Earthquakes Impact on Human Resource in Organizations

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Table of Contents

Introduction
Recommendations
Conclusion
Bibliography
Footnotes

Introduction

Human resource is the most important assert to any organization since it defines the organizational structure. According to Mills¹, human resource defines the roadmap to a firm’s success or failure. In this case, human resource is very delicate. It is affected by various factors ranging from political issues, social concerns and religious requirements to natural phenomena and personal issues.

The human resource management must be in a position to analyze such issues and determine how they influence the human resource base at any firm. This involves ascertaining the degree to which such factors affect the workforce and the frequency of their occurrence.

After this analysis, the human resource management would devise mechanisms though which such forces can be countered in order to avoid an adverse effect on the firm’s operation should such unfortunate things happen.

New Zealand suffered a serious earthquake in two close successions in the previous years. The earthquakes affected businesses and the normal social welfare of the community.

However, its effect on human resource was striking. During this time, the social structure of the society was completely disrupted and many firms recorded a serious drop in the demand for their goods. The earthquake that followed in Japan had its effects felt in New Zealand in various sectors.

This paper seeks to determine how natural disasters such earthquakes affect human resource in various firms. The researcher seeks to determine the magnitude of this effect and its general effect on the society in general and the firms affected in specific.

The paper also seeks to make recommendations on how natural disaster preparedness can be achieved. It seeks to offer a solution to the human resource department on what should be done should such a phenomenon occur. This study is based on the earthquake that took place in Christchurch, New Zealand.

Human Resource Issues Faced by Companies Affected by Earthquakes in Christchurch

As noted above, human resource is very delicate. Various issues affect it. At Christchurch, there have been incidents of earthquake in the past but the recent earthquake was a little too devastating. It affected various structures, some of which were destroyed.

The companies that operate in this region bore the most brunt. Their structures were brought down in one way or the other, which affected the operations of the firms. They lost the time that they would have utilized to produce goods leading to reduced profits.

The demand for their products dropped significantly both in the local and external markets. Compounding all this misfortune was the issue of human resource. A number of human resource issues were generated by this incident as is discussed below.

Shrinking Talent and Pool of Staff and Senior Management

According to Andresen², a firm would gain a competitive advantage if it were in a position to create a pool of talented staff. The scholar goes ahead to elaborate that talent is the very core of business prosperity. The current business world is very competitive and highly unpredictable.

A firm may not say for sure what tomorrow would bring in terms of new technologies, new threats or such related issues. They are left guessing what business environment would be like tomorrow.

This is very dangerous if a firm lacks a pool of talented workers. This is so because such talents are the one that would be called upon in case of emergencies to devise creative formulas to help bring the firm out of difficult situation.

At Christchurch, a number of firms reported an increase in the rate at which talents were shrinking after the earthquake. This could be attributed to various factors. Earthquake has adverse effect on people affected by it depending on its magnitude and the preparedness of the people.

There are cases where the effect of the earthquake is so strong that some people end up being displaced. The earthquake that took place in this region disrupted many families. They were forced to look for alternative places to stay following the massive destruction on their previous residential places.

The same employees with the same talent are needed by the firm in order to operate normally. In their human resource model Armstrong, Kotler and Brannan³ describe human resource as being highly mobile. He says that human resource mobility is always determined by among other factors, security and comfort of their immediate environment. People like places where they are assured that their families are safe.

The earthquakes rendered this region insecure. Some individuals were hurt, others lost their lives, or such other related misfortunes. Because of self-decisions and family pressure, many professionals, especially those with talent and are sure of securing job at other places would be encouraged to leave.

They would be seeking security other than increased pay on their work. This is a serious blow to firms in Christchurch because replacing such talents is not always easy.

Increased Cost of wages and Salaries for Firms Operating in Christchurch

It was evident that more people were moving away from this region due to such natural calamities. Very few individuals were moving in and most likely, they lacked the skills needed by many of the firms in this region.

The firms had therefore to share the little talent that remained. Ulrich⁴, in explaining organizational theory said that human resource behaves exactly like goods in the market. When in excess, their cost, just like the price of products, would drop.

They would be easily accessible and getting the right quality of staff would be easier and less time consuming. On the other hand, if it were limited, its cost, just like the price of a product, would shoot. They will be choosier and very demanding. They would not accept terms that they consider unfavorable to them.

According to Cunningham⁵, the ultimate goal of every firm that is operating in any given sector is to maximize profits as it minimizes costs. Expenditure on human resource accounts for the largest percentage of costs. Firms are always looking for ways in which they can minimize this cost.

However, the local firms in Christchurch found themselves in an awkward position, as the reverse had to happen. The cost of the talent, and other human resource in general had to be reviewed upwards, a fact that reduced its profitability. As the demand for the talent was on the rise, the costs increased because many firms were anticipating sharing few talents available.

Retention Strategy as an Approach to Securing Human Resource

Firms always employ different approaches when it comes to maintaining a pool of employees. According to Zimmerman⁶, although the most popular approach is always retention because of the experience gathered, there are instances where the employ and release method would be appropriate.

There are firms that may not need experience to be determined by an individuals’ stay in a firm. This scholar explains that employ and release method of retaining workforce is very appropriate for firms that are mobile or those not keen on seeing an increased cost of labor in regions where the labor market is flooded.

This tactic of employing workforce and laying them of after a contract of say two years has expired helps firms avoid such pressures to increase salaries of its workers. It also helps such firms escape the wrath of labor organization.

The Christchurch firms were not lucky enough to be able to employ this strategy because the earthquake sent people away from this region, leaving the workforce market highly strained, with employees who are very expensive and mobile.

