Professional Documents
Culture Documents
BY
SAKSHAM GAUR (A-19)
BBA + MBA (Dual)
Guide- Ms. ROLI RAGHUWANSHI
Date- 26th july 2010
ACKNOWLEDGEMENTS
I would like to thank some very important people in this segment without
whom this report would not have been possible. The first and fouremost
in this list are all my teachers who are teaching me in Amity School of
Business, all the knowledge which I have gained till now is because of
them, their contribution cannot be overlooked in the formation of this
project report. Secondly I would like to thank my faculty guide Ms. Roli
Raghuvanshi, who cleared my doubts, guided me thoroughly throughout
my research, corrected my mistakes when I committed them. Thank u
mam. I would also like to thank my uncle Mr. D.K. Mishra -managing
director of K.P.S. (a software company in rajasthan). His efforts in guiding
me with my research were enormous.
Abstract:
Once in a lighter vein, the Management Guru Tom Peter joked, "if you
want to insult an HR manager, ask him whether HR stands for human
remains in the organization or not." Perhaps, this off- bit remark is one of
the great challenges faced by HR managers today in the backdrop of
growing uncertainties, regular and cyclical fluctuations in demand for
organizational products or services. As the world economy has been, by
and large, plagued by global economic meltdown; indeed, this creates
from a broad perspective challenges and opportunities for HR
professionals.
CHAPTER 1- BACKGROUND
CONCLUSION
REFERENCES
INTRODUCTION
The world has suddenly plummeted into a deep economic crisis (called
Global Meltdown or Financial Tsunami), the worst ever since the 1930's. It
has almost taken all the countries across the globe into its grip. Almost all
the sectors of economy with varying degrees have caught business by
surprise during the current global downturn with so much swiftness that
every day has become a question of survival. Organizations are grappling
with low demand of their products, manufacturing plants are kept idling,
export markets are dying, job markets are being annihilated everyday
and the symptoms of slowdown are getting starker and starker with every
passing day of downturn phenomena.
RESEARCH METHODOLOGY
1
Chapter 1
BACKGROUND
Definition:
More than half of the world's economy has shrunken and among them
USA- the citadel of capitalism and free market has suffered the worst. In
the first ten months of 2008, there have been 1.2 million job losses in the
USA and the economy has suffered heavily due to financial crisis resulting
in global credit squeeze. "There is a real risk that millions will be thrown
back into poverty." (Dominique Strauss- Khan, MD, IMF)
Recession in India:
The immediate challenge is how to bail out Indian Economy from further
slips into a deep and long recession. Many stimulus packages are being
announced by multicultural organizations to salvage economic slowdown,
but, how far it will save us, the time will speak. "We must accept that we
are part and parcel of Global Economy. The global boom drove up our
growth to 9% and the global slump has lowered it to 5%. We must
abandon the illusion that we can somehow grow fast again while the rest
of the world stagnates. We must learn to live with global downswings and
rid out the storm. We can not end the storm on our own; we must
patiently wait for it to subside. This crisis was not caused by us and can
not be solved by us. Our role is to rid out the storm.
Recession has brought an era of gloom and doom for HR and in the
present scenario it is buzzing with terms such as lay-off, cost cutting,
right-sizing and cash conservation and presently these are the defining
terms.
"People are the companies' greatest asset. It does not make any
difference whether the product is cars or cosmetics" (Mary Kay Ash,
Owner of Mary Kay Cosmetics.). HR is treated with much delicacy and
care. They are more in demand in job market and the destinies of the
companies are very much dependant on these people than any other
resources. Over and above, there is also dearth of quality personnel in the
job market. "The Human Resource Management sector is facing a huge
talent crunch with only a handful of good human resource professionals
being fashioned every year. There is a dire need to fill the gaps in the
industries.12.8 million jobs are being generated every year during the
11th Five Year Plan of which the global benchmark depicts four HR
professionals per 1000 employees. India needs 50,000 HR professionals
every year". (Indian Management, Dec 2008)
They were lured with enviable pay packages and other benefits such as
opening of cafeterias, gyms and even crèches to retain them and
discourage attrition.
Chapter 2
The Present Scenario
The Era of Pink Slip:
Companies, world over, are frenzied with the object of cost saving/ cost
conserving/ cost cutting by any means. The present economic downturn
has witnessed various HR practices across global companies. "Employees
in many selected industries have been experiencing salary cut; incentives
and spending on corporate travel and conferences have been lowered;
perks likes lunch vouches mobile phone allowances, stock options, fringe
benefits, Diwali and New Year gifts budgets have been slashed by 60%."
