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Human Resource Management

Most companies have a human resource (HR) department, no matter what scale it maybe. Thus, whether it is a large company, small company or company that out sources it human resources functioning, the defined functions of human resource management (HRM) remains common. The primary functions are defined as follows: The HR department is required to: Establish Develop Maintain Communicate All personnel-related policies to the company, as well as: Represent Help Advice Consult With the staff of the company. Usually HR managers maintain a file for each employee, which is a compilation of the following data: An elaborate, titled folder containing relevant documents and data Personal employee details A manual that maybe handwritten or typed The employee work history card

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Employment track record within the company The salary and increments The appraisal forms Reports made by the seniors and colleagues Those in the HR profession regard the job highly challenging, as they have to handle diverse subjects at any one point of time. An interesting fact is that they rarely come across the same problem in an organization more than once. Also, HR executives are considered to be personifications of patience. Their voice over the phone will never display their anger or frustration, no matter what maybe the cause. The following are the varied job titles held by those in the HRM department of a company (please note that these are not arranged in accordance to hierarchy; all designations may not be a part of any one company, but will differ from company-tocompany as per their specific requirements): Manager Employment Manager Compensation Manager Benefits Manager - Personnel Relations (Personnel Coordinator) Manager - Information Systems Manager - Wage and Salary Analysis Manager - Training and Development Manager Payroll Manager - Executive Compensation

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Human Resource Management Definition

Management or managing is a broad concept by itself. Though one can define it arbitrarily, human resource management is about man management, channelizing workforce, aligning staff as per capability and also providing incentives to maintain the work force. There are various issues connected with the Human resource concept. This is primarily mentioned in the directive or the mission of the company. The Human resource department works under the strict rules of HR policy and directives laid by the Board of directors. There are additions or deletions in the rules which are generally flexible to change as per the economic moves of the country, contingency and existing talent in the staff.This is perhaps the most sensitive or volatile subject in managing an organization. With best practices in companies and corporate governance directives, many organizations are trying their best to cultivate a healthy environment. Jobs are scarce but at the same time lucrative owing to the advent of BPOs and call centers, there is a major shift in focus of career intentions of many people. Highly qualified people are allowing themselves to build a career in these companies and are open to shift timings as the pay is high. The companies are trying their very best to retain the exodus in their staff as the attrition rate is high. As the candidate during the selection process is a much aware person due to accessibility of information and transparent valid details of the company, the organization also needs to equip itself in recruiting the best person in the selection process. Recruiting the HR personnel itself is a big challenge that involves personality, qualities and skills in understanding the requirement of the slot and also gauging the personality of the candidate. There are stringent rules to check on the employees past record and obtaining valid information of his credentials. The HR process also involves medical tests and many companies are also getting into psychological testing parameters in getting to know the employee better so as to befit the job. The company also has to judge whether the job profile is suitable to the candidate as per his education, experience and expectation

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In Economics, What is a Recession?

A recession is a decrease of less than 10% in a countrys Gross Domestic Product (GDP). The decrease must last for more than one consecutive quarter of a year. The GDP is defined as the sum of private spending and government spending on goods, services, labor and investment. The terms recession and depression are often confused. It can be said that a recession is in general not as severe as a depression. A recession tends to resolve more quickly. Not everyone agrees on a specific definition for determining an economic recession, but most can point to several factors, which can cause a recession. Either significant drop in prices, or significant increases in prices can occur. A drop indicates that people may spend less money, thus the GDP is decreased. An increase in price may also reduce both private and public spending and thus decrease the GDP. In some ways, it is quite natural for countries to experience mild recessions. This is a built-in or endogenous factor of a society. Spending and consumption are going to increase and decrease, as will prices. However, another factor besides these occasional built-in drops in spending is needed to evoke a recession. Usually, something changes quickly and provokes sharp increase or decrease in prices. A recent recession in early 2000 was caused by the sudden decrease in activity of the dot.com industry. In the 1990s, the telecom industry had made huge amounts of money and began to overreach its expectations in terms of assessing future demand. Suddenly, the previously looked for demand was much lower than expected, leading to mass layoffs, decrease in production, and thus decrease in spending. The dot.com fall is considered a shock in the GDP, which can fall sharply if the product or industry falls in production and spending. Though the recession resulting from the dot.com bust was considered over by 2003, it has far-reaching consequences that are still felt.

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Those who initially made excessive amounts of money may still find themselves jobless. Telecom companies significantly cut jobs, and employment rates in the industry have never fully been restored. Telecom companies also cut costs by outsourcing production to foreign countries. While this outsourcing has allowed some companies to continue operations, it left many with training for specific jobs they could no longer perform. However, other industries have since expanded and raised the GDP. So the recession is termed over even though many still feel its effects on a personal level. Terming a recession as over does not necessarily account for positive economic changes for the individual. For example, sometimes recession is evaluated in terms of the countrys jobless rate. When this is the case, and people find jobs, failure to evaluate changes in income can make the economy appear more productive than it actually is. A former telecom employee who now works at Wal-Mart may have a job, but this job is not equivalent to former work in compensation. So analysis of only one aspect of a recession should not be used to indicate economic recovery.

Open a newspaper, switch on to a news channel on TV, browse on the Internet and one of the main topics of concerned discussion these days seems to be the recession. Economics gurus, business pundits, vexed politicians; verbose journalists all are talking about it. Some say we are heading into a recession, while others propound that we are already in one. Yet, scratch a little below the surface, and you discover that none of them seem to be quite sure what exactly a recession is. The term seems to be quite hard to quantify. So, what is a recession, really? How is it different from depression? And, how does it affect ordinary people like you and me?

What is a Recession? How does it differ from Depression?

A countrys economy is said to be in a recession when the GDP, or Gross Domestic Product, falls below 5-10 percent, lasting for two or more quarters consecutively. The GDP can be defined as the total market value of services, goods, investment and labor within a country in a given period of time, which is usually one year.

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Generally speaking, it is said that a recession is a less severe downturn in the economy, and it has a tendency of getting resolved faster. To some economists, a recession is an economic downturn that lasts for about 6 months to 1 years, while a depression can be defined as a sharp downturn lasting a number of years. To other economists, a recession occurs when 4,000,000 - 5,000,000 people are unemployed for a period of 618 months, whereas a depression occurs when 7,000,000 - 8,000,000 people are unemployed for a longer period of time lasting years. Recession, in fact, means different things to different people. For example, according to retailers, a recession means a fall in sales, although they do not agree whether it is a 5 percent or a 20 percent drop. To stockbrokers, it means a fall in the prices of stocks. For manufacturers, on the other hand, industrial production is the criterion. For ordinary people, it can either mean a significant increase in prices, known as inflation, or a decrease in prices, known as deflation. When there is a decrease in prices it means that people may have less money to spend or choose not to spend as much money, which leads to the lowering of the GDP. Whereas, when there is an increase in the prices it can result in a reduction of public as well as private spending, which again leads to the GDP decreasing.

The Causes of the Current Recession

Generally, periodic mild recessions are quite normal in the economic life of countries, and can be said to be a built-in factor. After all, there will be ups and downs in prices as well as increases and decreases in consumption and spending. But, an additional factor apart from the normal built-in falls in spending that occurs occasionally is required to trigger a recession. The recession that is being currently talked about in the US has been triggered off by the socalled subprime mortgage crisis. This was caused by banks extending loans to people who normally would not have qualified for them because of bad credit. Higher interest rates were charged for these subprime loans compared to regular loans. However, these people who received these subprime loans were demarcated with bad credit in the first place since it was determined that it was

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not likely that they had the ability to pay their bills according to the stipulated time, and that is what happened exactly. So, innumerable mortgages as well as other loans went into default, resulting in a number of companies belonging to the financial sector posting in enormous losses. Then, there was a sharp fall in many of the markets around the world because of the speculation about a full-blown recession in the US. Since the US is the largest economy, it has a significant impact on the markets of the world. However, soon magazines and newspapers began speculating that because of the corrective actions taken by government and commercial bodies, it was likely that the current recession would not be as severe as it was expected to be. Hence, although the bogie of recession, both in the US as well as globally, still is rearing its ugly head, the market and the government are trying hard to make it as pain-free as possible.

