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Article Summary
At the time of writing this article, Edward Pudlowski was working with Ernest & Young in Dallas, where he was the principal of performance and reward practice as well as the national leader of HR cost management services.
The author argues that managing human resources in the modern world has increasingly become a costly practice for organizations. Also, the HR function is one of the fastest growing costs for modern organizations. Noteworthy, the author argues that the recent economic recession in the US had a significant impact on the processes and practices for managing human resources.
Various organizations sought to reduce spending and cut on costs in a manner that did not affect or disrupt their employees. Companies wanted to involve transparent and minimally disruptive methods for reducing costs on HR management and assess the competitive levels of these plans (Brenner, 2009). However, the author asserts that this process proved difficult for companies.
Therefore, the purpose of the article was to address this problem, with a special focus on examples of the type of savings that such approaches can achieve without significant disruption on the employees.
The author emphasizes the importance of creating non-disruptive, creative, and cost-effective approaches in human resource management. In this case, the author condemns the implementation of disruptive changes such as reduction of employee benefit during an economic crisis. According to the argument, employees are the main asset to an organization during the economic crisis.
Although non-disruptive techniques are available for companies to use during hard economic periods, most organizations tend to overlook them. According to the author, health costs for employees are one of the fastest growing expenses in organizations. Also, other expenses on employees are increasingly growing. As such, suggestions for non-disruptive approaches to reduce costs on HR are needed.
In the second section, the author analyzes the typical employer responses that have disrupted organizations because they affect employees. For instance, most companies reduce costs by shifting them from the company to the employees. The article also identifies a typical employer response that involves increasing the cost required by employees to participate in their healthcare programs.
Managers tend to increase employee contributions above the actual increase that the company incurs, which has made employees pay more than they spend on their healthcare plans. According to the author, these are nontransparent approaches to cost reduction during the economic crisis.
Therefore, the author suggests some transparent cost-cutting approaches and opportunities. The article identifies several areas that should be examined when reducing costs. First, companies should assess the amount of risk they take and compare them to the real level of risk they can withstand.
Reducing the costs incurred in the organizational HR should be done with adequate measures to mitigate the risks associated with disruption. Secondly, companies should assess their ability to leverage market size to achieve efficiencies in their processes of purchasing products and services (Brenner, 2009).
Finally, the article urges managers to assess their companies’ pension plans. This allows them to identify the plan assets that are not performing and reduce the expenses incurred in these areas.
Analysis
This article provides an important source of information for managers, scholars, as well as investors. It provides corporate management with some important models for reducing costs in HR but maintains transparency.
Also, these models may prove effective during the economic crisis because they reduce costs in a non-disruptive manner. Therefore, I think this article should be recommended for use in managing organizations, especially during hard economic periods.
References
Brenner, B. (2009). The value of increasing investment in employee benefits during an economic downturn. Journal of Financial Service Professionals, 63(1), 29-31.
Pudlowski, E. M. (2009). Managing human resource cost in a declining economic environment. Benefits Quarterly, 4(1), 37-55.
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