Impact of recession on human resource management and working conditions

A new study based on a survey, focus groups and six case studies by researchers at University College Dublin and Queens University Belfast examines the impact of Ireland’s deep recession on human resource management practice and working conditions. Companies have generally responded to the crisis by making their own selection from a range of possible policies, combining ‘hard’ and ‘soft’ human resources (HR) policies, and adopting ‘path dependent’ HR programmes.

The new Irish research study (836Kb PDF) by a team of researchers from University College Dublin and Queens University Belfast examined the impact of the recession on human resource management (HRM). The research was published in late February 2011 to coincide with a special Labour Relations Commission (LRC) symposium on building better employment relations. The study is based on:

• a survey of 444 employers in Ireland involving focus groups of human resource (HR) managers and trade union officials;
• six case studies of good practice in responding to the recession from:

1. financial services provider Irish Life and Permanent;
2. estate agents Sherry FitzGerald;
3. Dublin Airport Authority (DAA);
4. food retailer Superquinn;
5. medical technology pioneer Medtronic;
6. telecommunications equipment and services provider Ericsson Ireland.

Key findings

According to the report’s authors, the picture of HR in the recession that emerges from the survey, focus groups and case studies is marked by the following major features.

Á la carte approach to HRM

Companies, their employees and trade unions have experienced considerable tumult and have responded by controlling or reducing pay and headcount, while seeking for the most part to sustain prevailing approaches to human resource management and industrial relations.

In developing a human resource strategy to address the difficulties thrown up by the recession, companies have not sought to either simply hold onto or shed labour. Instead they have carried out a range of policies including:

• pay freezes or cuts;
• curbs on overtime;
• short-time working;
• redundancies (voluntary and compulsory);
• more rigorous work regimes.

A feature of the ‘retrenchment’ programmes implemented by many companies is that the content varies a good deal from company to company. In responding to the recession, companies are not adopting a similar suite of policies; rather they are adopting an á la carte approach, using particular policies that allow them to navigate their own pathway out of the recession.

‘Hard’ and ‘soft’ HRM combined

A second feature of HR programmes is that companies do not simply include ‘hard’ HRM policies aimed at cutting their pay roll and boosting productivity. Frequently, HR programmes also include ‘soft’ HRM policies aimed at maintaining employee commitment and loyalty. These include intensified communication and employee engagement efforts, retaining HRM initiatives and the injection of as much fairness as possible into the programmes to ensure that the impact is spread evenly across all groups of employees, including management.

HR managers appear to be trying to balance ‘hard’ and ‘soft’ people management policies in an effort to ensure that efforts to address short-term cost pressures do not erode employee motivation or their commitment.

HR responses mostly ‘path dependent’

The research team make the observation that, for the most part, changes and HR response programmes in the case study companies have been ‘path dependent’ in the sense that they reflect long-established relationships between the parties and the parties’ concern to sustain these through the recession.

• The Employee Recovery Investment Contribution (ERIC) proposal at DAA reflects a heritage of stable industrial relations and significant past innovation.
• The agreement at Medtronic reflects good industrial relations and a shared awareness of the need to cooperate to protect and extend the subsidiary’s mandate from the parent company.
• Tiered salary reductions at Sherry FitzGerald reflect an organisation that has traditionally valued staff cohesion and commitment as key brand attributes.
• The survival and partnership agreements at Superquinn reflect a tradition of good if paternalistic industrial relations extending back to the company’s previous owner.
• The pivotal HR competencies programme at Ericsson preceded the recession and has been retained in the Irish subsidiary even while job losses triggered by global restructuring have occurred.

Commentary

The report’s authors conclude that there has been much cautious and incremental improvisation rather than radical innovation and change. The recession per se seems unlikely to have caused any major disjuncture or transformation in work arrangements.

Reference

Roche, W., Teague, P., Coughlan, A. and Fahy, M., Human resources in the recession: managing and representing people at work in Ireland: Executive summary (838Kb PDF), Dublin, Labour Relations Commission, 2011.

Tony Dobbins, Eurofound