them to continue bending rules to increase productivity. Little did they know that these illegal businesses were weakening the foundation on which the organization was built. Therefore, the financial collapse of the AIG has its roots in flawed human resource practices that led to retention and reward of rogue employees (Marchington, 2008). It is rooted in flawed human resource practices that measured performance using altered yardsticks to accommodate unethical practices. Secondly, the sales tactics adopted by AIG created a room for corruption and unethical products. AIG shifted from using sales agents to using independent brokers with a view of reducing the wage bill. Before, the independent brokers sign a contract with an insurer; they are supposed to be vetted by the human resource managers to ensure that they have a clean performance record. Most of the independent brokers were involved in the serious underwriting crimes that almost crippled AIG. The brokers were more concerned with making quick commissions by selling as much as possible, without regard for the consequences of the impact of their business practices on AIG. The human resource department should have been in a position to investigate the business practices used by the independent brokers to sell. The department should have set clear rules and regulations to be followed by every broker. Those brokers that failed to conform to the set rules and regulations should have been terminated (Whelan, 2010). However, the human resource managers watched as the independent contractors engage in malpractices. This is how the AIG became one of the serious victims of the financial meltdown.

Challenges that Human Resource Managers Face during a Recession My organisation, AIG faced several HR challenges. One of the challenges was shortage of skills. One of the moves a HR manager makes during a recession to cut costs is downsizing. Downsizing results in a low wage bill (Mellahi, 2010). On the other hand, downsizing leads to loss of crucial talents that could play an important part in the recovery process (Towers, 2009). For example, my company was forced to lay off some of the employees as the recession started to bite. The layoffs created fear in the remaining employees. This led to departure of more talented employees to more stable companies. This deprived the company of skills and competencies needed to manage recession. Some of the highly qualified employees were poached by rivals companies whose financial position were not that dire and could afford to pay better packages. This loss of skills compromised the companys recovery efforts. Furthermore, it was harder to attract more qualified and skilled workers to the company. However, the movement of workers was lower than during the normal economic times, since there were few companies offering greener opportunities for talents. Secondly, the volatility in the international labour markets impacted negatively on the HR planning processes. A recession creates a lot of uncertainly. This affects labour supply both at the international and domestic level. This makes it hard for a human resource manager to predict labour trends. A manager cannot meet the labour needs of their organisations in such a volatile environment. For example, during the recession, there was a huge supply of qualified and skilled workers who did not have a job (Cingoranelli, 2009). This presented the human resource management team with a recruitment headache. The team was faced with a huge array of talent to select from. However, the company could not hire a huge number of employees since it was still trying to keep the wage bill low.

Another Challenge that I faced as a HR manager was balancing between the interests of the company and the welfare of the employees. A recession creates inflation. This means that people have to spend more for less. During a recession, a company cannot increase employee compensation packages. Therefore, standards of living are lowered. To manage the financial burden, most employees decide to work overtime so as to get overtime bonuses (Cazes & Heur, 2009). On the other hand, the company tries to cut costs by reducing bonuses and benefit. On one hand, a HR manager wants to scrap overtime so as to save costs, while on the other hand; workers want to work overtime so as to earn more money. This clash of interests provides a challenge to the human resource managers. If a company scraps overtime, employees are forced to engage in side jobs to get extra finances to ease their monetary pressure. This splits their commitment between two jobs. This ends up affecting their performance in the main job, which may affect the health of a company, especially during a recession. The major challenge any human resource manager can face during a recession is compensation. Employee compensation is one of the critical roles of the human resource department. Compensation and benefits are also the main source of employee motivation (Schumann, 2001). A recession makes it difficult for human resource managers to design effective compensation programs. For example, in my company, the human resource management team reached a decision to cut the wages and benefits of the employees to cut costs. However, this decision could not be effected because of the negative ramifications it could have triggered. First, such a move would have put the company on a collision course with the workers union. Secondly, cutting the wages and benefits of the employees would have led to further loss of talents and critical skills. Furthermore, cutting the wages and benefits of the employees would have a adverse effect on the performance and productivity of the employees. Therefore, though the decision would have helped the company to cut costs, it was not executed because of the negative effects it would bring to the already struggling company. HR Plan of action for recovery One of the actions I