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Topic : Best Practices by HR
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Created by : Nikhil Jain, Senior Consultant, Hewitt Associates  | 04 14 2009 07:40:22 +0000
Industry : Human Resources (HR) ConsultingFunctional Area : Business Policy(Strategy & Execution)
Activity:  1633 views;  last activity : 07 06 2010 20:18:09 +0000

This is the most recent discussions regarding impact of recession on HR policies. Skilled employees who are high performers and are adding more value to the company but at the same time they are being paid more. The reality now is that most organizations have some type of "cross-subsidization" of high performers paying the price for low performers who are allowed to stay. Is it right?

 
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It is not about retaining or laying off, It is about transforming according to the situation so that the company can make profits. It is critically important that the organization understand their true talent "inventory"and act accordingly. The company should retain employees who are adding value to the company more than the cost incurred by the company to retain them. If this is true for skilled employees then they should be retained.


By Nikhil Jain, Senior Consultant, Hewitt Associates  04 14 2009 07:40:22 +0000
 
Top Argument
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Hello everyone,

I have to agree with Jyoti Rao to some extent but still I will say organizations are lacking foresight with this kind of strategy that sounds attractive, warm, and wonderful at first sight but the reality is those organizations will dramatically increase their risk. I don't think that its a right strategy bcoz people will be demoralized more due to the fickle nature of organizations & in turn decreases employee loyalty among everyone. The harsh reality is that organizations are laying off some of their best talent based upon outdated criteria such as length of service, human bias, and favoritism. I believe still, many organizations are almost completely clueless about what their employee performance actually is. First they need to formulate proper human capital management mechanism & evaluate each employee during poor and good economic times on cost - value ratio....

Based on that Organizations should take decision....


By Gargi Sinha, Senior Consultant, Hewitt Associates  04 15 2009 05:58:52 +0000
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Absolutely. So many companies, especially the large ones, have such a stupid policies. When those companies are in trouble, they have the policy as Last In, First Out. And they apply that policy. Those idiots loose even more money then before, because many useful, profitable employees are fired, while the old, useless employees sitting on their behinds doing absolutely nothing.


By Wim Vincken, Director, Zangville  | 03 25 2010 18:54:53 +0000
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Yes Mr.Shyam is absolutely right.If the company don't value their most important asset i.e. employees...then I don't think so the comapny will benefit in any way.Employees are the internal customers of a company and if they are not satisfied or treated well then a company can never serve their external customers satisfactorily.......so give importance to your employees.especially your talented workers and make them feel at home for the growth of your company.


By Ramdas Pawar, Sales/BD Manager, Flex  | 05 07 2009 06:21:26 +0000
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Its not about who are skilled employees and who are not. I believe that very few management knows who are the one in a team giving more value than they are paid... So instead of trying to retain skilled employees, try retaining everyone. Its they who have added value for your organisation...treat them as assets and try cutting cost in different way...


By Amit Madhav, Senior Consultant, GKC  | 04 22 2009 12:35:50 +0000
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Yes. .If you believe there will be an end to recession, employees should be retained.

Ultimately the organization will be benefited.


By Shaju George, Facilities/Construction Manager, IBS Software Services (P) Ltd  | 04 15 2009 12:23:34 +0000
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The organization must feel that people are its Assets. The companies should treat their employees as Assets rather than Costs /Expenses. Because, without them, we can not suvive as well.

 

Meanwhile kindly register yourself at www.partimejobz.com   and stay away from being worried about lay offs and recession!

I will show you an opportunity to have a constant cashflow every single week. PLs dont be dependant on one single source of income like your job and single salary !! Be open minded and look out for opportunities!! Call me: Shyam @ 99028 73988 to discuss more regarding this


By Shyam , Assistant Manager, Magna Infotech  | 04 15 2009 11:06:26 +0000
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Skilled employees are valuble asset of a company and also they are part of that. If a company need to survibe even after the recession they should be retained till the end of their service.


By Hem Chandra Kukreti, STA (HR), Bharat Electronics Ltd  | 04 15 2009 10:25:41 +0000
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Actually, there seems to be a mix of the two options.

What is the basis of assessing an individual's performance? What is the basis of retention or retrenchment/ termination? Honestly, I do not think many of us are clear on these aspects. In many of the HR forums I have seen very senior designations asking for basic formats, assistance. This is possibly a reflection of retrenchment/ termination without merits.

Multi-tasking is making its demand now more than ever before. But can we multi-task without completing our basic task? Reminds me of a comment I read about someone - "He has the wisdom of a youth and the energy of an elderly". We are all aware of how it should read. When the statement is clear, the essential requirements of an incumbent also become clear.