Causes of Economic Recession

Observation of economic recession: The calculation of a country's gross domestic product or GDP is usually for two or more quarters of a year, successively. Many economists judge recessions to better understand the causes and find effective solutions to them. A period of recession is a significant decline in economic activity. The decline could be observed over a period of a few months. The abstract decline that affects real people is sensed via a fall in the GDP, actual income on record, employment data, production and sales etc. A recession is measured from the time of initial decline, which is mostly just after the economy reaches a peak of activity till the time the resultant trough shows up on the graph. Most recessions are brief. Wider implications: A recession documents simultaneous decline in employment, profit and investment, and an upscale inflation. During the economic collapse, the periods of deflation and alternative inflation are part of a process studied by economists as stagflation. A severe economic recession is a devastating breakdown of an economy. Those economies that are market-oriented are usually characterized by

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economic driving cycles and there it is debated whether or not, in such economies, government intervention smoothes, exaggerates or creates it. A period of recession witnesses a stock market drop at the onset. Sometimes, nearly half of the stock market declines are recorded after the onset of the period. The period of economic recession can also be sensed via the unemployment rate and subsequent claims, a housing recession and the use of the indicator index. Possible solutions: There are a number of strategies that can be implemented to help an economy to move out of a recession. The strategy adopted and applied varies and depends on the type of economic system and analysis followed by the countrys policy makers. While some may advocate the deficit spending to initiate economic growth, others may adopt tax cuts and yet some other may prefer and recommend a non-intervention by the government in the market forces of the economy! There is no difference between the deficit spending and tax cut strategies and both increase the money within the economy. Economic recessions are believed to be caused by wide based increase in rates of interest or a loss of consumer confidence. Economists suggest that periods of recession are actually caused by specific events that impact certain industries. Factors that impact economic recessions: Periods of recessions have followed dramatic increases in the price of oil. The industries that depended on energy prices suffered a sharp decrease in business and subsequently, reduced output and staff. An economy-wide decline in demand and reduction in real is influenced greatly by the higher cost of oil imports and a stringent monetary policy. The influencing factors slow down overall demand, and lead to subsequent recessions. The economic recession is the outcome of the impact on the economy by drop in demand, role of aggregate forces and the allocative forces. Reversing the situation: Economists believe, backed by years of research, that paying attention to the forces that impact reallocation may actually help us to predict future recessions and upscale economy. The technology harnessed today and the survival post 1929-1930 has made it possible for economists to observe and make available solutions if and when such an unfortunate slow-down affects an economy.

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An economic crisis has a disproportionate impact on firms that trade with the country or zone and this triggers reallocation. The advent of the internet connectivity and the use of wireless technology to redefine communication and information and similar sources of favorable reallocation, could prevent an economic recession. The relative strength of the determining forces set the future course of the business cycle and hence, helps to evade the impending economic recession. The causes for economic recession are many, but the solutions available today are just as much. It is in a deeper understanding of the implications that we stand to keep the situation at bay.

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HRM & Recession

The recession is a topic of the day. After several years of the constant growth, the economies are slowing down and many people lose their job. The HRM Function has to focus on cost cutting, management of FTEs in the organization and keeping the organization in the shape. The HRM Function cannot be a passive player in the changes in the organization. The recession is a moment for the HRM Function to show the potential and benefits from the proper work with the human capital in the organization. The HRM Function has to play the role of the change agent during the recession and it has to co-operate closely with the top management of the organization. The recession is a good opportunity to cancel old policies and to introduce new and modern ways of Human Resources Management.

Content of HRM and Recession:

HRM Priorities and Recession Affected HR Processes by the Recession HRM Communication in Recession Main HR Recession Initiatives Recession and Employees Recession and Recruitment
o o o o

Change of the job vacancies in the recession Recruitment Freeze Recruitment Agencies in Recession The talents on the job market

Talent Management in Recession


Talent Management under Pressure

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HRM Priorities and Recession

The recession changes the priorities of the organization. The change of the organizations priorities should be reflected in the HRM Function priorities and HRM Strategy as well. The HRM Function cannot live alone; it has to follow the general business strategy. The HRM Priorities in the Recession can change quickly or they need to be adjusted at least. The organization has no resources to add to the new initiatives and the HRM Function can be asked to produce cost savings on current programs. The HRM Management has to make a quick scan of current procedures and policies to be prepared for the cancellation or change, when asked to make an urgent cost cut. The recession is about cost cuts and designing efficient, cheap HR Processes. The HR Priorities have to be assessed using a simple tool for selecting the processes and policies to be discontinued. The best tool is to use the simple matrix, which divides the processes and procedures according their costs and impact on the organization.

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Generally, the HRM Function should cancel the processes and procedures with the highest costs and lowest impact on the organization. The HRM Function has to be very careful as cancellation of some policies can be very sensitive for employees. Those are the processes and procedures with the highest impact. The recession changes HRM Priorities. The HRM Function has to make a quick response to changed conditions by the cancellation of the least important procedures and policies, but the HRM Function has to change the HR Strategy to have a consistent approach during the whole recession period. The HRM Function has to adjust the HRM Priorities in the recession very sensitive way as the employees feel some security and consistency and that they can trust the organization and its success in the war with the recession. The HRM Function has to keep the role of the employee advocate and this should be reflected in the decision matrix as well. The recession is not a chance to change and cancel everything; the corporate culture should not be touched by the change of the HRM Priorities during the recession.

Affected HR Processes by the Recession

The recession affects different HRM Processes. Some HR Processes can be affected by the recession very hardly and other processes can be completely immune from the recession impact. The HRM Function has to react very quickly and the response has to include the whole HRM team as all employees have to help the most affected employees to keep the level of the satisfaction. The organization needs to save the costs and it needs to identify and potential additional source for the cost saving and starting a new growth era. The HRM Function has to prepare a new HRM Vision and a new HR Strategy for the coming period as the cost cutting is not the only way to build a stronger organization fighting with the recession. The most affected HR Processes are the following: 1. Recruitment - The first HR Process with the change in the recession. The job vacancies are cancelled and the HRM Function should come with a new recruitment strategy. The

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organization can hire a new set of skills and competencies to strengthen the position of the organization on the market 2. Training The training are cancelled as it is a quick cost cut. The training can be later focused on more specialized training session and more internal training courses can be introduced. 3. Compensation and Benefits The department can be asked to bring a new compensation scheme, which will save the costs and motivate employees to be more proactive. 4. HR Front Office The HR Front Office have to be present at clients all the time as they will need a strong guidance and facilitation during the recession. The HR Processes are heavily affected by the recession, but the HRM Function has to take this as the opportunity to change and to bring new ideas on the scene. The recession is the best time to design a completely new approach of the organization to its human capital.

HRM Communication in Recession

The HRM Function is always responsible for the mass communication to employees in the recession. The HRM Function should be responsible for the consistency, transparency and fairness of the crisis communication to employees. The recession is usually not about the good news, but the HRM Function has to be the employee advocate and the messages should provide the employees with the clear outlook of the future. The crisis and recession communication have to be targeted, as not all the employees should receive the same amount of the information. The Sales employees should have completely different details from the Operations guys. The HRM Communication in the Recession is about defined and agreed target groups. The organization cannot publish the details about its business position to all the employees, but some groups of employees have to know more to feel comfortable and more secure.