(Business India, Feb 8, 09.)
Salary Cut:
Salaries have been slashed. Highly paid employees have been asked to
agree on a voluntary cut as in the cases of Motorola and Jet Airways.
Bonuses are significantly frozen. Even 15 out of 20 AIG companies have
frozen compensation levels and increment. There has been the return on
variable pay which the financial service sector has been increasingly
using. Jet Airways has slashed salaries of its top key executives by 25%.
Pilots and engineers earning 10 lakhs per month would have to
experience a pay cut of 20% where as chief executive and operational
heads would experience 25 % pay cut. The company has also decided to
freeze all sorts of allowances to trainee pilots, though the pilots who come
below Rs.75, 000 per month salary bracket have been left out.
Production Cut:
Budgetary Cut:
Companies across the globe have also tightened their belt by resorting to
budgetary cuts. Reliance Industries Ltd. has launched "Mission
Kurukshetra" to optimize costs across all its major industrial operations.
Infosys, Wipro Technology and TCS Ltd. have also economized through
the reduction of power consumption, cutting travel and postponement of
capital expenditure. NDTV India has also cut major rationalization costs.
In many MNCs, international trips- be it short or long term- have been
clamped. To overcome the on going economic turbulence, Airport
Authority of India has restricted the officers on an austerity measure not
to go on foreign tours more than four times in a year.
Job Cut:
All these cut being practiced across companies of the world have its
percussion on HRM. Relatively slow economic activities, threats of job cuts
and salary freezes have shifted the balance of power at the workplace
back to employers. And a much-needed rewriting of workplace practices is
under way at India Inc. The balance of power in the workplace has surely
shifted away from employees back to the employers. And it is not just the
now seemingly 'unnecessary' HR excesses of the boom years — recall 'no-
shows', 'talent crunch', 'counter offers', 'family holidays', 'dating bonuses'
and the like are being consigned to the dustbins even at relatively
financial healthy companies. Job cut is the most difficult and perhaps the
most critical but inevitable among the frugality measures taken by
companies across the world, particularly in India.
The global financial meltdown has taken its toll on the job markets across
the globe.
Organizations Considering Lay-Off, Asia Pacific & US:
General Motors, the US car maker has asked 1600 of its US employees to
leave by 1 May 2009. Fiat, the Italian car maker said it cut 4,600 jobs at
its US subsidiary CNH, a construction equipment maker. As per ILO, 23
millions of people are expected to loose their jobs in Asia. (Business
World- 4 May.2009) At every level from the unskilled contract workers to
architect, jobs are being cut." (Kumar Gera, Chairman Confederation of
Real Estate and Developers Association of India.).
Bharati AXA Life plans to add another 4000 employees to its pay- roll of
9000 employees. "We expect, Indian growth story to continue and this is
the right time to invest in manpower." (Moon B. Shin, MD, LG Electronics)
BPO sector will also witness addition of some new employees in the areas
of finance and accounting profession with a year or a few more years of
experience and also there is spurt of legal processing outsourcing.
Recession has not clouded hiring plan of TCS despite its rigorous job cuts.
It has made 24,789 technical campus offers for 2009-10, a 13% increase
over its intake of 22,000 for the current fiscal. Its closest rival, Infosys
Technologies, will be making around 20,000 offers, an 18% increase.
However, No.3 Wipro is lowering the number of campus hires to 8,000
from 14,000.
Survival Tools:
Organizational Tool:
* Lay-off is not the only alternative to manage surplus workforce during
economic slowdown. Examine other ways of cost cutting like freezing
benefits etc. Lay-off may be the last resort.
* It is better to look for outplacement opportunity for the surplus
employees to maintain positive image of the company in the job market.
* Assure the laid-off employees that when economy shows the sign of
upturn, first preference will be given to them
* Be humane and counsel the surcharged laid-off employees and let them
all be aware of the critical situation and compromise on certain economic
aspects.
* Redirect Your Employees to Other Departments (Job Rotation)
* Keep communication open between management and employees as
both are in tough times.
* Render the feeling that it is better to swim and sink together- all cuts
should start from the top to the bottom: "Examples are better than
percept"
* Introduce flexi-time in the work place, encourage employees working
from remote locations: "Results matter more than physical presence"
* Help out of the way- to keep them engaged in Training , EDP, sabbatical
education, may be full-time MBA, short time programs or On-line courses
* Have lots of fun at the workplace to relax the mood as the current
slowdown has induced a great amount of anxiety and fear among the
employees: "Humor is the greatest stress buster." It is time to bond
better and develop camaraderie among people and spread the words of
enthusiasm and happiness and suppress thoughts of pessimism and
sorrows.
