It is a long established business reality that Organizations prosper and grow through their people not their products. Chiboiwa et al. (2011) argued that, having a highly efficient and vigilant work force increases an organizations effectiveness and productivity. Due to the volatile and constantly changing economical situation of today, most organizations face the challenge of developing an effective HRM strategy for managing their human resource. By designing an effective strategy for a useful employee management, organizations can achieve operational excellence and reach their desired goals and objectives at a minimum time span. It is thenthe manager’s responsibility, to develop a short, medium or long term strategy, suitable to: the size of the work force, resources allocated and nature of problems faced by the enterprise.

1. 1
The role HRM plays in the development of a work force
strategy
It is a long established business reality that Organizations prosper and grow through their people
not their products. Chiboiwa et al. (2011) argued that, having a highly efficient and vigilant work
force increases an organizations effectiveness and productivity. Due to the volatile and
constantly changing economical situation of today, most organizations face the challenge of
developing an effective HRM strategy for managing their human resource. By designing an
effective strategy for a useful employee management, organizations can achieve operational
excellence and reach their desired goals and objectives at a minimum time span. It is then the
manager’s responsibility, to develop a short, medium or long term strategy, suitable to: the size
of the work force, resources allocated and nature of problems faced by the enterprise.
The employees must also realize their responsibilities towards their organization, and know how
they can maximize their collective efforts towards achieving the organizational goals and
objectives. Employee motivation is the key towards, increasing an organization’s chances of a
speedier achievement of operational goals. Employee motivation is not just based upon tangible
incentives, but monetary benefits surely play an important role in motivating them towards
performing their jobs better. Nazir et al. (2012) discusses and analyzes the importance of a well
balanced pay package, to fully utilize the work force capabilities for reducing organizational
costs. Fiscal rewards play a huge role in gratifying employee’s internal instincts. Literature
reviews suggest countless ways to facilitate employee interests, as reward and incentive
packages must be designed and tailored to the needs and preferences of employees. Hence,
improved communication strategies not only play an important part by engaging the employees
as they feel a part of the organization’s strategy, but they also increase their commitment and
interest levels, which ensures successful attainment of organizational goals. Internal
communication also plays a vital role in addressing these benefit packages to the employees to
make them feel needed and cherished. An effective communication strategy creates awareness
amongst the employees, regarding their shareholder worth as being an asset to the organization.
Cross cultural training is also an effective investment, for increasing employee commitment.

2. 2
More recent studies (Paauwe 2004) show that, the H.R.M function is a major organizational
responsibility, with perfectly laid out guidelines which must be abided. Its purpose is not solely
financial, it is also to ensure whether the organization is following its national and international
legislation, and trade union agreements. Major role of the H.R.M function, is to develop a keen
sense of “Corporate citizenship”, amongst all the employees. The exchange relationship that
exists, between the Human resource and the organization, involves not only elements of time,
effort and money, but also of, good will, mutual respect, competencies and expertise, knowledge
and learning etc. People within an organization; share most of their time together, rather than
their families. So, it is exceptionally important to shape that relationship, in such a way that it
becomes a useful asset for the organization and adds to its image and ideology, not just economic
feasibility. Despite the tough tasks encompassing the economic rationality, H.R.M also
represents the moral values of the firm, principles of legitimacy and fairness. Fairness may relate
to the Organization and Society in general, or between the organization and its: stake holders,
Government and Judiciary, trade unions and councils to be more specific. So the term Strategic
human resource management entails the concept of fairness on terms of improving an
organization’s productivity and ensuring its continuity. At the same time, it also encompasses the
uniformity of the human element by benefiting the workforce and creating: solidarity,
commitment to participation and mutual trust.
It is concluded by Alharthey et al. (2011) that, recognition of the value of Human capital is
integral for the organization for globally successful operations. With the global revolution on the
forefront, Strategic Human Resource Management (S. H.R.M) is the major concern of the
managers and H.R professionals who want to expand their business globally. It creates new
dimensions of team learning and organizational growth, and development of a competent and
culturally rich work force. Diversity based SHRM practices, create opportunities for the
organization’s success and help it retain its market share, and attain a competitive edge over
others on a global level. Employee diversity, harmonized H.R activities and value-based
performance are important criterion for the development of an effective human resource strategy.
The leadership and management must have a clear mission and strategy based model, which
focuses on employee empowerment.

