The Author

Ajit Kumar Kar

MBA (HR), PTHE, CTE, Ph.D (Pursuing)

Deputy Lead (HRD & Consulting Wing), WOMS, BBSR

www.womsindia.com

Vice President (Executive Training), JCI, BBSR

www.jciindia.in

Freelancer Trainer & Consultant, ELL, Bhubaneswar

Member of ecch, U.K

Email: ajitkar5@gmail.com

"A commitment to planning today will help support employees,

customers, the community, the local economy and even the country.

It also protects your business investment and gives

your company a better chance for survival."

Nancy R. Lockwood

Introduction

Human resources have two roles in crisis management. First, people are a source of risk, e.g., shortage of employees, people doing sloppy work, an employee refusing to take on additional responsibility, or a key employee leaving two months after completion of a one-year training program. Second, people are important in handling risk, e.g., people using their ingenuity to solve unexpected problems, employees going the extra mile for the good of the organization, a key employee redesigning his / her own job to avoid unnecessary delays in getting work done, or an employee persuading a talented friend to apply for a position in the business.

Human resources include more than regular full-time employees. They include all management and labor personnel, family and non-family members, full-time and part-time people, and seasonal and year-round employees. Human resources play important roles in farm businesses of all sizes.

Crisis management has paid little attention to human resources and human resource calamities such as chronic illness, accidental death, or the impact of interpersonal relations on businesses and families. Including human resources in Crisis management reflects the fact that people are fundamental to accomplishing farm goals. Human resources affect most production, financial, and marketing decisions. People can help or get in the way of accomplishing what managers have planned.

Smaller family businesses do not escape the impact of people. In these businesses, as in larger businesses, people are a source of risk and are important to the business’ ultimate success or failure. Over-dependence on family members for management and labor negatively affects family business effectiveness and efficiency. A family may have highly talented people in one management or labor area but fall short in another area.

Hence, the role of HRM & HRD becomes significant here in crisis management as to it has to analyze people, task and organization to overcome turbulent times and reach excellence by taking resort to HR tools and techniques.

EFFECTS OF ANY CRISIS

For organizations with inadequate HR crisis plan in place, the effects of any crisis on the workforce could be catastrophic and might include:

Loss of key staff and knowledge
Absenteeism & high turnover
Underperforming staff with lowered morale and lack of motivation
Rocketing health benefits costs
HR-related legal concerns and costly litigations
Negative publicity for the organization and badly damaged reputation
Immediate emergency guidance, aid and assurance of safety
Clear information, leadership and reassurance
Understanding and ongoing psychological support during and after the crisis
Post-crisis support for rapid return to normalcy

DEFINING HR'S ROLE IN CRISIS MANAGEMENT

HR leaders have a strategic role and responsibility to ensure their organizations are aware of internal vulnerabilities on the human side to different types of crises and to ensure their crisis management plan covers all potential risks and concerns.

To be included as a strategic partner in crisis management, with other functions such as risk management and business continuity management, HR professionals have to understand and speak the "lingo" of crisis management.

HR has the opportunity to ascertain that the human capital is taken care of in all crisis management and business continuity plans. HR could offer real value protection or enhancement through deliverables such as crisis communication plans, crisis resource planning, safety and security training, talent management and succession planning.

In partnership with other organizational leaders, HR can develop an infrastructure for crisis management by motivating the company's human capital to support what need to be done. The support and commitment that an organization will need from its employees during and after a crisis can only be facilitated by HR professionals who understand the business and employees’ concerns.

Hence, HR professionals can influence the organizational culture and capabilities to provide effective leadership before, during and after a crisis.

PREPARING HUMAN CAPITAL FOR CRISIS

We are living in 21st Century. Modern technology has made our lives easier and enables us to expand our horizons and our business. But the crisis since ages has continued to inflict our business and hamper their growth. Today’s business environment requires a robust plan to deal with unexpected business. This is where the HR leader plays a strategic role in ensuring organizational stability through advance crisis preparation, leadership development and solid communication plans to ensure that crisis is successfully dealt with.

The crisis is healthy, from time to time. The crisis helps to stop the businesses, which are not value added. Thus, it paves the path to strengthen the backbone of an organization as organization can better do a SWOT analysis. The role of HR is vital to an organization during crisis. The basic Role is to understand the situation and the HRM Function has to provide the list of the policies and the procedures to be cancelled or discontinued. Although, the employees do not like it, but the company has to find out the ways and means to establish a healthy basis for the future growth.

