Essays on Research Methods: How Will The Credit Crunch Affect Graduate Recruitment Essay

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IntroductionCredit crunch has led into a slowdown of global economic activity. This trend has predisposed company’s restructuring processes that seek to reduce the number of workforce as well as reduce wages. This phenomenon has resulted from decrease in production output in order to balance decreasing demand subject to customer’s decreasing purchasing potential. Decreased savings and investment from public and private sources have made banks to withdraw from lending loans and many companies are therefore unable to meet their budgets. Companies are therefore slowing down on their recruiting potential and this could lead into increase in unemployment rates and decrease in graduate recruitment as companies seek for workforce that have experience in their field of expertise. Statement of the problemInternational companies like Pricewaterhousecoopers and Delloite are reducing their graduate recruitment in preparation for a possible future financial crisis owing to credit crunch.

Companies are re-strategizing and are currently reducing their staff investment in order to prepare themselves for a possible recession. Many companies are opting to develop their current workforce since the cost of advertising, recruiting and training new staff is not currently an opportunity cost.

Other companies that are not able to balance their budgets are laying off their employees while other companies are giving out longer leave without full pay. Credit crunch has therefore brought graduate recruitment programs into a standstill as companies strategize and reposition toward retaining their workforce and working on sustainable talent management practices. Objectives of the studyTo investigate if the recent credit crunch has had any adverse effects on graduate recruitment industryHypothesis for testingCredit crunch has negatively affected graduate recruitment industry and created an environment for increasing rates of unemploymentCredit crunch has made companies to adopt strategies aimed at increasing workforce retention as a function of redundancy best practice policy. Credit crunch will lead into a future limited supply of skilled workforce following retirement of the current retained workforce Credit crunch has led into reduction of human resource budget for sustainable recruiting and trainingCredit crunch has led into decrease in innovation and positive growth of workforceSignificance of the studyThe studies on impacts of credit crunch as a function of graduate recruitment industry will propose policies that companies should adopt in order to avoid redundancies and prepare for the future after credit crunch is over.

The study will evaluate companies training budgets and employee retention and talent management as a good corporate practice in managing workforce turnover. The study will propose effects of high turnover in the prevailing environment of credit crunch. The study will evaluate performance management strategies and propose short term objectives that could match strategies for operating at market equilibrium subject to sustainable recruitment and radical organizational change. Literature reviewBloom et al. (2007) agrees that credit crunch has affected global economic cycle negatively with respect to recruitment markets.

Crouch (1972) argues that credit crunch exposes companies into negative economic cycles that negatively affect company’s recruitment potential. Bernanke (1983) has shown that credit crunch decreases wage negotiation potential and has ability of making employers to reposition towards talent management practices that are a function of retaining key personnel in the company and lowering turnover. Bernanke (1983) and Bloom et al (2007) share similar opinion that credit crunch has potential of increasing the rate of unemployment and bringing the economy of a country to its knees if the country has no working rescue plan or if it adopts policies that can delay recovery time of the economy.

According to Louis (1995) credit crunch has potential of exposing a company into risks of skilled labour shortages in the future if it sacks its employees and has no plans for their future re-absorption back into the workforce after recession. Louis (1995) argues that credit crunch has an effect of reducing the war for talented skilled labour since demand for skilled labour decreases following credit crunch.

Darby (1976) indicates that credit crunch has an effect of triggering mobility of skilled labour across domestic companies and internationally. Darby (1976) suggests that due to increase in unemployment rate, mobility of workforce increases and its only skilled labour force that have greater mobility because they have no fear of change. Darby (1976) argues that less confident employees opt to remain in the same organizations. This means the credit crunch has an effect of moving out employees to companies that are productive and seeking talent and exposing weaker companies to severe shortages of skilled labour.

Darby (1976) proposes that credit crunch provides an opportunity for companies to embark on workforce planning and for the companies to recognize strategies aimed at long term perspectives on the organizational health. Laidler (1969) shows that in the event a company invests in improving and sustaining its workforce, its turnover decreases and tends to zero.

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