Cost Reduction under Pandemic Pressure
COVID-19 outbreak is an unprecedented health crisis that has strongly shaken the whole world by prompting the World Health Organization to announce it as a global pandemic. The outbreak of COVID 19 has led to a serious slowdown of all economic activities all over the world with the experience of great uncertainty and risk. Hence the pandemic is a health crisis it has led to create an existing VUCA environment more complex and more challenging for human resource management (HRM) practitioners. The pandemic has immensely changed the operating patterns of organizations as employees work from home. Although most of the service sector organizations is being dealing with the concept of work from home with the support of information technology, labor-oriented manufacturing organizations drastically experiencing the negative effects of the pandemic.
Cost reduction is the most affecting factor for
organizations under pandemic pressure. As a negative consequence of the
COVID-19 outbreak, financial difficulties emerged drastically. HR practitioners
are struggling to reduce the cost that relates to HR Management and some
decisions that have been taken to reduce cost due to the outbreak of COVID-19,
can be identified as follows.
1. Hiring
freeze.
2. Hire
a temporary workforce.
3. Monitor
and limit overtime and shift premiums.
4. Freeze
nonessential HR initiatives- expertise of outside organizations.
5. Encouraging
remote work concept.
6. Introducing
Job sharing programs.
7. Eliminate
or reduce external training and introduction of virtual training.
8. Explore
government relief programs to avoid layoffs.
Human Resource is the most valuable and important
asset of every organization and that should be treated with greater attention.
The unpredictability of the pandemic has emerged a great uncertainty to the
whole world, Hence, consideration of short-term decisions is not sufficient and
consideration of long-term impact has become a mandatory requirement of decisions
made during the pandemic regarding the human resource.
COVID-19 global pandemic is a health crisis that has
led to emerge socio-economic crisis in the world. Cost reduction is the most
common issue that every organization struggles with due to the negative
consequences of the COVID -19 pandemic. HR leaders - like all functional
leaders - face pressure to cut costs. Since human resource is identified as the
most valuable resource in every organization, cost reduction decisions should
be made with much attention regarding Human Resources.
References
1)
Bussin, M.H.R., & SwartOpperman, C. (2021).
COVID-19: Considering impacts to employees and the workplace. SA Journal of
Human Resource Management/SA Tydskrif vir Menslikehulpbronbestuur, 19(0),
a1384. https://doi.org/ 10.4102/sajhrm.v19i0.1384
2) Hamouche, S. (2021). Human resource management and the COVID-19
crisis: implications, challenges, opportunities, and future organizational
directions. Journal of Management & Organization, [online] 15,
pp.1–31. Available at:
file:///C:/Users/HP/Downloads/Human_resource_management_and_the_COVID-19_crisis_.pdf
[Accessed 16 Nov. 2021].
3)
SearchHRSoftware. (n.d.). 18 HR cost reduction ideas for
the 2020 COVID-19 recession. [online] Available at: https://searchhrsoftware.techtarget.com/tip/18-HR-cost-reduction-ideas.
Cost management is a very important factor in any business but looking straight in to human resource cost may not be the only way you can achieve the desired objective. During Covid pandemic this was a hot topic, efficient creative way of dealing with the situation will have longer term benefits.
ReplyDeleteLaying off employees, reducing employee pay, closing facilities, streamlining the supply chain, downsizing to a smaller office or moving to a less expensive building or area, reducing or eliminating outside professional services such as advertising agencies and contractors, and so on are all examples of cost-cutting measures. I believe, instead of reducing employee benefits,alternatives should be used to reduce costs.
DeleteDear Animesha you have selected very essential topic in here. HR leaders must act to identify and capture short-term efficiency gains, including immediate spend reduction, while managing the risks associated with those cost decisions. In the case of HR, that primarily means protecting employee experience and productivity.
ReplyDeleteE commerce news 2020 said "Making smart and strategic cost cuts to company show employees that you are serious about using resources wisely.It will make them your partners in future cost reduction efforts and make them more conscious about using resources wisely too".I believe that everything can be controlled by the decisions of the top management so that proper decisions regarding cost control can be made in a way that does not cause problems.
Deleteinterested cost reduction is very important this time for every company to come out from bad situation , Thanks for shear
ReplyDeleteThis topic is a good one but my personal feeling is that most of the company's got advantages on the covid19 pandemic situation to overcome their historical burning issues which are not good at all. So no matter how we take precautions when management is behind in their own goals.
ReplyDeleteTrue,all processes ultimately serve the purpose of the organisation.It must be acknowledge that many companies in Sri Lanka have reduced employee privileges for profit.
DeleteCost reduction associated with HRM should be done in Covid-19 situation in order to maintain long run performances of the organization. In the cost reduction process, it is important to use the HR effectively.
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteCost reduction most helpful to success evry organisation,
ReplyDeleteYou have selected suitable topic of this pandemic situation
This comment has been removed by the author.
ReplyDeleteCost management has a great influence on the profit margin of the company. There is a negative relationship between the cost and the profit margin.
ReplyDeleteAs a organization when decisions are taken on above fact, it is necessary to identify the effects when reducing such costs.
Your blog contains an important fact which has been experienced by many organizations at this present pandemic situation.
Covid 19 pandemic situation many of the company did cost cutting strategically , According ( KENTON, 2021) to Cost-cutting methods are those taken by a corporation to minimize its expenses and increase its profitability. Cost-cutting strategies are generally implemented when a company is in financial difficulties or during economic downturns. They can also be implemented if a company's management forecasts future profitability problems, in which case cost reducing might become part of the corporate plan. Thanks to share your Idea here
ReplyDeleteCOVID-19 worldwide pandemic is a health epidemic that has resulted in a global socioeconomic crisis. Cost reduction is the most common challenge that every organization faces as a result of the COVID -19 pandemic's harmful impacts. HR leaders, like all functional leaders, confront cost-cutting pressure. Because human resources are considered as the most precious resource in every firm, cost-cutting measures involving Human Resources should be undertaken with great care
ReplyDeleteAs the impact of the COVID-19 coronavirus pandemic spreads, HR leaders like all functional leaders face pressure to cut costs, but it’s critical to avoid automatic response. A strategic prism must trump ad hoc urgency, because the way you manage your cost decisions now will determine how well you sustain performance during this crisis and emerge as it passes.
ReplyDelete