The firms were forced to employ the retention strategy in order to maintain its operation. As Conaty and Ram⁷ assert, the retention strategy as a way of maintaining the workforce is very appropriate, especially when experience is needed.

However, it is relatively more expensive. Whereas the firms can set a fixed wage rate for the employees on contract basis with a possibility of fixing the same or adjusting it a little, those on permanent basis must have a clearly defined scale within which their salaries would be increasing at a given regular interval.

Because of this earthquake, these firms had to pay more for their current workforce and offer them a better working environment, for this would be the only way to retain them.

Reduction in Staff and Management Morale

Staff morale is very important in the normal running of organizations. Merkle⁸ explains that the best workforce to deal with is the self-motivated workforce. They need little supervision as their actions are driven by internal self-motivation and the need to see themselves achieve. A motivated staff would be an assurance to any firm of a success.

Daft⁹ observes that for there to be a motivation within an individual, there is need to ensure that he has self-satisfaction, and lacks any forms of stress, from either home or work place. The earthquake at Christchurch was a great blow to many employees’ morale, both at management and junior level.

Their homes were destroyed and therefore they had to seek alternatives of settling their families. This came at a cost they had not planned before. Because of the physical and financial constrains that this incident brought, the workforce was highly demoralized to come to work.

They were more concerned with finding immediate solutions to their predicament. Those who came to work found the same destruction, a reminder of what they left at home heightening their disaffection. The management lost morale due to a number of factors.

The first casualty was the destruction of the business premises that has to be prepared at a cost. Then there was the talent drain because the region was now considered hash for human stay.¹⁰ As if this was not enough, the demand for the product in the market dropped.

Recommendations

There arise cases where firms are faced with unfortunate situations that threaten their existence. The greatest joy always comes when such unfortunate incidents are overcome. The above incidents can be overcome in the following ways.

To address the issue of shrinking talent, pool of staff and senior management, firms in this region should come up with rapid response units that would respond to their employees in cases such as the earthquake. It is important that these firms appreciate the fact that such unfortunate natural phenomena are hard to predict, especially for those without the geological knowledge.

They should therefore come up with measures that would see to it that they respond when their customer are met with such unfortunate incidents. This can be in form of transportation from the affected area, offering temporary shelters, or giving them bonus as a sign that the firm is with them in times of need

Ulrich posits that the firms should also be ready to pay a little more on top of this during such cases for the employees would go through tough times. This would reduce the possibility of unanimous demand for huge increments by the employees themselves.

It is necessary for such firms to embrace the retention strategy to managing human resource. Firms that wait until such incidents occur may find it disruptively expensive to employ such methods during such hard times.

In order to further increase their morale, the firm should strive to offer non financial incentives like promotions or team building retreats regularly to strengthen the bond between employees and the firm.

Conclusion

Disaster preparedness is very important when it comes to a firm’s prosperity in the market. When developing strategies that would respond to such unfortunate situation, one thing that should be considered is the impact on human resource. Such impact may cause serious consequences to a firm if not managed properly.

Such impacts include transfer of talent from the region, making the workforce be scarce. In effect, their cost would increase making the overall cost of production be high. The best way to curb this would be to develop mechanism that would cushion the firm from such effects

Bibliography

Andresen, Alan. Ethics in Social Marketing. Georgetown: Georgetown University Press, 2001.

Armstrong, Gary, Kotler Philip & Brannan Ross. Marketing: An introduction. New Jersey: Prentice Hall, 2009.

Conaty, Bill and Ram Charan. The Talent Masters: Why Smart Leaders Put People before Numbers. New York: Crown Publishing Group, 2011.

Cunningham, Barton. The stress management sourcebook. Los Angeles: Cengage Learning, 2010.

Daft, Richard. Organizational theory and design. Mason: Cengage Learning, 2010.

Ernst, Young. Telecommunications: Transforming our society. New York: Lowell House, 2000.

Merkle, Judith. Management and Ideology. California: University of California Press, 1980.

Mills, Gordon. Retail pricing strategies and market power. Melbourne: Melbourne University Publishing, 2002.

Ulrich, Dave. Human Resource Champions. The next agenda for adding value and delivering results. Boston: Harvard Business School Press, 1996.

Zimmerman, Richard. Designing customer surveys that work. New York: Quality Progress Press, 1996.

Footnotes

¹ Gordon, Mills. Retail pricing strategies and market power. Melbourne: Melbourne University Publishing, 2002. P. 45

²Alan, Andresen. Ethics in Social Marketing. Georgetown: Georgetown University Press, 2001. P. 79

³ Gary, Armstrong, Philip, Kotler & Ross, Brannan. Marketing: An introduction. New Jersey: Prentice Hall, 2009. P.14

⁴ Dave, Ulrich. Human Resource Champions. The next agenda for adding value and delivering results. Boston: Harvard Business School Press, 1996.

⁵ Barton, Cunningham. The stress management sourcebook. Los Angeles: Cengage Learning, 2010. P. 24

⁶ Richard, Zimmerman. Designing customer surveys that work. New York: Quality Progress Press, 1996. P. 56

⁷ Bill, Conaty, and Ram Charan. The Talent Masters: Why Smart Leaders Put People before Numbers. New York: Crown Publishing Group, 2011.

⁸ Judith, Merkle. Management and Ideology. California: University of California Press, 1980. P. 69

⁹ Richard, Daft. Organizational theory and design. Mason: Cengage Learning, 2010. P.34

¹⁰ Ernst, Young. Telecommunications: Transforming our society. New York: Lowell House, 2000. P. 39

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