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The HRM Communication is one of the strongest tools for the retention of key groups of employees. The talents and key employees have to receive more information from the organization to keep their own security and their value for the organization. The organization needs to raise the level of the motivation and the honest communicate on is one of the best But tools the for HRM motivation.

Function has to act as the consultant to make sure, the employees are de-motivated and frustrated by the amount of messages and the details provided. The HRM Function has to provide the advice on the communication channels used as not all the messages should be sent via email. The HRM Function is the only function in the organization to have a general picture of the target groups and it can provide useful consultancy in the description of the target communication groups. The HRM Communication in Recession is about a clear description of the organizations position on the market, the economic outlook for the next period and about the strategic products and services, which will be the leading the growth in the era after the recession. The employees should know about these topics as they can prepare themselves.

Main HR Recession Initiatives

The HR Function has to conduct several HR Recession Initiatives as soon as the recession is recognized in the organization. The organization can grow rapidly, when the recession ruins companies around your organization. But, when the organization feels the pain from the recession, the HRM Function has to start several HR Recession Initiatives.

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The HR Recession Initiatives have to be focused on the analysis of the current situation and the unlocking the potential for the future growth. The HR Recession Initiatives are not just about the cost cutting, the recession initiatives have to be focused in more areas:

Cost Cutting Key Groups of Employees Process Efficiency Honest Information for Employees Management Consulting

The HR Recession Initiatives have to be balanced well. The cost cutting is about the immediate activities to decrease the personnel expenses of the organization, but the HR Recession Initiatives have to be focused on the future as well. The employees are told to be the best capital of the organization and the HR Recession Initiatives cannot be focused on the full destroy of the human capital of the organization. The employees to be fired have to be selected carefully and the rest of employees have to sure about the future of the organization. The organization has to guarantee the future for the most important employees the key employees, high potentials and the managers. The HRM Function has to focus on the honest communication in the recession. The HRM Function has to inform the employees fairly about the bonuses, salaries and number of employees in the organization in advance as the employees can prepare themselves. The HRM Function has to have a good balance in the HR Recession Initiatives. The employees and managers have to feel the fairness and transparency in the initiatives as they can build the trust to the HRM Function.

Recession and Recruitment

Recruitment is one of the most affected HR Processes by the global recession on the market. The companies do not offer vacancies, the number of job applicants grows rapidly and the organization has to manage the recruitment smartly.

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The organization has to change the focus of the recruitment and the recession is a good moment to focus on the recruitment process development and redesign. Content of Recruitment and Recession:

Change of the job vacancies in the recession Recruitment Freeze Recruitment Agencies in Recession The talents on the job market

1. Change of the job vacancies in the recession

The recession is about the focus on the strategic initiatives of the organization to make the income of the organization stable and growing in the future. The organization usually does not stop the whole recruitment (see Recruitment Freeze), but some new job openings can appear. The organization needs some additional skills.

The organization should ask the HRM Function to make a quick SWOT Analysis of the employees in the organization to have a clear view about the gaps in the skills and competencies. The organization has to fill the gaps with the new employees from the job market, who are creative, smart and ready to work hard to save the organization.

The HRM Function has to ask the top management for the approach through the crisis and it can decide then about the skills needed for the successful fight with the recession. A very small team usually designs the proposal for the solution and the skills can be easily recognized. The team is mixed from the existing employees and new hires and the HRM Function should recommend both.

The recruitment team has to be ready to find a completely different set of skills and competencies. The recession changes the focus of the organization and the new employees can help to secure the organization in the time of the recession.

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2. Recruitment Freeze The recruitment freeze is a common solution in the beginning of the recession. The organization is usually completely unprepared for the depth of the recession and the recruitment freeze is a quite usual solution. The recruitment freeze sounds as a good solution for the organization, but it brings a lot of the issues. The complete recruitment freeze can be a big danger for the smooth operation of the organization and the exceptions are needed. When the expectations start to occur, they spread widely and the recruitment works the same way as before, just on the basis of many exceptions. The recruitment freeze has to be done smartly just from the beginning. When the decision is about stopping all the recruitment activities, it can never work. The HRM Function has to be asked for the proposal or it has to offer the proposal. The business functions have to have the chance to keep their FTEs stable to deliver the business to the organization. The recruitment freeze has to be focused and managed smartly. The majority of managers have to feel comfortably and they need to trust to the HRM Function, the rules will be strictly applied to all the requests. The recruitment freeze is about the trust to the top management and the HRM Function, that they will be able to manage the expectations and the requests from the managers will be evaluated fairly. The recruitment freeze is a chance to make the organization slimmer, when the top management and the HRM Function make a good decision. The recruitment freeze is not about hard cost savings; it just makes the managers to look for the new job hires internally. 3. Recruitment Agencies in Recession The recruitment agencies are hardly attacked by the recession and it is a good moment to have a better relationship of your company with the recruitment agency. The recession pushes the recruitment agencies to offer better conditions and the quality of job candidates gets to the better level as well.

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The economic growth era is a time for the recruitment agencies; the recession is the time for the companies. The recruitment agencies are willing to re-negotiate the contracts to keep their customers and they are fighting for the job vacancies. The company can change the recruitment process, the fees paid to the recruitment agency, but the best option for the recession is to ask for more flexibility from the recruitment agency. The recruitment agency can be used as the weapon for the search of a good potential in other companies. As the recruitment agency wants to keep the business, they are able to find the best contacts in the competitors on the market and the organization can hire really good employees cheaply. The recession is a good opportunity to set a new relationship with the recruitment agency. The recruitment agency can put a lot of the effort to finding the best potential on the job market and your organization can grow much stronger in the recession.

4. The talents on the job market The recession is a good moment to hire the top potentials from the job market and other competitors. The HRM Function has to act quickly to hire the best class employees before their current employers take the action to protect them. The HR Recruiters should always ask the managers and key employees of the organization about the excellent people, they know on the job market. The HR Recruiters should have a list of the job candidates, who can be asked to join the organization. The talents are usually known in the industry and the recession can make them to be more sensitive to the job offers from the competitors. When the organization has a clear plan for the fight with the recession. The talents from the job market do increase the personnel expenses of the organization, but they can bring new sources of the revenue and they hugely increase the trust of the existing customers.

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The role of the HRM Function is in the quick reaction to the recession, making the proposal to the top management and having a good contact with the recruitment agencies to start the hiring process as soon as possible. The HRM Function has to co-operate closely with the top management, as the talents from the job market need to know the clear plan and clear expectations from them. The HRM Function cannot communicate the clear expectations itself, but it can co-operate with the middle management of the job positions, which can be created for the top talents from the job market. The HRM Function has to monitor the personnel expenses added to the payroll of the organization as the company does not exceed the agreed rules and the HRM Function has to co-operate closely with the recruitment agencies to get the best class employees from the job market. The recession is a tough time and the top talents from the job market will definitely help to win the battle on the market.

Talent Management in Recession

The talents are the best assets in the recession, as the organization needs to mobilize the entire top potential in the company to bring new and innovative solutions to fight with the recession. The talent management is under a huge pressure in the recession. Each manager tries to protect the resources in the unit and the HRM Function has to leverage the resources of the organization. The talent management has to define a clear group of employees to be separated from their current units in the finding a new successful way to the future. The HRM Function has to have a mandate from the top management in the decision about the staffing of the special task force to define a new and bright future of the organization. Talent Management under Pressure The talent management works nice in the time of the economic growth. In the recession, the talent management gets under a huge pressure from the line management and the top management, as their interests is not aligned, at least fully.