3. 3
A diversified and enriching SHRM strategy includes, clear communication and knowledge
sharing from internal and external sources of information. The key factors for strategy design
are: experimentation, innovation, learning organization, conflict resolution, problem-solving and
skill development. The work force can be competitive and productive, by having common goals
and effective information sharing. Effective use of SHRM practices may actually help, in
developing a highly competitive and skillful work force which also helps sustaining the
organization’s shareholder worth and also maximizes its profits within minimum time and
resources, whether a long, medium or short term strategy to adopt.
Shah et al. (2011) debates, that employee performance can be judged through evaluation and
incentive based reward system. H.R dimension can have tremendous impact upon an
organization’s success; employee commitment can be achieved through long term strategies of
training and medium or short term, task based reward system. Job security naturally enhances
employee commitment and participation. Promotion increases employee satisfaction and
reassures them of future rewards. Employee development can be achieved through retention,
which is reflected by learning and the age of an employee. Employees gain experience through
retention, and gain confidence and expertise by further polishing their skills. It is the manager’s
responsibility to recognize employee’s potentials and, select the right person for the right job.
Employee collaboration creates novelty and foresight to the organization’s work design.
Competitive advantage is every organization’s dream, whether big or small. An effective, well
trained and well maintained work force ensures a competitive edge, with increased profit
margins. Employee evaluation and organizational performance both are measured by SHRM
models. Organizational performance is directly proportional to organizational justice, which in
turn means that, employees trust the organizational efforts to increase their development, and
polish their skills. This trust re-enforces their commitment and loyalties to the organization and
they give their best, to support and build their organization. In order to sustain this trust and
efforts of performance, the organization must induce learning practices within their environment,
by making good use of their intellectual and creative capabilities. Building a learning
organization, will help develop employee’s abilities and increase their commitment and this will
have a lucrative affect upon the organizational performance. Therefore, the mutual relationship
between, leader and sub-ordinate employees must improve and shine, as employee participation

4. 4
and motivation is attained by creating: mutual understanding of organizational goals,
performance evaluation and appraisal, motivation of leaders and employees, also promotional
and incentive based packages for employees. Compensation plans in case of a lay-off, should be
designed keeping in mind the needs and demands of the work force, to infuse encouragement and
to reward employees to reduce turnover ratio. Employee performance is indispensible, when
extensive and far reaching use of collaborative team work is required. The nature of the
underlying project or task determines the longevity of employee performance whether long,
medium or short term evaluation of tasks and problem resolution, and the extent of resources
required for achieving the particular goals. Employee efficiency and excellence can be enhanced
when, employee training is provided in activities like: pre-education, post-education and on-job-
training along with lively guidance and employees are duly rewarded for improving work
performances, post task achievement, which will increase their personal interests.
Parsons (1972), Shed lights and draws inferences, by researching the concept of “firm-specific-
human-capital”, which results from: training, research and transfer of knowledge and
investments of a distinctive value to a specific firm. The impact of firm-specific human capital
on firm turnover and wage policies and agreements are analyzed. The optimal and feasible
sharing of such investments between firm and worker are explored. Statistics show that lay-off
rates and quit rates are negatively linked to the employee and firm investment relationship. The
research and development department of each firm conducts empirical tests and develops
hypothesis after analyzing the various: cost and benefit factors, turnover rates and wage policies.
The theoretical situation between these tests may contradict with their practical application, as
their validity depends upon the firm-specific human capital, versus the market conditions and
external environment factors such as: technology, wages, lay-offs etc. One may reach an
important assumption that by bringing innovation in technology and, improving labor skills the
firm can eventually reduce costs and may even increase operational efficiency and enhance
productivity, along with keeping the desired level of human capital. Employee performance
which is directly proportional to firm’s success ratio, can be enhanced by exercising fair labor
policies, optimal wage rates and improving firm’s business ethics and values. An efficient and
technically advanced work force is an irreplaceable asset for an organization; human capital must
be preserved and protected, in a dignified manner, to maintain firm’s competitiveness and
productivity.