The HRM Function has to be capable enough to understand the potential employees in the organization who can be assigned key roles. These key people will hold the organizational success path. In the crisis the HR Professionals can design, develop and implement a lot of new HRM Processes but with a clear vision and taking into organizational stability.

The HRM Management Team has to work strategically to prioritize the tasks and envision the goals to be implemented.

In developing a crisis management plan, HR directly creates value for the bottom line by minimizing potential damages and downtime.

Some recommended strategic and practical steps regarding crisis management planning:

Action Purpose set up in advance,
A Humanitarian Response Team
To ensure adequate attention to human needs in the wake of a disaster,
Establish a diagnostic of the human side vulnerability of your organization to crisis,
To identify and prepare specifically for crisis scenarios affecting employees,
Develop HR policies and procedures specifically related to crisis management,
To avoid panic ad hoc actions and to ensure effective delivery of crisis-related human services,
Provide training to address specifically, and only, the human side of what happens during a crisis,
To provide employees with an opportunity to understand and learn to cope with the effect of stress and traumatic events Conduct crisis simulation exercises,
To train and program employees to know what to do during a crisis ,
Establish an online resource with information about crisis management, employee benefits and other employee-related policies and programs linked to crisis.
To provide employees with 24-hours easily accessible information and communication means
Additionally, a number of other activities may be necessary such as to protect and backup HR records,
To identify and reserve emergency office space and to provide sufficient manpower for business recovery.

HR INITIATIVES DURING CRISIS

There some crises which can make a business crippled. They can be financial failure due to following bad management practices, fire at the workplace, cyber crime, product tampering, power blackouts etc. the list will be endless.

The most important decision to be taken during crisis is all about the initiatives to be taken. An organization can strengthen itself when the crisis ruins other companies around your organization.

The HR Initiatives should focus on the current situation and discover the potential for future progress strategically. The HR crisis Initiatives includes the following:

Finding the Key Employees (Skilled & unskilled)
Process management & Enhancing the Process Efficiency with minimum resources
Correct Information flow for Employees
Management Consulting

STRATEGIC HRM & HRM PRIORITIZATION

The right prioritization is the best strategy during crisis. The policy has to be based on Cost and Impact Analysis. It has to find out the functions which are to be cancelled, considered or to continue on the basis of checking the cost and impact. If cost is high and impact is low then the project or policy has to be cancelled and vice versa.

Strategic planning can help survive an organization during crisis. The steps to include are:

Trim down the number of employees
Increased productivity and efficiency
Minimizing the daily recurring expenses
Redesign of the compensation scheme & Cancellation of benefit schemes
Training and Development Programs cutting
Optimization of resources

CRISIS & EMPLOYEES

The employees are the most important assets of the organization. No organization can run with out the life blood that is Human Resource. During the time of crisis, the employees should feel secured and so that they can work with whole heartedness. The HRM function has to focus to work as a Change Agent.

The crisis brings rumors about the retrenchments, layoffs, cancellation of benefits etc. which grasp the organization quickly and thus the HR Function becomes significant. So, HR function has to understand and monitor the employees and their reactions. Once employees start taking about the crisis, it may so happen that the Key and talent employees may leave the organization.

Here, the HR function has to follow the following Strategy.

The employees feel the danger from the crisis, the top management has to inform all the employees honestly about the outlook for the organization and it has to provide them with the vision to follow.

AFFECTED HR PROCESSES BY THE CRISIS

The crisis casts its effect on all most all the areas but the major HR Processes affected are the following:

Recruitment - The job vacancies are cancelled and the HRM Function should come with a new recruitment strategy. Instead, of hiring people it can go for outsourcing and offshoring.
Training – The training programmes are to be cancelled as it is a quick cost cut. The training programmes will only focus on more specialized training session and in-house training courses can be introduced to be conducted by internal experts.
Compensation and Benefits – The department can be asked to bring a new compensation scheme, which will save the costs and motivate employees to be more proactive.
HR Front Office – The HR Front Office has to be present at clients to understand the requirement and better liaisoning.

CRISIS QUICK WINS STRATEGIES

The following are the crisis quick wins, which can help an organization in planning its goals taking cost and impact into consideration.