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The HRM Function has to be able to mobilize all the talents across the whole organization and the line management can be fully confused by such an activity. The top management can have a nice plan to use the top talents of the organization to have a new opportunity to win the war with the recession, but the line management likes to have the talents in their units to have the smooth operations certainty. The talents usually like the challenges and the recession is the challenge for them. The HRM Function has to find the plan to allow the top potentials to be freed from their current units and to propose a good plan to the line management to keep their satisfaction and buy-in. The talent management is usually set as the long-term activity of the HRM Function. The recession makes the whole talent management a lot quicker. The talents have to be set to new teams, they have to learn to co-operate quickly and they have to learn to make quick decisions. The talent management in the recession is about the quick assessment of the top talents of the organization and assigning them to the special tasks from the top management. The role of the line management has to be minimized as they have no chance to prefer their own task above the strategic tasks of the top management.

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HRM Role in Recession

The recession is healthy, from time to time. The recession helps to stop the businesses, which are not bringing value added and the human capital is transferred to more vital businesses at lower costs. In the companies, which survive the recession, the HRM Role is very important.

The recession is very dangerous for the companies. During the times, when the business grows dramatically, the HRM Function introduces different policies, which are focused on spending money. The company was able to carry all the costs and the employees started to take the policies as the standard.

In time of the recession, the HRM Role is to make cost cuts and the HRM Function has to provide the list of the policies and the procedures to be cancelled or discontinued. The employees do not like it, but the company has to return to the healthy basis for the future growth.

The HRM Function has to be able to identify the top potential in the organization quickly as the company needs to make the cuts in the human capital of the organization. The HRM Function needs to provide the tools to managers to inform their key employees about the security, the company wants to offer to key employees.

The HRM Function is not a department to make employees happy, the role of HRM Function is also about the cuts in the costs of the organization and the HRM Functions role is about minimizing the damages to the organization.

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HRM Role in a Recession

Many business organizations, however the size, are getting the hardest hit. No wonder, the efforts are zeroed in on cutting costs in all areas of business operations to avoid closing shop. Unfortunately, the first on the list has always been streamlining human resource. I cannot blame CEOs and business owners if they still see that in a recession, in order to survive, you have to eliminate your extra baggage and that would mean laying-off a number of your employees. It is not that it is a wrong decision to make; however, this action adds more strain to the already faltering economy by further adding to the bloated unemployment rate. So, how does HRM (Human Resource Management and Managers) help the organization cope in a recession? What is the role of HRM in crucial times like these? In my mind, here are the important roles and responsibilities that HRM should focus on during a recession: i. Conduct Organizational Assessment or Audit

Accountants would readily point that labor is where cuts should immediately be made. As I pointed out earlier, this means streamlining the organization by laying-off employees. Usually, the non-permanent jobs or positions are the first to go. On an organizational competitiveness perspective, reduction of personnel is not necessarily the best or first option in cutting costs. Looking closely into the details of each business processes through an organizational assessment or audit will reveal that there are other areas where cost cutting measures can be made. The HRM should be the forefront in this activity being independent from operations. Besides, it has the competency to do such an audit.

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Its amazing that in some business process audits I conducted independently and in a team, reduction of personnel is at the bottom list of the recommendations. Improvement in processes, reduction of waste, recycling of materials, and quality monitoring rank almost always on the top recommendations. ii. Information Dissemination Keeping employees informed on a timely basis is probably the most important role that HRM can play. Employees need to know where the business is going and what the intentions of top management are. In a recession what is more at stake are the investments made and employees come second. However, when job security is threatened due to a financial crisis, employees deserve to be informed about the status of the business and their employments fate. With many already unemployed (some are regretfully unemployable), and the job opportunities narrowing or disappearing, employees must be informed ahead and warned of the possibilities of losing their jobs so that they can prepare emotionally and financially. Keeping communication channels open put the HRM at a very crucial role of bridging the gap that may widen when the inevitable retrenchment of employees have been decided, and which may tend to put management in a bad light, especially in unionized companies. iii. Providing or Coordinating Livelihood Skills Training Employees need to look beyond the comforts of their salaries and job securities. They also need to develop other skills that will help then earned a decent living other than their current employment. The HRM should have integrated in its yearly training curricula training on livelihood skill development. With these new skills, employees are better prepared to cope in cases of unemployment and may consider home or small businesses as income alternatives; besides, many small home businesses do not require huge investments.

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Counseling and Guidance A financial crisis that is global in nature has a psychological effect on the average employee.

Especially when the news of bigger and more established companies are laying-off employees and/or are closing shop, they are likely wary also of their own job security. HRM should provide guidance on how employees can cope in case of the inevitable happen. It should help affected employees to find possible alternatives in cases of mass lay-offs.

HRM Innovations in Recession

The recession is about the creative Human Resources Management. The HRM Function is asked to bring new ideas, to change the HRM Processes and to develop or change the procedures. And this effort has to be cheap or it has to cut the costs of the organization. The HRM Innovation is easy in times of the business growth, but the recession is not good for big innovative HRM Initiatives. On the other hand, the top management understands the effort to innovate the HRM Processes better. The top management is in the search for the potential cost savings and they count every single penny brought by the line management. The HRM Costs are usually a very significant cost to the organization and the HRM Function has to be proactive. The HRM Function has to focus on unpopular innovations during the recession as the role of Human Resources during the recession is to save money to the organization. The top management expects all the support functions to bring innovative solutions, which will have to make the organization stronger, when the next growth era comes. The HRM Innovation during the recession has to focus on the following topics: 1. Reduce the number of employees in the organization 2. Strategic initiatives to increase the productivity and efficiency of the whole organization 3. Redesign of the compensation scheme 4. Cancellation of several benefit schemes 5. Training and Development Programs cutting
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On the other hand the HRM Function has to find innovative solutions for the following topics: 1. Identifying the real key employees and to keep them in the organization 2. Identifying the real top potentials and to strengthen their development program The second two topics have to be done with the minimum additional costs and it is a really hard task to accomplish. The HRM Function has to have priorities in mind and the strategic impact of the HRM Innovations in the recession time. The role of the HRM Function is not to cut the costs for the time being, but to make the organization stronger and ready for the future growth.

Bonuses and Recession

The bonuses are the most discussed compensation component in the recession. As the bonus is directly linked to the overall business performance and the profit should be reached to pay the bonuses to employees, they feel uncertain about their bonuses in the recession. The top management has to ask for a quick bonus analysis, when the profit will reach some level and the impact on employees and their total cash for the year. The top management has to be very conservative in the communication of the recession impact on the bonuses of employees. The employees can live without their bonuses usually, when the bonuses are not a significant part of their total income, but they have to know the solution provided by the top management. The HRM Function and Finance have to prepare the good analysis, which can offer several bonus payment options to the top management. The bonuses can be stopped, the company can pay the symbolic bonus to every employee or it can adjust its profits for the bonus calculation. The employees would love to have their bonus calculation adjusted, but this is very dangerous as the employees will feel that the bonuses will be always paid to them and they would not worry about the overall company results as they are not important for their personal income. The bonuses are not motivational compensation component in the recession, but the organization has to continue in the bonus system development as the employees can feel the pressure for the personal performance improvement. The bonuses play a significant motivational

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role in the era of the economic growth and they play the role of the demotivator in the recession as they transfer the recession directly to the total cash of the individual employees.

