* Ian Kessler is a reader in employment relations at Said Business School at the University of Oxford. The views expressed are his own *

The Chinese define a crisis as ‘an opportunity on a dangerous wind', and the crisis created by the current economic downturn has certainly placed the management of human resources centre stage. Corporate survival has become dependent on controlling and reducing labour costs, while future organisational viability has necessitated restructuring, placing further strains on the workforce. The challenge confronting human resources management is reflected in the predicted scale of job losses: the International Labour Organisations suggests that in 2009 as many 51 million jobs worldwide could be lost.

The tension between opportunities and dangers is clear:  radical change in a crisis runs the risk of undermining workforce motivation and performance, so precipitating the very organisational failure the changes were designed to avoid. At the same time if employee morale and productivity can be maintained, the likelihood of competitive advantage in the upturn is considerably enhanced.

Success during a crisis is likely to revolve around the balancing of three sets of issues:

Insiders and Outsiders

The shedding of jobs represents the quickest and surest way of reducing financial costs. It is, however, a process fraught with hidden costs and likely to unleash tensions, not least between insiders retaining their jobs and outsiders losing them. This should encourage reductions in the workforce other than through redundancies, for example relying on redeployment, natural wastage or a recruitment freeze. As an alternative, organisations might use more flexible forms of employment such as agency working, so protecting the core workforce. The 850 redundancies recently made by BMW at its Mini plant in the UK were all agency workers. This is not to deny the unease created within the workforce and the community even in this situation, highlighting the need for organisations to care both for those workers who go and stay.

The help provided to redundant workers, for example, career counselling will have a significant bearing on the reactions of remaining workers. The guilt felt by workers in retaining their jobs while others lose theirs is mitigated if those leaving are seen as being helped. Moreover, job losses place increased work pressures on the residual workforce, reflected in research which indicates that for those keeping their jobs in times of downsizing the risk of a heart attack doubles. This suggests the need for organisational sensitivity to these increased demands

Substance and Process

In times of crisis, organisations often have little choice but to place downward pressure on substantive terms and conditions of employment. They are likely to have greater discretion over the processes used to enact these changes. Such discretion is crucial in determining employee reaction to substantive change:  how organisations do things, can be as important as what they do.  Equity theory suggests that employee motivation relates to how fairly workers feel they are being treated in procedural terms - the systems used to reach decisions. Punitive employer decisions are less likely to provoke a negative employee response if introduced fairly. US researcher Greenberg examined two similar factories: one reduced pay by 15% with an explanation and an apology; the other cut pay by the same amount without any explanation or apology.  Workers in the former were not too happy and thefts from the plant increased by 54%; however, in the latter factory where no remorse was expressed theft rates increased by 141%.

How can crisis changes be implemented fairly? Fairness resides in managerial transparency, honesty and humility, pursued through open communications with the workforce. But employee voice, whether through representatives or more directly, also becomes crucial: the chance for employees to express their views in meaningful ways.  Moreover, fairness lies in consistent and equitable treatment throughout the organisation; workers assess fairness by how they are treated relative to those closest to them, typically those within the same rather than in different organisations. It is for this reason that the disproportionate rewards received by senior managers in an organisation so often prompt employee unrest.

Opportunistic and Strategic

In times of crisis, the management of human resources is likely to be driven by short term, opportunistic cost considerations. This runs the risks of weakening the very efficiency and effectiveness of the workforce which created corporate success in the past, while threatening the basis for organisational success in the future. Cutting training budgets subverts the possibility of updating and investing in skills; voluntary redundancy programmes encourage the most talented, typically the most marketable, to leave.

HR systems require years to settle down. The success of the oft quoted payment system run by US company Lincoln Electric lies in the fact that it has been in operation for almost a century. Workers have come to understand and trust it. Any attempt to radically change an HR system, say by a rash pay reduction, threatens to destroy worker trust and the likely effectiveness of the practice. Worker trust in an HR system takes years to develop; it can be destroyed in flash by an unthinking act. Periods of crisis call for an enlightened opportunism: quick action where possible which never loses sight of the organisation's strategic goals and the maintenance of a workforce able and wiling to deliver them.

Bankers, auditors, money-market speculators and regulators all came in for criticism at the Church of England’s General Synod during a discussion on the implications of the financial crisis and the recession.

