At the recently concluded 12th National Conference in Chennai of the National HRD Network in Chennai, more than 500 human resource professionals from across the country attended.
Aquil Busrai, national president of NHRDN, is the executive director, human resources, IBM India Private Ltd, too was present. In an interview with rediff.com, he talks about the global economic situation and its impact on India. Read on. . .
During troubled times like these, what is the role of HR in a company?
In times of growth, the role of HR is very easy; it hires more people, inducts them and trains them. When times are bad, business is sluggish and when downsizing is needed, HR has to play a bigger role. You cannot be a fair-weather friend for the organisation then.
HR's responsibilities when things are down are twofold: one for the organisation, and another for the employees.
When did you start getting the signals that a global recession is in the offing?
I would say recession has not yet happened in India. Financial sector is under pressure and it has brought about a wave of liquidity.
The global economic slowdown has had an impact on us and it has created a dilemma on which way the Indian industry would go. If you look at the Indian market, the GDP growth rate is still projected at 6.5-7.5 per cent. In absolute terms, you would have celebrated this. But sentiment shows a negative picture.
If you look at the retail industry, it is still growing at 40 per cent. Manufacturing is growing at 15 per cent. Infrastructure is growing at 20-25 per cent. Therefore, where is the sluggishness, you wonder.At this point, the market has become very cautious. Liquidity has gone down. Times are bad from the liquidity point of view.
Overall, the industry growth in India is 10-12 per cent. Global recession has created an apprehension whether business will continue to boom in India or we shall go the way the West is going.
You mean the real impact of global recession has not reached India?
In my opinion, you will have to watch this quarter and the next quarter. First quarter of 2009 will be very crucial for all of us. Then, we will know whether we also will go down.
How does a company prepare for recession and its effects?
Any organisation needs to look at whether there is a demand for their goods and services. If you are in a business where your demand is decided by the Western market, you will be impacted.
If your market is local, you don't have to worry. But market reacts on sentiment and perception. If you look at the behavioural pattern of the youngsters, there is a marked difference now. They have become cautious in spending.Last month alone, sale of iPods and cellphones has gone down by 6 per cent. It is purely based on (negative) sentiment.
We hear about lay- offs in companies almost every day. How does the HR department of a company decide on lay-offs?
In any organisation where business goes down, you cannot keep overheads fixed (I am not talking about the cyclical downtrend).
If the order book is not filling, you have to reduce the headcount. You must have read that some organisations are reducing the salaries of senior executives. Five years ago, you could not do that in India.
What do you resort to first; cut salaries, or lay off people?
In the first place, you don't resort to reduce the headcount or cut salaries. You try to see whether you can re-deploy the same number of people for different types of jobs.
If it comes to such a situation where you cannot continue to do so, then, you look at the timeframe required to tide over the difficult period.If the time frame is long, you have to cut costs by reducing the numbers. If the time frame is only 2-3 quarters, you can resort to cutting salaries.
How do you describe the present economic situation?
I think it varies from industry to industry. For example, the airline industry is in a desperate situation. Each situation requires you to react differently.
How can the HR department prepare the employees for tough days?
A good HR person should first understand what the reality of business is.
Unfortunately, many HR personnel do not understand business; they only understand statistics.
If you look at any company, not many are cutting manpower cost, but they are slashing non-essential expenditure (like travel).One should touch the manpower cost at a much later stage. There is a lot of sentiment involved in cutting manpower cost. For, in this case, one deals with human beings, not furniture.
While one needs a sharp mind in dealing with the business, one needs a soft heart to deal with people. That is how HR people should behave.
Image: Aquil Busrai, national president of National HRD Network. | Photograph: Sreeram Selvaraj