Impact of Economic Recession

Question: Discuss about theImpact of Economic Recession. Answer: Step 1 Provide a Brief Summary of the Article Economic instability in the GCC market has made many organizations result to reducing the number of their workforce. The economic recession has however provided an opportunity for HR departments to review their strategies. Even with the slow stability being witnessed, organizations are not willing to focus on their workforce with majority focusing on their budget, efficiency and making public their organizations. In order to counter the effect of this recession and slow stabilization of prices, Focus has been shifted to areas that had been previously ignored before such as strengthening of certain capabilities and improving support functions. Several other sectors have also been affected by the economic crisis leading to a drop in Gross domestic product and recruitment across all sectors. It has also led to drop in wages in different sectors. Focus has been shifted to strategies to minimize unemployment levels by both organizations and government which has translated to increase in demand for consultancy services Step 2 Identify the challenges your business will face. Scan both internal and external environment Organization Culture Organization culture is likely to be affected .Employees are likely to fail to adhere to certain organizational values and practices as a result of economic downturn. Technological Innovation Innovations require sufficient finances. In the wake of economic downturn organizations are likely to focus on cutting expenses so technological innovations are likely to be withdrawn. This can affect organizations ability to compete with other firms (Wilkinson, Johnstone Edward, 2016). Step 3 Evaluate the Effects these Challenges will have on your HR Strategies. Retrenchment Strategies Because of the challenges brought about by the economic recession affecting GCC countries, most companies will be forced to implement a retrenchment strategy in order to counter the economic recession. This is the strategy used by my most organizations in times of economic recession. By implementing this strategy companies will be seeking to cut on operational costs by reducing the number of salaried employees, cutting on expenses on employee training and finally they can be able to achieve this by closing some of their branches in order to save on overall costs amid this economic crisis (Noe, 2016). Product Innovation and Market Development Strategies These strategies are meant to generate more revenue for organizations by widening their operation to new markets, and increasing competitiveness of their products by making them better than those provided by consumers. For market development and product innovation organizations might find it necessary to hire technical expertise from outside the organization or provide training for the existing employees for them to be able to carry out this mandate effectively. Hiring and training of employees require finances which might not be available during recession. For this reason organizations might be forced to suspend their innovation and market development strategies (Phillips Gully, 2013). Investment Strategies There is a tendency of reduction in the amount of investments especially at times when companies are faced with financial crisis. Because of the recession that has been experienced in this region, the nature and amount of investment will be quite minimal. Companies invest when there is stability in their amount of revenues or when their expenditure is lower than their amount of revenue earned (Price, 2011). However in the face of economic crisis companies are likely to have nothing left over for investing. With the level of economic downturn among GCC countries, companies will be forced to rethink about their investment decisions because there will be no adequate resources to implement such decisions at such a time. Step 4 Design HR Strategies for each Challenge Identifies in Step 2. Building a Strong Cultural Foundation Organizations can design structures that lay much emphasis on common values and sets of behaviors for all employees at all times. By focusing on this, organizations can be able to make their employees show tolerance and perseverance in such times as when their organization is hit by financial crisis (Wilkinson, Johnstone Edward, 2016). Employee Training and Managerial Leadership Organization should ensure that its employees are effectively trained by the time they join the organization. Besides this, they should also ensure that there is continuous training for employees to deal with such crises when they occur. Leadership is also quite important. A manager should also focus on leading employees out the recession. If he/she leads, the rest will follow. Technological Innovations Organizations should always strive to ensure that they maintain use of best technologies at all times so that at such times when it is not possible to innovate due to financial crisis their operations cannot be affected and they can be able to compete favorably with other global organizations. References Wilkinson, A., Johnstone, S., Edward Elgar Publishing. (2016). Encyclopedia of human resource management. Cheltenham: Edward Elgar Pub. Ltd. Phillips, J. M., Gully, S. M. (2013). Human resource management. Mason, Ohio: South-Western Centage Learning. Price, A. (2011). Human resource management. Andover: Cengage Learning EMEA. Noe, R. A. (2016). Fundamentals of human resource management.