HRM practices during the global recession (2008-2010): Evidence from globally distributed software development firms in Sri Lanka

Purpose- To investigate human resource management (HRM) practices adopted by firms during the recession period of 2008–2010 and their impact on employees' happiness at work, and whether there are any differences by the size of the firm. Design/methodology/approach- Two survey questionnaires were developed for the study, one targeting non-managerial employees and the other targeting senior managers. Two random samples of non-managerial employees (N=263) and senior managers (N=76) attached fulltime to globally distributed software development firms in Sri Lanka responded. For the data analysis, descriptive statistics, factor analysis, analysis of variance, and multiple regression were used. Findings- It was found that reduction in financial rewards, reduction in benefits, and training and development provision significantly vary by the size of the firm. Further, the communication of information, performance management, reduction in financial rewards, and reduction in benefits significantly predict employees' happiness at work during recession. Research limitations/implications – The research was designed as a cross-sectional study employing survey methodology. Respondent senior managers were reluctant to provide actual data on layoffs and quits during the recession period. Practical implications – The findings of this study would contribute for practitioners to better understand the HRM practices adopted by the firms during recession and effects of these HRM practices on employees' level of happiness at work. Social implications – Employees' happiness by doing what is worth doing, pursing important goals, and using one's skills and talents during the economic recession could be affected by the HRM practices adopted during the recession. Originality/value- It is evident that firms facing economic recession launch cost reduction initiatives such as pay cuts and freeze in new hires. From the academic and practical standpoint it is important to identify the influence of such HRM practices adopted during the recession on employees' happiness at work. However, available research does not provide sufficient understanding about the influence of HRM practices on employees' happiness at work during recession as empirical research on this area is presently lacking.