Impact of the Current Global Financial Crisis on Human Resource Management

Introduction

Current economic downturn has enormous influence on businesses. The field of Human Resource Management (HRM) is not an exception. The common practices in these periods in HR departments are not hiring new employees, layoffs, not paying for overwork hours, cost cutting including wages and bonuses, less training and early retirement programs and so on. What has been happening in my country, Japan, since this financial crisis began was much different from former recessions such as 1990s. For example, the TOYOTA started reducing workings days from five days a week to three or four days a week in most factories instead of firing people. Finally, they decided to close some of them temporarily. It was a very shocking event for Japanese since the TOYOTA is a world famous and a major motor vehicle company. This essay will first provide downsizing as a HRM common practice in recession from the point of view of cost-cutting and alternatives of layoffs. Then, it will also show the role of training during the economic downturn. Finally, it will discuss how financial crisis affects equity in HRM using examples of gender wage gaps, age discriminations and transition of equity perception in Thailand case. The essay also argues what should be carried out as reduction and training strategies in recessionary time. It also discusses about how HR departments can consider equity in such a difficult time for layoffs and salary since “equity” is a key words in current HRM such as equal pay and equal opportunity.

Downsizing – cost reduction

The cost cutting is the first effort which is considered in every department when an economic downturn hits. Aycan and Kabasakal(2006, pp. 492-493) argue that focusing on cost reduction on HRM shoul...

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