The City had lined its pockets, regulators had not done their job properly and auditors had signed off financial deals that should not have seen the light of day, the synod heard at its meeting in London.

The result is a deep recession, the first since the early 1990s, with Britain suffering a shrinking economy, rapidly rising unemployment and falling output.

But the Archbishop of York, John Sentamu, suggested everybody was to blame.

“We have all worshipped at the temple of money,” he said. “We have been guilty of idolatry: the worship of God falsely conceived - which is deadlier than either heresy or sin, for it is the prolific source of each. It is this idolatrous love of money, pursuing profit without regard for ethic, risk or consequence, which has led us from orientation to dis-orientation.”

He said the solution lay not only in economics and politics, but also a “deeper vision”.

“It is not about what governments can do for us but what we can all do,” he said.

Various suggestions were put forward by synod members, including working with counsellors, supporting credit unions, donating 10 percent of salary and opting for a gentler life.

They sympathised with the near 2 million unemployed and recognised that some of their own communities were still suffering from the economic downturn of the 1980s, with generations of families still unable to find work.

But the Bishop of London, Richard Chartres, while empathising with the 150,000 people in his diocese who are likely to lose their jobs, said some may feel relief from being made redundant.

“It is difficult to know whether to sympathise more with those who have lost their jobs or those who are left carrying even greater loads with higher targets and fewer colleagues,” he said. “Sometimes indeed people seem to be relieved to get off the treadmill and to be given an opportunity to reconsider what they really want out of life.

“One of the great implications of this turbulence for us is to re-boot our sense of what a truly flourishing human life consists of. The Crack-berry culture is dangerously addictive and coming off is notoriously difficult.”

The comments were less strident than those made since the onslaught of the financial crisis.

Sentamu in September had accused short-sellers, those who speculate on falling share prices, of being “bank robbers and asset strippers“. While the Archbishop of Canterbury Rowan Williams in December said the credit crunch was a reality check, a reminder that “fairy gold is just that“.

He also criticised the government’s fiscal stimulus package, likening it to “an addict returning to a drug”.

But there were still criticism from synod members.

“It is very ironic that we have got to the point now where we have massively bailed out big banks, and bailed out car manufacturers in the States doing to them what we have not done for many nations in the Third World,” the Bishop of Durham, Thomas Wright, said.

“We are in severe danger of the very rich doing to the very rich what they have failed to do for the very poor, and that is shameful.”

But not everybody was angry with the financiers.

Susan Cooper, from the London diocese, said she was “a little disconcerted” by some of the comments.

“These are people too alongside the rest of us and they do not need vilifying at this stage. Some of them are members of our congregations,” she said.

Sue Tumelty is Managing Director of employment law specialists The HR Dept. The opinions expressed are her own.

The latest Labour Market Outlook survey conducted for the Chartered Institute of Personnel and Development (CIPD) with the accountancy firm KPMG looks bleak. The Ipsos Mori poll of 892 UK employers in January, reveals that more than one in three (36%) plan to cut jobs in the first quarter of 2009.

What if you are a one in three? Regardless of whether you are a high earner or in a low paid job, the chances are that you’ll face the same question. How will you pay your mortgage and bills? How will you find another job?

As with any high stress situation, panic won’t help. Try to stay calm and make an effort to understand the process and the options open to you. For example, redundancy can be expensive and difficult for employers. Many are now looking favourably on innovative ideas in an attempt to retain their talent pool. This can range from shorter working hours, to unpaid sabbaticals and temporary pay cuts.

Part of the redundancy process requires consultation. Use this as your chance to offer alternative solutions. It is worth exploring all the avenues that may enable your employer to keep you.

The process begins with the announcement of proposed redundancy. Your employers need to consult with staff as early as possible about the reasons for the proposed cuts.They have to state how many employees are at risk and how the employees would be selected.

If more than 20 people are to go, the consultation should take place over 30 days. Larger scale redundancies need over 90 days with elected representatives, such as unions.

Part of this consultation process should involve looking at ways to avoid or to mitigate the circumstances. For example, can savings be made in any other area of the business?

If redundancy seems the only option, your employer may score each employee against set selection criteria. You have the right to see and question your own score. You also have the right to be informed of any suitable alternative jobs available within your company. If you are pregnant or on maternity leave, your position enjoys additional protection.