would undertake to aid the plan for recovery is institute cost saving solutions that will help the company not to go the downsizing way. Downsizing is not the best option for a HR manager during a recession. For example, as a manager, I would take advantage of modern teleconferencing and wireless technology to allow employees work remotely, even from their homes. First, it would help in saving transport costs, because the employees would not have to be present at the workplace physically. Secondly, it would reduce the need for the company to invest in real estate. Real estate is one of the largest costs any company incurs (CIPD, 2008). Therefore, instead of downsizing with a view of reducing the companys wage bill, adopting the aforementioned measures can help me as a manager to save more costs without affecting the jobs of the employees (Klemmer, 2010). Another action I would take as a HR manager is to increase the resources that the company allocates to training and development. I would design a training and development program that helps employees to maintain a work and life balance, understand issues related to compensation and furthering of their education. Effective training programs can help a company and employees to the new economic times. However, to ensure that the company saves money on training, I would adopt cost cutting measures. For example, I would prefer in house training methods where trainers come to engage with the company employee at the workplace. This would reduce of the costs of hiring high end vacation spots for training, which the company is accustomed to during better economic times. This would also help the company to freeze the frills and allowances that employees are given when they are taken for training. Also, I would negotiate for reduced training fees from the trainers, to maximise on costs saving. During a recession, communication and increased employee engagement is vital. Recession creates uncertainty and tension among the employees. The employee worries about the security of their jobs during a recession than during any other time. They also worry about the financial and economic position of their companies. Therefore, as a HR manager, I would ensure that the communication lines are more open than ever before. I would ensure that employees are informed about the financial and economic position of the company to diffuse the tension. I would also ensure that employees are aware of what the company is doing to deal with the various challenges during the recession. During a recession, rumours about job security and the financial position of the company abound. These rumours can have a debilitating effect on the recovery efforts of the company. To minimise the effect of rumours, it is always important for the HR manager to ensure that all information regarding the company is delivered to employees first before it is relayed to outside sources which may alter the information. Keeping the communication lines open is vital because it increases employee commitment and reduces their anxiety (Elridge & Becker, 2009. It maintains the trust that the employees have in the company. Another crucial step is employee engagement. During a recession, it is important to ensure that employees are more involved in the affairs of the company more than ever before. This is the time that employee need to be assured that they are valued. This helps in reducing anxiety and stress caused by the pressures of recession. One of the best ways of engaging them is involving them in decision making processes. Consulting the employees on critical areas of operation creates an avenue for the management to engage with the employees. This can impact on their commitment. Delegation of duties is another method of engagement that can have fruitful consequences. Delegation during times of recession helps managers and employees to engage with each other fruitfully. Also it helps employees gain skills that enable them to carry out more challenging responsibilities, reducing the need for an organisation to hire extra talents. Another critical area is compensation. As a manager, I would revise compensation strategies to align them with the needs of the employees and the interests of the company. This is a tricky operation. During a recession, I would freeze all incentive based bonuses because they may be too costly for the company. However, I would make the employees understand why the bonuses were frozen, and may be even promise to compensate when the company fortunes become brighter. I would invest in preventive care and stress management programs to ensure that the company reduces its health care costs.Positive Outcomes of a recession During a recession, there are high levels of unemployment mainly because many companies lay off their workers. High unemployment levels lead to a large pool of highly qualified and talented employees without work. A HR manager can use this opportunity to find talented and qualified employees, who may not be easily available during better economic times. During a recession, it is easier to attract highly qualified employees at a lower cost than when the supply of labour is tight. Similarly, the international labour environment stabilizes during a recession. Most companies go slow on recruitment, hiring and poaching. Therefore, during a recession, the likelihood of losing talent to competitors is very low (Ferguson, 2009). Employees focus on their current jobs. They do not focus on greener pastures because there are less alluring opportunities outside. Therefore, a recession provides an opportunity for a company to retain its best talents. For example, in my company, there was little movement by the talented staff during the recession even though there was no increase in their compensation packages (Vance, 2006). Furthermore, there was little pressure from the employees to increase their compensation packages. There were few