Compensation Strategy in Recession

The compensation strategy is a general document about the vision, mission and strategy of compensation and benefits of the organization. Generally, the recession has no impact on the compensation strategy, but the organization has to make some adjustments. The compensation strategy is always connected with the business strategy and the stage of the organizational development. The fast growing organization needs a different compensation strategy from the mature organization. The recession can quickly change the status of the organization. The fast growing organization can change to the mature or declining organization and the compensation strategy has to reflect such a dramatic change. The compensation strategy defines the general position of the organization on the pay market and the compensation strategy defines the proportion of the overall company costs allocated to the human capital of the organization. The recession makes a huge pressure on the overall costs of the organization and the compensation strategy can easily change the position of the organization on the pay market. The recession has a positive impact that the compensation strategy does not have to be that aggressive. The HRM Function has to monitor closely the development on the market and it has to watch for the signals in the change of the overall business strategy as the compensation strategy has to be adjusted as soon as possible. The compensation strategy is quite costly document for many organizations and the HRM Function has to react proactively too many external changes. The compensation strategy cannot be fixed for many years, but it has to be clearly attached to the stage of the organizational development.

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Managing HR during the Recession

Your company may be faced with a loss of business as the economy slows down. Human Resources (HR) Management can contribute to helping executives handle the repercussion from the ailing economy. Here are 10 recommendations that should help you if your employer is facing negative challenges: 1. Let your senior management know that you have contingency plan recommendations ready for guiding human resources so that the company can continue as a financially viable enterprise. If you do not have those plans at-hand, focus on developing them immediately. Otherwise, HR will be seen as simply an administrative function or even worse, as irrelevant in the turbulent situation. 2. Contribute to strategic planning by providing data on employment needs for scenarios that senior management is considering. Have hard data not soft opinions. HR should have or develop a Workforce Plan that includes succession analysis, replacement hiring considerations and attrition projections. 3. Consider a complete or partial job freeze. This will both control the overall workforce growth and demonstrate that the company is managing the situation. However, communicate to the workforce that the company many continue to recruit key individuals even in difficult times. The messages show that that the company is considering its future as well as dealing with current difficulties. 4. Review the employee performance evaluations to determine the key people that company cannot afford to lose. Senior managers should speak to those individuals to ensure that they know they are highly valued and their contributions will be needed by the organization "to weather the storm." They, of course, should not be guaranteed employment but encouraged to help senior management succeed.

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5. Communicate the company's position to the entire workforce by providing as much information as possible in a respectful and caring manner. People can deal with change if they know what is happening. It is possible that some key decision makers may wish to hold back significant information until all the facts are available. This is a major mistake. People will create their own version based on rumor and fantasy. Give as much correct, detailed, and timely information as possible. This will demonstrate the concern of senior management for employees. 6. Be prepared for individual and group concerns. People may need to be counseled and guided to focus on their work tasks if there is any hint that the company is having a hard time keeping business and being profitable. There is nothing wrong for an employee wanting to discuss concerns with management but the leaders need to be prepared to provide guidance without commitment for continued employment. It is important that managers stay in touch with high performers as well as other employees. A high performer who is left without sufficient management support because "good people don't need their hands held" might be a candidate for another company. They can feel neglected as managers spend more time dealing with the concerns of less competent employees. 7. Help maintain a calm atmosphere by role modeling an appearance of focus attention. This will be a model for other managers as well as employees. Counsel the managers not to display anger or other negative reactions in stressful situations. Managers must restrain any impulse to motivate by fear. Under stress they may tell employees that they could be the laid off if they do not comply with management demands. If those orders are perceived as being unreasonable the high performing employees will look elsewhere for work and the other employees will tend to "duck their heads" and try to keep out of sight. Fear corrupts organizations. 8. Review all HR policies, processes and procedures to ensure that they are purposeful and contribute directly to the success of the company. Improving HR methodologies in difficult economic times will demonstrate your team's commitment to the organization and be a model that other functions might follow. An organization can often save a lot more money by improving or eliminating out-of-date processes than by laying off (making redundant) employees.

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9. If the company has to lay-off staff ensures that there is no other opportunities for them in other functions or divisions of the organization. They may require only a short period of training and development to be competent in another field if they are acquiring new skills based on already established competency. For example, an experienced training specialist might be able to use group and individual influencing skills in sales and marketing. 10. Advise managers to deal with the situation as a process of managing change with the key techniques of: a. Working with a Strategic Plan b. Communicate, communicate; communicate c. dealing with the loss of the old more stable economy d. believing in a positive future and moving on

The recession is about the creative Human Resources Management. The HRM Function is asked to bring new ideas, to change the HRM Processes and to develop or change the procedures. And this effort has to be cheap or it has to cut the costs of the organization. The HRM Innovation is easy in times of the business growth, but the recession is not good for big innovative HRM Initiatives. The HR Management has to focus on unpopular innovations during the recession as the role of HR during the recession is to save money to the organization. The senior management expects all the support functions to bring innovative ideas and solutions which will lead to stronger organization, when the next growth era comes. The point has to be focused by HR management during recession are as follows: To optimize the manpower strength. To take strategic initiatives to increase the productivity and efficiency of the entire organization. To work on compensation benefits.

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Redesign training and development programs.

On the other hand the HR Management has to find some innovative solutions during the recession like, To identify the real key employees and to intact them in the organization To identify the real top potentials and to strengthen their development program

The HR Management has to have priorities in mind and the strategic impact of the HRM Innovations in the recession time. The role of the HR Management is not to minimize the costs for the time being, but to make the organization stronger and ready for the future growth.

How to intact your employee during recession:

Here is how to keep your employees with you and away from your competitors during tough economic times. i. ii. iii. iv. v. Differentiate Between Your Good and Average Employees Redirect Your Employees to Other Departments (Job Rotation) Listen To Your Employees Keep Them Motivated and Busy (Communicate-Communicate and Communicate) Show them the long term vision

The above steps will enable the employer to hold its team together during a recession, and will even make bond between all of you stronger. Employees should be motivated enough to stick to the employer during tough times and put in the extra effort required for the organization growth.

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Global Recession An Opportunity For India

The near recession in the US and the global meltdown will, of course, have its impact on India's high-tech industry, as it is one of the greatest financial crises of our globalised times. But it also presents an opportunity for Indian services vendors to improve their market share, while forcing them to diversify and de-risk across sectors and geography. Lehman Brothers went bankrupt Sep 15. A day earlier, Merrill Lynch had announced that Bank of America was acquiring it. A week earlier, US mortgage giants Freddie Mac and Fannie Mae went into federal receivership. And with each news flash, the Indian Sensex swung wildly downward, partly in sympathy, partly with foreign funds pulling out because they needed the cash. And the jitters echoed in the hallways of a host of tech services companies - who were servicing any of these firms, or their US-based suppliers. This was bad news. The Indian tech and business process outsourcing (BPO) services industry is strongly dependent on North America, and specifically on the sector that we call "BSFI" - banking, financial services, and insurance. Yes, the US financial services slump has come as a wake-up call for Indian exporters of technology and BPO services. But for them, this is no sudden crash. They have been through a longer crisis, though arguably, one that wasn't as severe, as the result of the weakening dollar in 2007. So, that has had some time to prepare. In 2006-07, the dollar averaged Rs.45.05 to a dollar. In 2007-08, it averaged Rs.40.4, which meant a 10 percent decline in rupee earnings for the same dollar billings.