Stop and prioritize the recruitment process.
Review of functions & responsibilities (KRA)
Introduce job analysis and evaluation
The bonus / incentive schemes have to be reviewed.
The talents have to move around the organization to play their strategic role.
Define your long-term objectives.
Set short-term goals to reach your long-term objectives.
Breaking down your goals into bite-sized pieces is crucial.
Identify any obstacles & formulate strategy.
Assign the specific tasks to key people.

ROLE OF SHRM IN COMMUNICATION DURING CRISIS

Proper communication flow can help resolve half of the crisis and issues. The HRM Function should be responsible for the consistency, transparency and fairness of the crisis communication to employees. The flow of communication has to be clear, so that the employees will get the clear outlook of the future.

STRUCTURED SHRM COMMUNICATION

The SHRM Communication in crisis is about a clear description of the organization’s position on the market, the economic outlook for the next period and about the strategic products and services, which will be the leading the growth in the era after the recession. The employees should know about these topics as they can prepare themselves.

Three Tier HR Communication

TALENT MANAGEMENT IN CRISIS

Key talents are the people who create the value in an organization need to succeed.

The talents are the best assets in the crisis, as the organization needs to mobilize the entire top potential in the company to bring new and innovative solutions to fight with the crisis.

The talent management remains under a huge pressure in the crisis. Each manager tries to protect the resources in the unit and the HRM Function has to leverage the resources of the organization.

The talent management has to define a clear group of employees to be separated from their current units in the finding a new successful way to the future. The HRM Function has to have a mandate from the top management in the decision about the staffing of the special task force to define a new and bright future of the organization.

Research suggests that a company’s ‘stars’ are the first to be poached by competitors and are less likely to stay.

Thus, an Organisation has to employ the above strategy of acquiring talent, deploying the talent at the right place, developing and retaining them.

A Case: HR Strategies implemented in TSIL (tata Sponge Iron Ltd.) to overcome Crisis AND DOWNTURN scenario

TATA Sponge Iron Ltd, has implemented different HR strategies to overcome different crisis. The HR team has significantly worked on these strategies which have helped TATA Sponge a lot in overcoming the down turn.

* Revisited and redesigned the Performance Management System

· Identified of a process to deal with the low performer

· Acquisition of the talent from the competitors pocket with marginal hike in the salary (for core competent people)

· Redesign the organizational structure

* Freeze the hiring process

· Recruitment has been totally stopped other than the critical positions

· Merger of the two cross functional sub-functions

* Outsource of certain non-core functions / departments

· Through a manpower study some of the non-core functions have been identified to be outsourced

· Freeze the regularization / rationalization of the manpower

* From external training to internal training

· More focus is given for internal training through in-house mode.

· MDP programme is totally stopped

* Cost cutting initiatives

· Booking of overtime has totally stopped

· Drastically reduction of traveling expenses and guesthouse expenses

· Entertainment / expenditure on hospitality has been drastically reduced

* Thrust on multi-skilling and working together concept

· More focus has been given on multi-skilling

· Informal groups have been made among the Employees to focus on working together concept

* Kaizen / Total Productive Maintenance (TPM) Initiatives

The Kaizen method of continuous incremental improvements is introduced by elimination of waste and inefficiency at TATA Sponge.

The foundation of the Kaizen method consists of 5 founding elements:

1. Teamwork

2. Personal discipline

3. Improved morale

4. Quality circles

5. Suggestions for improvement

TPM brings maintenance into focus as a necessary and vitally important part of the business. It is no longer regarded as a non-profit activity. Down time for maintenance is scheduled as a part of the manufacturing day and, in some cases, as an integral part of the manufacturing process. The goal is to hold emergency and unscheduled maintenance to a minimum.

§ Breakdown maintenance

§ Preventive maintenance

§ Periodic maintenance

§ Corrective maintenance

§ Maintenance prevention

EFFECTS OF ANY CRISIS ON WORKFORCE

The challenge of identifying, preventing, and managing crisis events has become a significant concern for many organizations.

There is always a human side to a crisis as people might get hurt physically and/or psychologically. Unfortunately, one of the critical errors in crisis management planning is the strong tendency to focus attention and efforts on systems, operations, infrastructure and public relations, with people coming in last on the list of concerns and hence often ending up neglected.

This is a serious problem as organizations need to pay greater attention to the impact of critical events on employees, their families and the community as a whole for one simple reason: business recovery cannot occur without motivated employees.

