Can elections mean a hiring freeze?

Organisations are likely to prefer to wait for the formation of a new government before deciding how its new policies will shape their growth and hiring plans

These are uncertain times, what with the Lok Sabha elections on in full swing and a new government likely to be formed by next month. As of now, nothing is clear on the stand the party in power will have on various issues from foreign direct investment in multi-brand retail to telecommuniations to IT. Typically at this time, when nothing is clear on government formation or policies, organisations tend to witness a ‘hiring holiday syndrome’ as they wait for the changes.

According to HR experts, job interview processes have been initiated in many sectors such as banking, retail and infrastructure, but these have yet to translate to concrete offers.

“The idea is to have a pipeline of ready-to-hire candidates and get them on board, if need be, after the election results are out in May,” says Jappreet Sethi, an HR head of a real estate firm.

Sethi is of the view that companies and employees should be very cautious while hiring at this time, as the voter mandate is still some time away. “There are major policy decisions to be taken by the new government which will definitely shape the growth plans of companies. It will be naive to pick people now and repent later if policies don’t pan out as planned,” he says.

Amit Das, president and chief human resource officer, Reliance Communications Ltd, says, “Typically, hiring is slow in March and April since it marks the end of the financial year. The trend is likely to continue in Q1 FY14-15 as well, since the elections are on and companies are cautious with their hiring plans.”

Das expects that the scenario will improve after the elections and hiring will gain momentum from June 2014, indicating that an economic rebound could be at work besides the election factor.

So what’s the best hiring policy for such times? “The need for highly innovative, engaged and productive talent is felt the most during the time when there is economic uncertainty. The best way to hire talent would be to create a pool of people to manage through recession. Others include cautious hiring for key business positions and retention of the best talent,” says Tarun Katyal, chief human resource officer, MTS India.

According to AK Agarwal, CEO, Autometers Alliance Limited, a premier railway and Metro equipment company, “One needs to divide hiring into two categories - routine hiring for ongoing business and hir- ing for future expansion and diversification. For companies which are largely dependent on government policies, the impact of elections may be limited on regular hiring. However, hiring for expansion plans must be put on hold by most of the companies as the elections are likely to throw up some unexpected results.”

One such unexpected scenario was witnessed in 1977 when the Janata party formed the government. “Companies like Coke, IBM etc had to shut their operations and leave India immediately. So I believe that companies should be extra cautious during these times as these situations are unpredictable,” says Sanjay Kapoor, director and CEO of Iris Corporate Solutions.

P T hir uveng adam, seni or director, human capital advisory services, Deloitte India, however, doesn’t see any specific need for unnecessary caution. “We understand from organisations that regular and required positions will definitely be filled. Where there is a certain degree of discretion, there is a possibility that there would be some waiting.

This has greater connection to a broader economic uncertainty more than what can be attributed to elections specifically,” he says. “In my opinion, companies would have to take into consideration various aspects like their industry, business activities, committed investments, critical positions and other fact ors during t his period,” Thiruvengadam adds.