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Accordingly, many of the Indian tech/BPO services exporters looked harder beyond North America, which used to account for most of our services exports three years ago. They went to Europe, and Asia, and an adventurous few Indian companies even "came" to the India market. India is a tech services market dominated by IBM and HP, with very few Indian services majors - mainly Tata Consultancy Services (TCS) and Wipro - active in this market. Others, such as Infosys and Satyam, have a negligible presence in India. So here's the impact one sees of the dollar weakening in 2007, followed by the US financial services-led slump in 2008: a. Indian services exporters look harder beyond the US: to Europe, and Asia, including Japan b. They all work out an India market strategy, if they did not have one already c. Financial services drops from nearly 60-40 percent of our entire services exports d. Other areas like telecom and engineering services pick up rapidly e. Overall, there's increased diversification, across geography, sector and type of business Financial services have been the mainstay of Indian software and BPO services exports. This began to change a few years ago, with telecom and engineering services picking up. That process has now accelerated. Telecom is a huge growth market in Asia, and especially India and China. Has the slowdown hit Indian tech exporters? Of course, it has, though not dramatically. Here's what, and why: i. A very few large institutions have melted away. They were outsourcing to India, directly as well as through other US-based services majors who had delivery centers in India. This has of course meant some impact on business

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For some time now, new deals have slowed down, and turnaround time for signing contracts has increased


There is increasing pressure on companies to minimize their "bench" - or the currently idle employees. Recruitments thus slowed, and campus offers stayed pending

India is not de-linked from the world, and the financial meltdown has certainly impacted us. While some of the impact is real and direct - like foreign institutional investors pulling out funds, which they needed, back home and thus causing havoc with the rupee - a lot of it is wild overreaction. For instance, the day Infosys announced a great quarter and a 30 percent rise in net earnings, the Sensex saw one of its worst crashes ever. The market is not reacting to fundamentals, but is overreacting in panic. It is also reacting to rumors. Take ICICI Bank. Each day I bought ICICI stock, figuring it couldn't go any lower, it would drop 5 percent the next morning. Yet, Indian services vendors have an opportunity waiting. There are factors in their favor. The dollar has swung very hard in the other direction now. India's brand image and reputation of services expertise in a range of areas, beginning with financial services but now extending to telecom, engineering services and medicine and more is on the rise. And then there is this large untapped market - a long tail of companies and processes that do not outsource that may be forced to open up to reduce costs. An economic downturn is like a mild ice age, with the survival of the fittest. Take the airlines industry shakeout today: the fittest will survive. The outlook for IT and BPO services is a lot brighter than it is for the airlines, and brighter than it was post the dot.com bust. Even so, it will mean belt tightening, and more focus on efficiency. Just as the fuel crisis and cost is forcing us toward more efficient transport. The global financial meltdown will mean some tough times for its suppliers, but the fittest will survive - and emerge stronger. And many will find opportunity in the crisis.

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Insurance Industry Is Hovering For Impressive Growth

Indian insurance sector is poised for a massive expansion. And insurance companies have been recruiting more employees and coming out with newer products. On the other hand, the banks and other financial institutions have stopped the process of expansion, and also begun retrenching employees, according to Mr Puneet Nanda, Executive Vice-President & CIO of ICICI Prudential Life Insurance, and Mr Vikram Kotak, Chief Investment Officer of Birla Sun Life Insurance. They were addressing an interactive seminar on "Insurance as Long-term Investment Avenue" organized by Indian Merchants' Chamber on 27 January 2009. Based on the present pace of insurance industry's growth, they expected the number of policy holders to double at 530 million within the next five years. All this was happening under a tight regulatory regime and strict vigilance of the Insurance Regulatory & Development Authority (IRDA), which was very conservative. Mr Puneet Nanda said that insurance was becoming the most popular form of household savings and also the instrument of security to people. There was a great scope for growth, as at present insurance industry's share was only 16.9% of household financial savings. The insurance industry enabled people to do savings by offering them its products such as the long-term regular premium and single premium insurance policies. It also catered to people's different needs by way of different policies such as such as life plan, child plan, health plan, pension plan etc. The insurance industry started offering health insurance products recently, as the mediclaim insurance policies, which were in vogue, did not satisfactorily meet the needs of people, who looked for safety, transparency, consistency and good return from the insurance companies, he said. For safeguarding itself against the erosion of its funds as a result of vagaries of the market, the insurance industry, as a rule, deployed its investible resources in diversified portfolios consisting of a large number of sound corporates and sectors -- each with sector-specific and company-specific

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limits -- in a disciplined manner. Also, they invested only in highly rated corporate debts, observing prudent regulatory norms. Mr Puneet Nanda said that different asset mixes served different investor needs, and in all such cases optimal asset allocation was critical. "The Brinson study on investment by the US insurance industry in the past 100 years reveals that asset allocation was 91.50%, stock selection was 4.60%, market timing was 1.80% and others 2.10%," he said. Mr Nanda said that the insurance industry was a major source of domestic finance for investment in key sectors, as the country could not rely on the funds of FIIs, "which quickly moved in and also quickly moved out. Inflow of funds from external sources is too volatile to cater to the need of long term investments. Also more than 95% of such funds are retail." He said the insurance industry owned 6% of India's capital market and managed assets worth Rs.8,57,000 crore. It had emerged as the largest investor segment in the capital market in the past few years. "The net market inflow during FY 2008 was Rs.55,000 crore from the life insurance sector, Rs.53,403 crore from FIIs, and Rs.16,305 crore from the Mutual Funds. This only goes to show that the insurance industry is one of the most important financial intermediary for both the individual consumers and the national economy", Mr Puneet Nanda. Mr Vikram Kotak said that there were 21 life insurance companies with a capital of over Rs.16,235 crore in India in FY 2008. Despite some slowdown in growth under the impact of the global recession, he expected the Indian insurance industry would regain its growth momentum within a year. As India did not have a social security system for the general public, life insurance was of cardinal importance to provide them security. And there products such as ULIP, the insurancelinked equity, that provided both security and value growth to consumers. "In view of its popularity both in the urban and rural areas, the sale of ULIP has recorded 80% growth in FY 2008. ULIP has become most popular because it is among the most transparent retail financial investment avenue," Mr Vikram Kotak said.

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Metlife Insurance Co. Ltd.

MetLife India Insurance Company Limited (MetLife) is an affiliate of MetLife, Inc. and was incorporated as a joint venture between MetLife International Holdings, Inc., The Jammu and Kashmir Bank, M. Pallonji and Co. Private Limited and other private investors. MetLife is one of the fastest growing life insurance companies in the country. It serves its customers by offering a range of innovative products to individuals and group customers at more than 600 locations through its bank partners and company-owned offices. MetLife has more than 50,000 Financial Advisors, who help customers achieve peace of mind across the length and breadth of the country. MetLife, Inc., through its affiliates, reaches more than 70 million customers in the Americas, Asia Pacific and Europe. Affiliated companies, outside of India, include the number one life insurer in the United States (based on life insurance inforce), with over 140 years of experience and relationships with more than 90 of the top one hundred FORTUNE 500 companies. The MetLife companies offer life insurance, annuities, automobile and home insurance, retail banking and other financial services to individuals, as well as group insurance, reinsurance and retirement and savings products and services to corporations and other institutions. FACT SHEET
Founded Started Operations Headquarters World Wide Web Address Managing Director Employees Financial Advisors Bancassurance Tie-Ups Number Of Products Presence Through MetLife Offices Presence Through Bank Partners * All data as on 6th March, 2009 2001 FY 2001-02 Bangalore, India www.metlife.co.in Rajesh Relan 7688 56,072 5 (J&K Bank/Axis Bank/Dhanalakshmi Bank/Karnataka Bank/Barclays) Over 20 products 192 offices in 131 cities 1910 offices in 686 cities

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"Coming into your own", performing as a Leader to be really effective and successful by acting and making decisions independently to get results.

It's all about People, MetLife's key resource. MetLife will succeed because we are winning from within.

Functioning productively in teams towards a common purpose; realising the collective power of diverse work-groups.

Operating with an intense dedication to managing monetary resources for strong business results.

Conducting all business endeavours with truth, sincerity and fairness.