5. 5
Downsizing or reducing the size of the work force on purpose, has become a frequent feature on
the corporate landscape in recent times. After analyzing the particular case study, under
discussion, if we are to assume that the General Managers have decided to reduce the work force
or change employment arrangements to reduce costs, they would have to deal with certain legal
implications also. However, Stacey claims that these redundancies and lay-offs would be legally
justifiable. Let us bring more clarity to the legal aftermath regarding this case study.
The management lay-off practices may traumatize the workforce and bring displeasure to the
employees, due to the social stigma and psychological stress it entails. The procedural degree of
fairness in lay-off practices is required, both on social and decision-making levels. The layoff
outcome can be predicted and evaluated, on the basis of the perceived level of benefits to be
achieved in case of the lay off. The inter-relationship is best described through a thorough cost
and benefit analysis, and the certainty of the generated outcome to be lucrative. According to
McKinley et al. (1995) the managers and executives may improve their downsizing practices and
reduce the uncertainty, by analyzing three social forces of: Constraining, Cloning and Learning.
These forces and their related models of behavior may improve the downsizing routine of the
H.R personnel and executives. It will also help justifying the consequences and improve chances
of the benefit outcomes related to the down-sizing. The procedural fairness and justice is of
utmost importance whilst deciding about reducing the work force, and various factors demand
consideration. McKinley et al. (1995) believes, that firms downsize due the factors of:
Constraining, Cloning, and Learning. Constraining at the initial level means that firms are having
immense pressure to conform to legitimate rules and organizational norms, regarding
management structures. Firms ideally look up to the model of “Lean” and turn to downsizing in
attempt of imitating that. Secondly, Cloning can be explained as, firms tend to downsize in
pursuit of excellence, by imitating firms who set the benchmarks for organizational prestige and
success. Regarding these two concepts, whether the firm is actually going to gain measurable
benefits and positive outcomes, is not a major concern for the management, which is keener
towards the process of downsizing to take place in any case. Third factor is Learning, which
involves academics and things that are taught within colleges, universities, and professional
organizations. The theory discusses various techniques, perceptions and ideologies encapsulating

6. 6
the processes of downsizing, its alternatives, and after effects. This theory helps legitimizing the
concept of corporate downsizing by making it more acceptable, as a next logical consequence if
the situation demands so.
According to a research study by Cloquitt et al. (2001) the question of fairness and
organizational justice leaves a lot of room for research and deliberation. The factors that
influence the decision making process for the management are: the extent of relationship
between the two key figures, the management and the employees, various dimensions for justice
marked by the current organizational scenario, the relativity of equation between various justice
criteria, and the specific affect that these justice dimensions have upon key outcomes . The
author of this essay conducted a “meta-analytic review” of 183 justice studies to answer the
above questions. The results show that although various justice dimensions are inter related,
either high or less, they bring about gradual variance, described in fairness perceptions. The
outcomes also depict the exclusive relationships between: procedural, distributive, informational
and interpersonal justice, and also amongst several organizational outcomes such as:
Organizational commitment and achievement of goals, job satisfaction, evaluation and extent of
authority, organizational citizenship behavior within the work environment, withdrawal or
quitting rates, employees work performance etc. These factors have significant affect upon
organizational justice criterion and its implications.
The Company in the given case study is a strong enterprise, with major financial interests to take
care of, and a reputation to uphold. The decision to reduce the work force size is not a simple
task for this company because of its sizeable work force. In the company’s best interest, if the
GMS decide to cut down on the cost by downsizing the work force, there are certain legal issues
to address, along with the psychological impact of the layoff procedure on the work force as a
whole. Recession is a tough time for an organization, and it should aim to go through the whole
situation with as fewer setbacks as possible. In an academic article by the Canadian Alliance of
Sector Council (2012), a research study conducted by the University of Wisconsin Madison,
shows that downsizing may lead to higher percentage of turnover. It may cost the firm most of its
critical and experienced people, as the firm may lose them to their competitors; hence, it will
cause them a negative reputation accompanied with, emotional turmoil and financial losses. So,
the challenging task for the organization going through tough times is to keep its workforce

7. 7
intact, and go through the situation without losing their key employees. As low morale of the
work force during recession, may lead to dissatisfaction which will eventually cause low
employee performance and declining profits.
This complicated task can be handled tactically, if the GMS of this firm take the following
intelligent measures, to deal with the inevitable consequences of downsizing:
1) Enhance Communication: The worst thing to do to your work force is to keep them in the
dark, so the management must have open communication with their employees to give them a
sense of what’s coming. Employees tend to get the feel of downsizing, so the firm must respect
their workforce by creating awareness regarding the factors responsible for causing the
downsizing. They must be fully enlightened regarding the declining economical situation, by
holding regular staff meetings and group discussions.
2) Invest in training the employees: At the time of recession incurring more costs may seem
unlikely, but training the employees during such a time is a must-do. It will help building-up
their morale and create awareness regarding the financial situation at hand, it will also make
them realize they are an important part of the organization and, the firm would not want to lose
any one of its competitive work force, until it becomes inevitable. To reduce the training cost,
the firm may use E-learning modules, or lunch-and-learn sessions, which are comparatively less
expensive. Employees may also join trade association seminars and voluntary mentors may be
provided to impart guidance.
3) Involving the work-force throughout the decision making process: The employees are the
building blocks of an organization, their insight may even be better than the senior management
regarding recession. They must be taken into confidence before the final decision is taken. Group
discussions and brain storming sessions within the work force may generate better ideas and
productive outcomes. Discussions with the employees may even help in finding solutions to the
existing problems. As they work on all levels of the organization they are in a better position to
know where the extra costs have incurred and how to reduce them. The consultation sessions
with them may even help getting rid of the excessive work force that need to be replaced, or the
procedures and activities that cease to be profitable and how to find suitable employees for