companies out there that could attract them with better pay packages since all companies were cutting costs. The presence of highly talented staff during the recession was crucial for the recovery of the company. Secondly, a recession gives a human resource manager to make their organisations more performance-centric. During a recession, an organisation is able to identify the real performers and the non performers. This helps the organisation to deal with non performers either by instituting programs to help them perform or through negative reinforcement. The organisations is also able to identify the talent that would be used to aid in recovery and move the organisation forward during the post recovery period. Furthermore, recession provides an organisation especially the HR manager with an opportunity to review and restructure some of the policies. A recession slows down a company. Therefore, the fast pace of recruitment, hiring, appraisal and training is reduced. During a recession, a HR manager is not as busy as they are during normal times. This creates time for the manager to revisit the organisational policies, compare these policies with the best policies and those of the competitors and restructure them to maximise their effectiveness for recovery period and for the future (Bartlet & Ghoshal, 2002). A recession provides the organisation with an opportunity of earning the trust of the employees (Roche, 2006). How an organisation relates with its employees during a recession is important in the future of the organisation. A HR manager who keeps communication lines open during a recession, informing them about company operations and position and engaging them actively increases employee commitment to the organisation. A recession makes the job market volatile. To escape the effects of this volatility, most employee strive to improve their skills. There is enough research evidence that indicates that during a recession, most employees opt to go back to school to improve their skills and competencies (Griffith & Smith, 2010). Employees with special skills and competencies are usually in high demand during a recession. To make themselves more marketable and to escape the uncertainty created by a recession, most employees get motivated to enhance their skills. This applies more to employees who have lesser skills and competencies, who feel that a recession threatens the security of their jobs. This is an advantage to the company because, first, the employees use their resources to further their education. This reduces the costs that the organisation would have spent on their education and training (Ulrich, 2008). Secondly, the company gains from a large pool of employees with enhanced skills and competencies. These skills are crucial for recovery and post recession development. Enhanced skills and competencies through further education form a competitive advantage that helps a company to compete favourably with its rivals in the market.Furthermore, a recession is a lesson provides several lessons for managers. As a manager, there are several things I learnt from the recession. First I learnt the value of communication and employee engagement. I learnt that employee participation in the decision making processes is a significant strategic process because some of the employees have latent talents that an organisation could have ignored for long. For example, some of the recovery strategies the company used were suggested by employees. Therefore, I learnt that the company had more talent than the managers previously thought. This provided an opportunity to change the management structure where decision making was the preserve of the top executives. Decision making has now been devolved. All employees regardless of their position are allowed to suggest strategic options that the company should pursue. The best options are selected then the managers decide on the route to take. This has been a source of competitive advantage because it has enabled the company to manage change and deal with the dynamic and fluctuating market forces.

ConclusionHuman resource management department is the engine of any organisation. The department manages the key resources in an organisation. Human resources are the main pillars of an organisation. Therefore, the success and the failure of an organisation are highly dependent on the practices of the department. Human resource managers played an indirect role in the 2007-2009 financial meltdown. Though they were not the immediate perpetrators of the crimes and unethical conducts that led to the crisis, they were in charge of the people who were involved in the crimes. The managers selected, recruited, trained and managed these people. Therefore, laxity in management of people and organisational cultures created loopholes that were used to bend rules and regulations, leading to corruption and impropriety. During a recession managers face a variety of challenges. These include shortage of skills, inability to plan effectively due to labour volatility and uncertainty, compensation issues and performance management. A human resource manager can overcome these challenges and chart an effective recovery path by instituting innovative cost cutting measures that do not affect the welfare of the employees immensely. Communication and employee engagement are important in management of a recession because they increase employee engagement (Faith, 2009). Finally, a recession has many negative consequences. However, there are several positive outcomes. For example, it provides an opportunity for an organisation to conduct a performance audit and an overall health check that may help an organisation to avoid a future recession. Also, it provides an employee with an opportunity to recruit the best talent because there is usually an overabundance of highly qualified people without jobs.

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