Lets us also analyse the type of job being performed. How many managers can work as an office boy? How many of us can actually entertain the police constable or the labour officer? When we don't understand the nuances of this work, how are we in a position to assess the performance of those involved in this task?

Coming to the bottom line of a company - to make profits (why else would it be in business)? Profits were soaring when the economy was booming. High salaries, perks, etc etc. Now when there is a slowdown, what logical reason is there for the employees not to take a dip in their salaries, perks, etc, etc? The company should also realise that profits will no longer be akin to those made a few years ago, unless there is an increase in the client base. After all, we were assuming that money is to be made when people pay off the mortages (which is not likely to happen at all), weren't we? But then everything cannot be measured in monetary terms. What about that one person who is a problem solver and motivator for almost all employees. Onlt his/her presence makes employees comfortable. How do you assess his/her value in monetary terms?

Thus, before we retrench/ terminate there is a need to weigh a whole lot of issues and options.      

 


By Ajay Chaudhari, Chief Executive Officer, Adroit Consultants  | 04 15 2009 09:14:02 +0000
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I guess it makes sense to hold on to your core team and going down the level the key support grp (core team) for the core tam member and so on.

You can count on the fact that they would repay you by seeing your company thru the tough times. Maybe not each one of them but atleast 70-80% of these people.

They might not be coming cheap , and if they are really part of the core group they might be willing to take salary cuts and still stick with you. 

Chances are the payoffs will be higher from a team which gets the message that they are valued and are key to the Organisation. Offcourse there is the issue of morale which has to be handled efficiantly and clear signals given regarding the direction the company is taking.

There really isnt any logic in holding on to people with questionable loyalty and limited contribution to the firm just because they come cheap. 

Ideal/humanitarian situation would be to not let go of any one and probably go for salary cuts. That may not solve all the problem. If survival itself is at stake then it makes sense to hold on to the high rankers on parameters like performance, future contribution potential( quite subjective) etc and let go the rest.

 

 

 

 


By Prakash Francis, Director, Enterprise Hiring Solutions  | 04 15 2009 07:55:12 +0000
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Retention is anytime a better option than a layoff. The organisation needs to identify retainable people and try to give them inputs to further their skillsets in times of slowdown. These employees are the core of the functioning of the organisation and this also gives out messges loud and clear to all those whose performances are below par. This however, has to be done in a very transparent manner to avoid misunderstandings between employees.

This downturn is going to make organisations do a rethink on ther manpower strategies. During the last boom that lasted for more than 6 years, most employers were hiring people in huge numbers, without understandng whether or not there would be enough work for them to do. This has been true of sunshine industries like telecom, retail and banking, where expectations of growth were more or less unrealistic without taking into account the Indian consumer's psyche. Thus, these are the industries that have seen huge layoffs or a freeze on recruitments for more than 6 months now.


By Inderpal Singh, Director - Academics and Admissions, MILE - Management Institute for Leadership and Excellence  | 04 15 2009 06:40:47 +0000
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This is a great question.  The answer to this question is complicated, yet simple - high performers who are adding more value than they cost should be retained.  Lower performers should be laid off as quickly as possible to preserve resources.  This is not just a strategy to be used during economic challenges. 

The reality is most organizations have some type of "cross-subsidization" of high performers paying the price for low performers who are allowed to stay. 


By Jothi Rao S, Mobility Services, Calsoft Labs India Pvt Ltd  | 04 15 2009 04:31:49 +0000
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I do agree with Nikhil's statement... Retaining skilled employees is seen as the top priority in helping businesses survive the downturn, according to a survey released by the institute.
The low-skilled workers who are unfortunate to find themselves being retrenched will have to look at investing in themselves and acquiring new skills.


By Kalaivani R, Technical Recruiter, CEI India Pvt Ltd  | 04 14 2009 09:16:57 +0000
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Well, I want to ask all those who have said YES.

Do organization have any idea who are the one in a team adding more value than the cost ?? I guess its very less. The organization doesn't know much abt who are the ones adding value.

I agree to Gargi Sinha that most of the organization are laying off some of their best talents. And they have evaluate employee during good and bad economic conditions. Who knows a employee doing really well might just fail in bad economic condition and vice versa...


By Dayanand Deshpande, Senior Consultant, Ernst & Young  | 04 21 2009 07:11:17 +0000
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Perfectly said..Gargi Sinha


By Fazalur Rahman, ManPower Development Specialist (Leadership & Talent Development)  | 04 15 2009 06:39:04 +0000
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