As per David .l. Scott (2003), credit crunch is a defined as “period during which borrowed funds are difficult to obtain and, even if funds can be found, interest rates are very high”. The UK became recession affected in June 2008, creating period of limited growth. Many studies have looked at the impact of current economic downturn; studies note that in comparison to previous economic recessions: 2008 recession had certain peculiarities. Although the economy is in recovery, the effect of the recession is expected to be for longer periods, earnings, state benefits as well tax credits all fell in real terms. Decline in living standards of average man is expected to continue for years to come. The nature of work has changed within UK during last twenty years with service sector becoming main employment provider plus increase in flexible, plus semi-legal employment with less regard for workers rights and without access to redundancy packages Li-yu Song (2013). Robert T. Clair and Paula Tucker (1993) identified six causes of credit crunch “Reductions in bank capital, failure of depository institutions as well as Bank supervision, New credit standards set by banks, Failure of Regulatory mechanisms, Increased legal Cost .Credit crunch resulted in loss of 15 trillion dollars worldwide, this is believed to be stemmed out from globalization, accelerated by increase in technological innovations,. Royal Bank of Scotland is one among the main banks of the United Kingdom and was one among the worst hit by credit crunch with HM Treasury having to invest 37 billion pounds to save the company Miguel A. Ferreira and Pedro Matos (2012). This crisis also saw top brass of the Bank having to resign and board being heavily criticized for their bonuses. The question what human resource managers could have done to avoid this happening has been forwarded by many José-Luis Peydró (2013). Neil Roden the ex head of Royal Scotland bank Human resources commented “The CEO is the decision maker, not me. There should be a debate about what HR can reasonably be held accountable for. People seem to think that HR runs companies. HR is a support function, not more or less vital than sales or IT Peter Crush (2010)." Richard Hayden former managing director Goldman Sachs international says” there are three types of capital financial capital, reputational capital and people capital , as bankers we focused more protecting first two ignoring and spending less time on our people which should have been our priority” Financial news (2001: 24). Although it is true that Human resources is function like other functions whether it could have done further to prevent the crisis will be studied as part of this research paper. The company has operations in the United States through two companies Citizen bank and charted one human resource activities of group will be part of this research.
The human resource management and credit crunch
The human resource also had contributed to credit crunch in many a manner. Corporate fought war for talent in which small number of individuals and executives gained mega rewards for their presumed business performance. HR ethics and practices were ignored as corporate became more money hungry and craving for results. Compliance with the employment law was happening but its aims and ethics were mostly forgotten. When many human resource managers tried to send warning signals they were ignored and kept aside citing client interests with culture of individualism more prevalent in workplace. Senior executives as well as top revenue earners themselves became Weaknesses of the company Igor Gurkov, Alexander Settles, (2011). Human resource managers were marginalized by line managers pursuing their own agenda. Central Human resource management was in most companies well below expected levels. In pursuit of accelerated growth in earnings per share, new risks were taken which destroyed many organisations on both sides of the