8. 8
specific tasks. This will give the firm ample opportunity to reduce extra costs and get rid of
inefficient procedures or extra work force and finding the right person for the right job. By doing
so, the management will be able to bring some stability to the organization in such crucial times.
Along with raising the employees’ morale, the management might also be able to find out, how
far are the employees willing to go to keep the firm from downsizing. The employees might
suggest ways to cut costs such as: pay cuts, reducing allowances, working extra hours and job
shifts etc. Moreover, the organizational decision making process will be a fruitful one, if the
employees are a part of it. This will create a feeling of trust and belongingness and enhance their
loyalties towards the organization. It is not only a morale boost, but a survival tactic also.
Employees might actually help solving the crisis that their firm is going through in times of need.
4) Having a positive attitude through-out the tough times: It is important to keep employees’
morale intact and maintain a positive outlook, to spread energy and goodwill throughout the
crisis. Sharing good news and celebrating achievements will create the spirit of togetherness and
unity of thoughts. So employees must be given positive feed-back for their performances and
constant encouragement, to induce optimism and sportsman spirit and create assurance of a
better future.
5) Keeping the little perks: In times of a crisis, when cutting down all the excess costs are
critical, it is equally important to keep the little perks that are reminders of good times and create
hopes for a promising future. These little touches are not that expensive, but they add to the
positive energy of the work environment for example: employee of the week, small bonuses and
increments for extra ordinary performances etc.
Although, sometimes reducing the work force size becomes inevitable for even a highly
successful organization such as the case in consideration. However, it is equally important and
highly commendable to avoid lay-offs altogether. But if all measures fail and lay-offs become

9. 9
un-avoidable then, certain Government funded Programs, like the federal governments “Work-
Sharing program” may provide timely assistance and help avoiding permanent loss of
employees and layoffs. Work-Sharing is an Employment Insurance (EI) program that reforms
and assists companies, whose business transactions and productivity has been declined due to
uncontrollable circumstances (Work-Sharing n.d.).
These programs rearrange work hours and reorganize activities, so as to cut back staff hours
anywhere from one to three days a week. This way, the firms reduce salary costs without
resorting to downsizing. Another feature of these Work-Sharing programs is for the work-force
whose employers are taking part in the program, they can draw EI payback and benefits to help
reimburse for the loss of wages. The program supports both the employee and the employer as:
employers keep hold of the skilled personnel they will need eventually when the economy
stabilizes and further starts booming, hence, the firm manages to uphold its position in the
industry. On the other hand, through this program the work force also preserve their positions in
the organization, guard their salaries and sustain their skills. Another critical aspect is that
during a financial crunch, one thing that every company wants to avoid is an expensive legal
battle. So it is best to know the law, and give the dismissed employees a prior notice and
compensate them accordingly, as per their contract. The legal particulars depend upon the
specific territory of the country. It is better to get legal advice from a lawyer or contact provincial
labor board to ensure all the required legal obligations are met, prior to the dismissals.
Conclusion:
It is a known fact that at some point in time, every organization has to bite the bullet and go
through downsizing, no matter how tough this decision is for the management. Every successful
organization owes a large chunk of its success to its proficient and highly accomplished
workforce. However, during unfavorable circumstances, laying off becomes inevitable, then the
wisest thing to do is to do what is best in the company’s interest, and handle the lay-off
diplomatically. It is an organizational reality that retaining the work force and laying off
employees, both go together and calls for the same level of competency and delicacy. We are
living in an age where every organization needs to treat its work force with the highest level of
dignity, as they will to any other asset. Today is the age of media and social communication and
networking. Social websites have taken exposure to a whole new level. Every company’s

10. 10
employees have their company’s secrets, good experiences as well as bad and it takes only
seconds to express and share it with the whole world. So it is the call of the day that every
company who wants to uphold its image in the industry must treat the laid-off work force with
respect and honor as well as cherish their services. So that the employees spread the good word
and be proud of their association with the company they once worked in.
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