For organizations with inadequate HR crisis plan in place, the effects of any crisis on the workforce could be catastrophic and might include:

Loss of key staff and knowledge
Absenteeism & high turnover
Underperforming staff with lowered morale and lack of motivation
Rocketing health benefits costs
HR-related legal concerns and costly litigations
Negative publicity for the organization and badly damaged reputation
Immediate emergency guidance, aid and assurance of safety
Clear information, leadership and reassurance
Understanding and ongoing psychological support during and after the crisis
Post-crisis support for rapid return to normalcy

SUCCESS STRATEGIES FOR CRISIS HITS

The HR called the backbone of any organization shoulders the responsibility of crafting an effective crisis management plan which incorporates emergency response, disaster recovery, communications with the internal and the external publics. Such a plan will help the organization to be better prepared and respond quickly to any unforeseen situation or disaster. For a business organization, whenever a crisis occurs the first and the foremost thing that should be the priority is the people. HR has the responsibility to look into every issue and suggest alternative solution. The HR should ensure that the crisis management plan is in place and will be implemented immediately when required. For this, the HR first looks out for the professional fit in this regard and then trains them.

There are many ways to create a strategy, but here are a few tried-and-proven principles that can be implemented:

Define long-term objectives. What exactly do you hope to achieve? Spell each one out on paper in concrete, concise terms. For the greatest chance of success, narrow your focus to one or two primary objectives. You can take on more or diversify later.

Set short-term goals to reach your long-term objectives. In order to reach your long-term objectives, you will need steppingstones along the way. These should be smaller goals that together will get you to the final destination of your long-term objectives. They should be detailed and specific, concrete and measurable. If a goal isn't something that you'll be able to tick off as done, if it can't be quantified, then it's not specific enough.

Breaking down your goals into bite-sized pieces is crucial. The simpler and easier your goals are to reach, the better, because you'll see more immediate progress. It's easy to overestimate and shoot too high when setting your goals. It's also wise to realize that reaching big objectives takes time. Having a number of smaller goals will help keep the motivation level high, because you'll see more tangible progress. And every time you tick off one of your smaller goals, you're that much closer to your long-term objective.

Identify any obstacles. Once you have determined your long-term objectives and your short-term goals, you should take a look at any obstacles, or cons‚ or things that might stand in the way of achieving the results you're after. If you are alerted to potential problems, you can head them off by proactively praying for potential solutions.

Formulate a strategy. Once you have determined your long-term objectives and the short-term goals, you need a plan that includes specific tasks that will help you reach each of your short-term goals. Your plan must be realistic. A lofty plan may look impressive, but if it's too complicated or difficult to implement, it will never get off the ground and therefore be ineffective.

Assign the specific tasks that will be involved. Determine who will be responsible for each step, when they should have it done by, and if it's possible to know at this stage, how it should be done. Accountability is vital to success, as otherwise there will be no follow-through and no progress.

CONCLUSION

Thus the HR function should be a strategic tool and must have some uniqueness to deal with different situations. It should reflect seriousness of HR team to help bottom-line of the organization without being any source of embarrassment for the top management.

HRM is no more confined to top management rather has become the routine job of every Line Manager today. And, during crisis, recession or turbulent period the role and function of HR become significant. Every HR Personnel has to keep him/her strategic while dealing with situations. Today HRM must enable the HR personnel to play the following role for organizational survival and success.

o Strategist Role

o Innovator

o Business Partner

o Change Manager

In contemporary times business environment requires a robust, enterprise-wide plan to deal with unexpected crises. Company reputation and brand, as well as the trust and loyalty of stakeholders, are all critical factors in the background of crisis management. At the helm, HR leaders play a strategic role in organizational sustainability to contribute tangible deliverables through advance preparation, including safety and security initiatives, leadership development, talent management and solid communication plans to support crisis management.

Managers’ paradigms, understanding of human resource management and human resource skills determine the success they will have with people. Like the rest of risk management, blaming others for management shortcomings neither solves problems nor provides escape from the problems. The good news is that managers can make human resource management one of their strengths. The result will be better crisis & risk management, more effective management, and greater satisfaction from working with people.

For more details visit: www.womsindia.com

STRATEGIC ROLE OF HR IN CRISIS MANAGEMENT FOR ORGANISATIONAL EXCELLENCE

Friday, February 10, 2012