Continuously creating and introducing new and original ideas and ways of doing things.

WHY CHOOSE METLIFE? We take great pride in the financial solutions that we offer. But thats not all. Your requirements and comfort are always our priority. That is why our interactions are distinguished by our expertise, compassion and sensitivity. So when you consider MetLife, think of the

Sales representative who cares enough to provide need based advice to customers. Customer Service representative who understands that the people who call him require sensitivity, as well as prompt attention. Product specialists who anticipate changing demographics and financial needs with products that actually make a difference in peoples lives.

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MetLife is one of the worlds largest and most respected firms. Weve been helping people build financial freedom for nearly 140 years. For some, this means protection for their families. For others, it means wealth optimization or preservation. Combined with our innovation, this makes MetLife a truly formidable player in the Life Insurance industry.

MetLife....where work meets life!

What we do MetLife India is in the most exciting phase of its evolution in India today. We are among the three fastest growing insurance companies and this translates into amazing opportunities for our associates. Our ultimate goal at MetLife India, simple in concept and impressive in breadth, is to build financial freedom for our customers. For our customers that means providing products and services that allow them to enjoy life and trust in the fact that we will be there for them.

Where we are going We at MetLife India are committed to continued growth. Well get there through the power of our relationships, by expanding our already wide array of innovative products and services, and by making the most of an enormously diverse and talented work-force to meet the challenges of an ever-changing marketplace. This means an array of career opportunities.

Where you want to be Work shouldnt be something you do just to make ends meet. It should provide satisfactionand an opportunity to make a difference. MetLifes responsiveness to the needs of both our clients and our employees is a direct result of one of our core Company values people count. To you, as a potential associate, it means providing a career wherein you can achieve both work and life significance.

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If you want to make the most of life... then MetLife is the place to build on your strengths and talents. We believe in bringing out the best in all our associates. That's why we foster an inclusive, supportive environment where everyone has the ability to make a difference. If you want to foster prosperity, protect families and enhance lives... At MetLife, it all about building financial freedom for our customers and associates. Through the wide breadth of products and services we offer, and the financial guarantees which only an insurer can provide, we help individuals manage the 'ifs' in life by enabling them to build a personal safety net for the future.

If you expect to be rewarded for performance..... At MetLife, performance management is a process for helping you maximize your contribution to the business and develop your potential. Our performance management links your teams goal, as well as your own, to those of the Company. Closely aligning pay with performance. It enables you to ensure accountability for business objectives and develop to your full potential.

If you desire to work with the brightest and most dynamic individuals in the business Every day MetLife embraces the diversity of life. The combination of various perspectives, experiences and backgrounds not only enhances our work environments, but also promotes our personal and professional growth. So if you want to find all this in one place then MetLife is the place to be. Who we are looking for? * People who are ready to challenge assumptions and use innovative thinking and produce solid results. * People who not only embrace change they effect change. * High performers who thrive in an environment that acknowledges their energy, creativity and diligence. If you are a team player who understands that partnering is essential to the success of the whole, then you are exactly the kind of talent we seek.

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Metlife to Milk Recession, Plans Massive Expansion

Private insurance major Metlife has announced big plans in India. Metlife plans to hire over 2,000 people and double the number of its branches. The company also plans to increase the number of its financial advisers from 30,000 to 60,000 keeping in lieu with its plans. Managing Director of Metlife India Insurance, Rajesh Relan justifies the plans as a part of their growth strategy. "We are going to do more business in next 5 months than we have done in the last 5 years," Relan said. The company's take is clear that bears must be taken head on and going big on the bust seems the way ahead for Metlife. The company has launched two new products, which are Met Growth & Met Income Guaranteed, to keep pace with its expansion plans. Understandably, both the products have an element of guaranteed return on investments. The company is also hiring aggressively to ensure the success of its existing products as well as new ones in the offing. "We plan to raise 100 crore through shareholders. We would double the number of offices from 96 to 191, hire 2000 sales managers and increase the number of financial advisers from 30,000 to 60,000," Relan added. According to IRDA, life insurance industry grossed premium of Rs. 40,000 crore from January to September this year. Although premiums for the month of August at 3400 crore rupees were much below the 5000 crore rupees average, Metlife claims that it is growing at 118 per cent as against the 60 per cent growth boasts of. Metlife has said that though the customer base is small, it presents an opportunity for them to revise and hasten their expansion plans to get maximum gains.

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It is the downturn in the global economy that they hope to get help from. In recessive times it is relatively cheaper to set-up businesses, costs like lower property rentals and skilled manpower are lower than at other times. This can help fuel their growth said Relan. Metlife works on the premise that a mere 20 per cent of the insurable population in India is covered by life insurance. Considering its population base of a billion, even a marginal increase in the insurable population represents a considerable market opportunity. Apart from that, India has one of the highest personal savings rates in the world. And as most of the other measures seem insipid for corporate across the board to raise their revenues, being bullish seems the last throw of dice which could trigger a revival.

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Metlife Life Insurance Has Huge Potential

Though recession is giving a tough time to most the industries but life insurance isnt too much of concern yet. In the interview with Economic Times, MetLife International President William J Toppeta shared his view why the life industry will continue to grow at a high rate. Read the full interview below:

The recent reduction in the life insurance space is not too much of a concern yet. The industry will continue to grow at a high rate as the need for financial protection and long-term wealth creation will not change due to the external conditions, said MetLife International President William J Toppeta in an interview to ET. How do you perceive India as a market in the wake of the global recession? There is immense potential to be tapped in India. The life insurance sector is relatively new and under-penetrated. It constitutes around 4% of the total GDP when compared to other Asian countries, where the life insurance penetration is around 8-10% of the GDP. India is a young country where more than 50% of the population is between 20 and 60 years of age. Insurance in India is perceived more as an investment tool and people are opting to buy insurance products for the purpose of long-term investments. The norms on how FDI is calculated have been changed. What is your take on the regulatory hurdles in India? I havent followed the latest announcement in terms of the FDI policy, so I really cant comment on it. But we do face problems of capital infusion because of regulatory hurdles in both India and China.

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The life insurance sector has declined by over 2% this fiscal. Is that a cause for concern for you as India is grossly under penetrated in terms of life insurance? Not at all. The long-term growth story is very much intact in India. As I mentioned earlier, insurance products are perceived as long-term investment tools in India and people will continue to buy irrespective of the financial crisis. The reasons for taking out life insurance for the purposes of marriage, retirement and child education will not change due to adverse economic condition. The negative growth this fiscal is more like a blip. If you have tracked the life insurance sector in India so far, you will realise that it has immense growth potential. Last year, the industry witnessed almost 100% growth. What is your total asset size? Do you think there is any need to modify the rules regarding the calculation of mark-to-market (MTM) losses? We have an investment portfolio of around $300 billion worldwide and in India it is almost Rs 2,500 crore. We manage a broad range of asset class including public and private bonds, real estate and agricultural mortgages and bonds backed by consumer loans. As to mark-to-market rules, I dont think I can comment on it. We have established our presence in several countries and have complied with all the rules. Coming to funds, how much do you deploy in infrastructure globally? We invest enough in infrastructure projects but it varies from country to country depending on regulations. You will find Metlife doing a lot to develop infrastructure projects such as highways and ports. Many financial institutions like banks are not much into long-term financing because of the nature of their business. We propose to fill that gap. Do you think the volatility in the stock market in the past year has affected the demand for ULIP products? We are inherently a conservative company and invest very little in equity. Our total equity holding is less than 7% of our portfolio. We adopt different business models for different countries. Its all about complying with the regulations and tax rules. I remember a time, not too long ago, when the general account was worth $300 billion, while a separate account comprising ULIP and other

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schemes was in the range of $100-150 billion. In the months to come, ULIPs will continue to be the preferred investment channel for investors. What is your outlook on the global slowdown and going forward what are your investment plans? We always plan in advance before taking things forward. In my view, the global situation may take about 12 months to revive. Given the current global market sentiment, insurance is one sector continuing with its recruitment exercise Thats true. With the growing awareness about the need for insurance in India, the demand for agents and professionals has increased significantly during the last three years. The industry will continue to recruit in hundreds in the next few months. This is one of the sectors that has witnessed a good growth rate even in the crisis situation.

