Select two topics from the list and critically discuss how they contribute to the effective operation of the Human Resouce Manag

An economic downturn also affects the reward system of the firm where the human resource management has to figure out a way to reduce the costs of rewards and still keep employees motivated ( 2013). Economic Downturn: No business operates in isolation and is very sensitive to the outside environment. As an economy goes into a recession there is a significant decline in economic activity, a slowdown in industrial production, a decrease in consumer spending, loss of jobs, and a reduction in real income. For example Sherry FitzGerald a leading Irish residential and commercial estate agent was significantly affected by the recession as the volume of transactions in the residential market fell by 40% and their capital value fell by 50% ( Top of Form Roche, 2011). Bottom of Form . Due to this downturn, the Human Resource Management all of a sudden finds itself in the midst of problems encompassing all of its functions. It needs to reduce workers, ensure it maintains the motivation of the survivors, completely redesign jobs, and also try to gain the few opportunities that recession presents to the various firms. During the downturn of an economy, the human resource management must strive to maintain a balance between the interests of the employees and the organization as a whole. This scenario greatly affects the efficiency of the HR as it is faced with increasing constraints. Due to a decrease in economic activity, the management faces a decline in the HR budget and the main priority of the firm is to reduce production costs. Downsizing becomes the norm as companies critically review the allocation of their resources. Sherry FitzGerald however, did not initiate a redundancy policy right away, but decided that its chief HR policy would be to offer job protection and security. Salary cuts, recruitment embargo, career breaks and flexible working hours were offered to the staff and it was claimed that redundancies would be kept to the minimum. However, the complex economic situation threatened HR with more problems as all the steps it had taken until now were not very effective in decreasing the cost. Thus, redundancies were seen as unavoidable and 31 employees were laid off. Cuts in salaries and reduction in fringe benefits was implemented once more. Layoffs put up a challenge for the HR departments, as they try to keep the existing employees motivated and appropriately trained. Reduced staffing levels and funds, and psychological problems faced by the employees during this hard time make the work of the HR difficult. All the events faced by the HR department of Sherry FitzGerald challenged its efficiency as many of their policies were not very effective in reducing costs and helping the firm through recession. However, by involving the staff and trying very hard to compensate its workers, it gained the support of its employees and was able to live through the hard times (Dtz Sherry Fitzgerald (Firm), 2010). The economic recession of 2007 created uncertainty for the American businesses and many are still hesitant in investing. According to the Bureau of Economic Analysis, corporate spending is increasing and GDP is expanding. but companies are still hesitant to hire again (Charles et al 2010). Many companies have also cut spending for the current employees, and won’t increase wages, benefits, and investment in hiring and training

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