If you are selected for redundancy, you or your representatives should be invited to a dismissal meeting and given the right to appeal. If your employer fails to follow the correct process, you may have grounds to pursue a tribunal claim.

Try not to view redundancy as a personal slight. It can be a golden opportunity to start your own business or train for a new career. Prepare your CV, read the Which? Essential guide, CV and Interview Handbook for valuable tips on how to get ahead in the employment market.

Your job now is to get a job, so get up at the normal time and get to work. Be realistic and explore all search methods including the internet, employment agencies, local papers, speculative letters and contacts.

Do a review of your finances and get advice and help if you think you may fall behind with your mortgage or utility bills. Most companies will respond favourably if you are proactive. Above all stay positive and don’t give up. The recession will end and we will all be a bit wiser because of it.

Simon Owen is a strategy and innovation consultant who helps companies identify and implement new business opportunities. He worked at a London based consultancy before being made redundant in January 2009. The opinions expressed are his own.

Most recently I worked for a leading innovation company that specialised in innovative growth projects. They took a much more creative approach, and I enjoyed it because they generated great ideas that had genuine impact and acted on them.

The ‘innovation’ industry, so to speak, is relatively new and it has grown rapidly over the last 10 years. People will always pay more for the creative than the analytical. The company I worked for were at the top of all this and grew very fast.

Then times started to get tougher. Suddenly our clients, who paid us a lot of money to do what we do, started to cut back. They concentrated on their core business and shied away from taking a risk on any new ventures and ideas, even those that offered potentially greater rewards.

Some experts say that a downturn is always full of new opportunities and businesses should make a head start and prepare for the return of the good times, but it’s a hard sell when profits begin to nosedive. The bottom line was that some clients could no longer afford our projects as they steadied themselves for the bumpy road ahead.

So our profits began to fall and, unfortunately, this meant redundancies. High quality staff are expensive and the outcome was inevitable. To be made redundant was both frustrating and liberating. Frustrating because I loved the job but it’s important to remember that redundancy isn’t personal, it’s about business and I understand why it happened.

It was liberating because, as a professional, I wanted to experience growth, not decline. And, as has happened to numerous people in my position, I have found being out of work can be a great opportunity. There is uncertainty but I’ve started to do freelance work and found that, with freezes on permanent hires, demand is actually up.

I’ve also gotten involved in a number of web start-ups and helped to re-launch a small brand design agency. I’ve discovered a whole network of bright young entrepreneurial people in a similar position to me. It strikes me that people are beginning to think for themselves again, simply because they have to.

I’ve also found that it forces you to try things you might never have considered before. I’ve started writing for clients as well as publications. It might not pay as well as freelance strategy, but it sure is a lot of fun!

I have my fingers in a lot more pies these days. The trick is knowing which ones to tuck in to and which ones to put back in the oven. But I guess that is something many of us will need to figure out over the next few months.

Losing your job can come as a massive shock, even if it is something you have been worrying about for months. The latest figures show that for the first time in over a decade the number of people out of work has risen above two million.

If you are one of them, you probably want to find a new job as quickly as possible. Here are a number of useful resources to help you.

Redundancy procedure, your rights, unfair dismissal

Directgov

Citizens’s Advice

CAB Advice Guide

The Advisory, Conciliation and Arbitration Service

Debt

Consumer Credit Counselling Service

National Debtline

CAB Advice Guide

Find legal advice

Law Centres Federation

Law Society

Payment protection insurance

Association of British Insurers

Benefits and financial support

Jobcentre Plus

CAB Advice Guide

Directgov

Careers advice and retraining

Directgov Careers Advice

Tax guides

HM Revenue and Customs

It’s not a great time to be a banker at the moment with financial apocalypse making the pin-striped gents probably more loathed than estate agents or journalists. Thousands of them have lost their jobs and those that are still in paid employment are finding that their renumeration packages are coming under ever greater public scrutiny.

Over the weekend reports that the Royal Bank of Scotland was about to award its staff a billion pounds in bonuses prompted outrage at a time of soaring unemployment and with a deep recession looming. Most people would agree it is a no-brainer that a company that has just posted the biggest-ever financial loss in British corporate history, required a 20-billion-pound government bail-out to stay afloat last year and is now nearly 70-percent state-owned should not be allowing its staff to be trousering huge bonuses.

The banks say they are bound by contract to pay the bonuses and that they need to retain key staff.