* Reinvent policies so that employees feel wanted and that will improve
employees loyalty
Tools for Employees
* Have a positive frame of mind, make a self assessment and introspect:
"Am I update and do I have upgraded my employability skill?"
* Think what value "I can add to the task/ organization?"
* Acquire new skills, be multi skilled and have cross functional exposure.
* A great time to reinvent self, have great time with family at movie
theatre, restaurant, shopping malls and exhibition.
* Network tactfully, and establish valuable rapport.
* Do physical exercise, practice Yoga and Pranayam.
* Spend more time with positive people and read inspiring books on
personality development.
Chapter 3
Basic Outline Of The Problem
Joblessness in India:
There are some companies that have succeeded in taking off at a time
when industrial growth is slowing down, exports are coming crashing
down, investments are decelerating and consumption is moderating.
Corporate like Bharti Airtel, Larsen and Toubro and Hero Honda are all
leaders in their sectors. They are also the only companies in their sectors
that have been notching smart growth even as their rival flounders.
2. BHARTI AIRTEL
Business: Mobile Operator
Stratiges adopted to Fight Downturn
l Expanding beyond mobility-long distance
connectivity, besides DTH and IPTV
l Growing presence in rural India driving
subscriber growth
l Well thought-out network expansion plan
A low debt – equity Ratio
3. SUN PHARMA
Business: Drugs
Stratiges adopted to Fight Downturn
l Focusing on the Indian branded prescription
segment as well as on export of branded drugs
l Carved a niche in US generics
l Spend of 8-9 percent of sales on R&D is paying
rich dividends
Acquiring loss-making drug companies and
turning them around
4. SIMPLEX INFRASTRUCTURE
Business: Infrastructure and Construction
Stratiges adopted to Fight Downturn
l Diversifications wit in construction have helped
it de-risk
l Has moved into new geographies like West Asia
l Has stayed away from higher risk BOT projects
Own machines and equipments make for better
profit margins
5. ALL CARGO
Business: Cargo & Container handling
Stratiges adopted to Fight Downturn
l Minimal exposure to the US
l Low debt & healthy cash pile helps it in buyouts
l Branches into equipment leasing
Restructured international acquisition to
Advantage
6. AIA ENGINEERING
Business: High tech niche engineering segment &
make parts for coal grinding used in power plants,
cement & mining industry
Stratiges adopted to Fight Downturn
l High entry barrier in the area it operates
l Its products for replacement market are
recession-proof
l Diversified customer base
Low debts on the books
7. HERO HONDA
Business: Two-wheeler manufacturing
Stratiges adopted to Fight Downturn
l Building a wide product range across segments
l Differentiated brand-building campaigns
l Launching new models
Focus on driving sales in rural India
Cost Cutting:
There are indeed many ways of cutting costs than shedding labour. For
example, some of the reasons for slow profit growth include the rise in
production costs, a heavier interest payment burden and lower price
realization in global commodities and export markets. With lower cost of
power, transportation and finance and with a rise in world commodity
prices, profit margins of most companies, especially those engaged in
exports would improve.
Salary Cutting:
When companies are trying to cut costs, the biggest temptation is to lay
off workers. Finance Minister Mr. Pranab Mukherjee has advised
industrialists not to retrench workers but to go for salary cuts. Many
European workers willingly accept lower wages in lieu of a big severance
pay when they are laid off. Infosys has asked its staff to take a years’
leave from their jobs in order to work for an NGO. During this time, they
will earn half their salary, thereby saving the company some money. Jet
Airways has started laying off its staff and has in particular, retrenched its
non-Indian staff. Besides a good number of senior management personnel
are in for a huge reduction in salary.
Price Cutting:
The Former Finance Minister Mr. P. Chidambram advised companies
(while giving away the Annual National Tourism Awards) to cut price to
weather the downturn. He said, “Businessmen should not be hesitant in
cutting prices. It is more important to remain in business and retain
clientele. Cutting price is also better than losing loyal employees and
business. Cut prices and the results would be visible.”