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Key Lessons of a Global Recession

The overall impact of the global recession is now evident across the world. What started as a sub-prime crisis in the US sometime in the first half of 2008 has engulfed almost all countries. Consequently, all countries have witnessed their economy, modelled on the ideas of neo-liberal capitalism, falling like nine pins. The banks, which till very recently were the epitome of private sector efficiency and global excellence, are lying insolvent and hollow. The problem is essentially a making of the private banking sector. Throughout the past 100 years, bankers were perceived to be people who enjoyed the trust and respect of the people. However, as the crisis unravelled, people saw the ugly face of bankers, who were driven by an insatiable desire to make profits and lobbied hard to de-regulate their institutions. This made the entire banking sector extremely vulnerable to risk. However, in the meantime, top bankers had ensured a fat bonus for themselves. The government in a haste and, more importantly, fearing mass outrage decided to pump in large sums of money into an already failed system, leading to what we commonly refer to as bailout packages. Let us examine who actually is paying for this deceit and fraud? Is it the working class, whether in white-collar or blue-collar jobs? It is certainly not the companies, whose value has shrunk by half or more. It is also not those who have built empires on artificial value. The people in real estate business had made enormous money when the going was good. If they find themselves in a jam, they cannot ask for any sympathy. These were the people who had lost all commonsense and indulged in utterly ostentatious lifestyle that reeked of vulgarity. They had scant respect for money when they advertised that one could become a multi-millionaire in a short span of time. The economic tsunami was not only foreseeable but possibly, is in a way better for the world to be brought in order. When the world comes out of recession, which may be in three-four years, the world order would be different and the people will view money with the respect that it deserves.

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The loss actually is for millions of people around the world who work hard to build companies, projects and homes. They are the ones directly affected by job losses and shrinking salaries. However, these people in distress find themselves alone with no bailout package for them. Their children find it difficult to pay their school fees and their homes do not get adequate food. In fact, it is the working class that is paying for the sins of the rich. There cannot be any sympathy for the rich. For, they are still living in the same style as they did two years ago. It is a misfortune for millions of laborers, particularly Indians, who had moved to other countries for jobs and are now returning home. They were sending remittances to support their families and now find themselves an additional liability to the families. It is, of course, a loss to the national economy, which is losing remittances that cushioned foreign exchange reserves, but the social impact of such reverse migration is more threatening. Can anyone imagine the plight of parents, who gave them proper education; clothing, food and shelter, and have now abruptly lost their jobs? Their dreams lie shattered right in front of them. To conclude, possibly, this jolt of the economic meltdown was not only expected, but also needed in order to restore a semblance of sanity among those who were managing the fiscal and monetary system. A deregulated environment cannot ensure the welfare of the people on a longterm basis. It was a short-term Diwali for many people, and they abused Lakshmi (goddess of wealth) by disdaining her value. One hopes the darkness of recession, whenever it lifts, will bring with it a better environment for doing legitimate business and seriously offer better employment opportunities to the middle class on a long-term basis. However, the current situation cannot pass without leaving some lessons for the society to learn. The impact of this recession, I believe, is certainly greater than that of the Great Depression of 1929. The world today is electronically connected and the economies are inter-dependent. Hence, the pain of job losses is being felt across the world, and the social security available in a few countries is hardly enough to help the young and jobless. One hopes that the people will learn some lessons such as showing respect to money and living in a manner that is not about making a statement and giving a complex to others, but based on values and decorum. Hopefully, old values and family culture will guide the next generation.

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Challenges in the Insurance Industry

Challenges are mounting for insurers. Increased pressure for profitability translates into a hard look at cost reduction and top-line revenue growth. Profitability is linked to the ability to accurately assess risk and manage customer relationships over time to achieve financial success. Insurers recognize that in order to respond to these pressures, they need to eliminate inefficient back-office processing functions. Another priority is improving the quality of service to the distribution channel. As agents have more choice in choosing carriers, they are looking to align with an organization that makes it easy to conduct business, pays commission on a timely basis and reduces the time to process business. The modern day global economy is a highly interconnected one. With the increased connectivity the challenges before the global economy has achieved an altogether new dimension. On one hand is the positive impact of instant access to the global information network. On the other hand, market volatility is using the economic inter linkage channels to spread like wildfire. The global economic challenges come from a host of factors. They include topics like poverty eradication, role of international bodies, containment of inflation, ways for controlling rising food prices, demand and supply trends in the world's food grains markets, factors impeding the global economic development, issues related to world trade and afflation to name a few. 2008 has begun on a relatively somber note as compared to 2007. The International Monetary Fund revised down the estimated world growth rate for 2008. This was a fall out of the US subprime crisis. At present economies throughout the world are facing stock market volatility and rising unemployment figures as an after effect of the US crisis. It seems that the world is headed towards a recession. Since globalization has done away with the insulation of markets, various market risks are getting magnified. The world is yet to do away with the scourge of infant mortality, income inequality and poverty. Poverty y is basically a lack of entitlement to the basic needs of human sustenance. As per estimates, around one billion people worldwide survive on less than a dollar per day. Over

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one billion do not have access to clean water. Basic sanitation facilities are absent for around 2.4 billion people. Around 5 million children worldwide die from starvation. Life expectancy of the African populace is around 35 years less than their US counterparts. As per data released by UNICEF around 10 million children who were less than 5 years of age died worldwide in 2006. Of them around 4 million were infants. To sum up, the challenges before the global economy are by no means simple. Timely intervention in the form of appropriate policies and fiscal help from the world bodies are needed to tide over the crisis. No less important is the political will needed for the seamless implementation of the policies.

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An organization greatly depends on its capital and the human resource is truly an essential part of the process. With global recession trends, cost cuts will be effected with job slashes and also curtailing employee salary. This forms a part of strategic planning that encompasses human resource sector. Each employee is a cost centre to the organization and training the employee is an apt requirement for boosting his performance. Human resource is about relations, maintaining the relations and conflict management. When it comes to manpower rules will be necessary. One has to strictly go in accordance with the rules and violation in the slightest variety will result in discordance. Strategic planning involves looking into future needs that the management has to visualize and anticipate. Business expansion, cost centre location, skilled employees, training programs all have to fall in line in the broad concept of strategic planning. Planning in human resource contains qualitative aspects but most of the themes should be around statistical data. Survival in a competitive environment is about having in edge. Retaining the employee and allowing multi tasking is necessary to maintain the head count in each section. Targets in performance have to pre determined based on authentic research of potential capacity, geographical viability and ad hoc absenteeism. Outsourcing in another major plan about strategic human resourcing. This is definitely a cost cutting procedure though one has to formulate a strict quality maintenance contract with the outsourced company. Environmental changes effect business in a big way. With recession trends, the low cost and less supply will definitely hit all factors of life. Economy downswing is a realistic method and each organization must plan for it in advance. Profits and performance is linked. The employees also look forward to intangible morale boosting perks that are constantly a pressure to management. When interest conflicts emerge, there is a contradiction to ones expectation and then retaining the talented employee becomes a cause of concern. The age of pink slips and down trend in the job market is not a very encouraging situation and management must insulate the process with strategies and reliable policies.

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