But that argument has got the former deputy prime minister John Prescott so riled he has even launched a public campaign against the bonus payments on Facebook. “This is morally and economically outrageous,” wrote Prescott. “If we hadn’t bailed them out to save homeowners and businesses, their contracts would be worth nothing as they’d be out of work.”

Over in America U.S. President Barack Obama has set a $500,000 annual cap on executive pay and imposed other restrictions on companies that receive government aid. Chancellor Alistair Darling has said it is too early to follow Obama’s lead, despite the European Commission urging states to cap bank pay.

Is it time for banks that are receiving government help to be subjected to a salary cap or would that policy be counterproductive to economic revival?

The government is to offer firms a “golden handshake” of up to 2,500 pounds for every person they recruit who has been unemployed for more than six months. Total cost of the initiative is expected to be around 500 million pounds.

Unemployment in Britain rose to 1.86 million people in the three months to October, equal to six percent of the workforce and the highest rate since the three months to June 1999.

Some commentators forecast it could rise as high as three million by the end of the year.

Gordon Brown is hosting a jobs summit today, bringing employers, union leaders and sector representatives together to discuss how to tackle the growing problem of joblessness.

The Conservatives have called it yet another government announcement on jobs that is more spin than substance and the employers group the Confederation of British Industry (CBI) say the only answer is to get the banks lending to firms again. 

Do you think anything is likely to come of the jobs summit? What would you like to see the government do to protect employment?

Net job creation in the UK has almost stopped as employers feel pessimistic about prospects for the economy, the latest quarterly Labour Market Outlook survey by KPMG and the Chartered Institute of Personnel and Development (CIPD) has found.

The balance between the proportion of employers looking to increase staff levels over the next three months and those expecting to cut has fallen from +41 in autumn 2007 to +2 in autumn 2008 – the lowest figure recorded since the survey began in spring 2004, according to the Payroll and Human Resources Newsletter.

Of the 721 employers surveyed, 83 per cent anticipated that Britain’s economic condition would further deteriorate this autumn and only one percent said they thought there would be an improvement.Respondents felt more optimistic about their own organisation though, with only 25 per cent believing that things would get worse.

Even though inflation is running at a 16-year high of 5.2 percent, staff pay excluding bonuses is seen increasing on average by just 3.5 per cent when the next pay review is due, while the expected average increase including bonuses has risen from 3.9 per cent to 4 per cent.

With official UK unemployment data for October due out on Wednesday, CIPD Chief Economist John Philpott sees a gloomy winter ahead:  “With pay increases at best modest for those still in work, the harsh chill of recession will make this the toughest winter for UK households for almost two decades.”

Tell us what impact the downturn has had on you and your business. How has staff morale been affected?

Recent headlines alarmed us with news of the country’s budget deficit having risen to its largest in six decades, while top economists ominously declared that we’ve moved beyond merely tipping into a recession, to hurtling towards one.

More crucially, both Chancellor Alistair Darling and Prime Minister Gordon Brown have sought inspiration from revered economist Maynard Keynes’ oft-cited advice - spend and spend some more to fight off the ill effects of an economic slump. Keynesian theory’s greatest principle is the fundamental concept of the circular flow of money. He opined that when individuals rein in money outflow, the government needs to be “priming the pump”.

Brown and Darling insist that we may very well fall prey to a vicious circle if we curb spending - most people hoard money in turbulent times, but times become even more difficult when we’re tight with money. Whether this theory will work remains to be seen.

In November’s pre-budget report, Darling is expected to announce an easing of fiscal rules and outline plans for priority and targeted spending on infrastructural projects. “What I want to avoid is getting ourselves in a position governments have done in the past, where you face an immediate problem and cut back on the things the country will need in the future … ,” says the Chancellor.

Close on the heels of his declaration comes U.S. Federal Reserve Chairman Ben Bernanke’s statement to Congress supporting the idea of a second wave of spending. Gearing up for Round Two in the feverish economy rescue battle no doubt.

Could fast-tracking future governmental spending plans provide a fillip to productivity and create job opportunities at a time when forecasts peg the unemployment figure to hit 2 million by end-2008? While staving off unemployment won’t hold good as a sole justification in light of a worrying debt-to-national income-ratio, expanding money supply can put a little power back in the hands of people. Might it restore some strength to the fragile confidence of today’s fraught consumer? What do you think?