Tax Cutting:
Since one of the main reasons behind the decline in the corporate sector’s
profit is slack consumerdemand. The Finance Minister announced small
cuts (2 per cent) in indirect taxes like the service tax and excise duties
will have atleast a psychological impact on peoples’ spending propensities,
specially when the tax cut is passed on to consumers by producers. It
may help in reviving up demand, but the tax cut is too small to make a
big difference to sagging sectors. The Finance Minister has obviously been
constrained by the bloated fiscal deficit, which, though it is around 6 per
cent, adds up to 13 per cent when the states’ deficits are also added. The
new tax cuts will add Rs. 30,000 crore to the government’s expenditures.
It is indeed going to be tough to boost domestic demand when job cuts
have already started. People hold on to their money and postpone buying
unless there are big bargains in sight.
Ups and downs are the basic nature of a country's economy as well as
organization. It must be remembered that there is always light at the end
of the tunnel. Even though the road towards the tunnel may not be
devoid of roadblocks, nevertheless, a little bit of optimism can make all
the difference. Time will come when black cloud hovering over Indian
Economy will be cleared and there will be sun shine every where, that is
perhaps what P.B Shelly in his master piece, Ode to West Wind, meant
when he said: "If winter comes, can spring be far behind?" No matter how
big the problem is, no problem is insurmountable.
If you are the one who has been laid-off then you must do the following:
1) Time with family. Remember when you were working and working
for 12-15 hours a day, how difficult it was for you to find some time for
your family. Now is your time to be with your family. Spend some time
with them. Strengthen your bond with them.
2) Improve your skills and personality. No one is perfect and there is
a scope for improvement in everyone of us. Use this time to work on your
areas of improvement and weaknesses. Sharpen your skills.
3) Work on your professional and personal network. Networking is
very important for the growth of an individual. Use this time to build and
strengthen your professional and personal network, so that whenever the
market situation improves, you get the benefit of it.
4) Heading back to schools, colleges and institutes. This is also a
good time for you to share your knowledge and experiences with new
generation and to pass on your intellectual legacy to them. Get associated
with some colleges and institutes to do so. There is a possibility that you
might get paid for it, which in turn might give you the required financial
support.
These are some of the ways you can spend your time during this phase.
Good time and bad time will always be there but when we pass through
the good phase of our life we forget to prepare for the bad time. We get
carried away. We do not plan for our future and difficult times lying ahead
and crisis and adversities are part and parcel of our life that we cannot
run-away from. Recession of one such crisis and we need to prepare our
selves for all such adversities. We can do it in a following way:
1) Save generously and invest wisely. In such crisis, nothing but only
your savings in the bank can save you. More the savings that you might
have lesser will be your pain.
It is also important for you to invest wisely. The higher the risk the higher
will be the gain and more higher will be the loss. Hence, one needs to
think about it.
3) Keep updating your existing skills all the time and acquiring new skills.
Don’t take anything for guaranteed. Learn and relearn. Keep the sword of
your skills sharpen, all the time. Learn new things and that can help in
your professional growth.
Now, these are few things that might help you to overcome any type of
economic recession or crisis in your life.
REFERENCES
1. Rishi Joshi, “Employee’s market, still”, Business Today, May 4 2008, (P 78.)
2. Saumya Bhattacharya, “Job Loss Are you Next?” , Business Today, March 8, 2008,
(Pp 42 – 48.)
3. Cover story : “Atlas shivered”, Outlook, 27 Oct, 2008, pp 44-55
4. Ashish kumar sen, “Severence packaged”, Outlook, 27 Oct, 2008, P 56.
5. Satyanarayana.G and Y.Kesava Reddy, “Global financial crisis and Indian economy”,
Southern economist, July 15, 2009, pp 31 – 32.
6. Anitha Selvaraj, “Global financial crisis: Its impact on Indian economy”, Southern
economist, May 15, 2009 pp 5- 8.
7. Mahalingam T.V., “Managing the slow down: IT services, people power”, Business
Today Oct 5 2008, p 68.
8. Venkitaraman.S, “Global financial crisis: Reflections on its impact in India”, The
Hindu Online edition, Oct 18, 2008
9. Mohit Sharma, “Recession takes 2 lives as job market shrinks”, Indian
express.com, Feb 17, 2009.
10. Mansi goyal, “BPO firms hit by US financial crisis”, The Times of India, Oct 1, 2008.
11. Sreekala.G and Sai Deepika Amirapu, “IT Companies raise referral bonus amid
crisis”, The Economic times, Dec16, 2008.
12. Vinay pandey, “Hurt labour intensive sectors pull down sentiment as well”, The
Economic times, Dec 5, 2008
13. Chandrasekar C.P and Jayati ghosh, “India and global financial crisis”, The Business
line, Oct 21, 2008.
14. Website: www.wikipediaencyclopedia.com