Keeping the sparkle on: Workforce retention in Indian diamond cutting and polishing firms during economic recession

Purpose - The Indian diamond cutting and polishing (CPD) industry enjoys a global leadership position, but at the same time is vulnerable to economic shifts in the global market. Historically, such shocks have resulted in shake down of the industry, including closures, bankruptcies, job losses and labour unrest. Most recently, the vulnerability was experienced during the economic recession of 2008, which impacted both entrepreneurs and diamond workers alike. The shock elicited different adaptation strategies from individual firms. The paper aims to understand the adaptation strategies of large and formally organized diamond enterprises in Surat, India, with particular reference to "labour hoarding" as a strategy for workforce management. Design/methodology/approach - Using case studies of four large CPD firms, the paper investigates patterns in managerial decision making pertaining to workforce management and adaptation strategies taken during recession. The authors also traced the subject companies' performance post-recession. The tool used for data collection was semi-structured, in-depth interviews with entrepreneurs and human resource managers. For additional inputs and triangulation of findings, content analysis of news reports, along with interactions with several knowledgeable persons from both industry and government, were conducted. Findings - The authors' study of the sample firms neither supports the popular notion of "workforce retention by large diamond enterprises, in spite of recession" nor the generalized statements about "massive lay-offs by all", as reported in popular media. The authors found that, due to recessionary pressure, there was a deep managerial dilemma in the companies about how to strike the right trade-off between workforce retention (labour hoarding) and downsizing. The paper argues that, post-recession, the companies whose decisions were pro-labour retention (hoarding) oriented were able to come back in business stronger and perform better. Originality/value - The diamond industry of India is ethno-bound in its functioning, where community and regional/linguistic affiliations of both workers and entrepreneurs traditionally played a vital role. Therefore, the employee management practices adopted do not strictly fall within the general realm of western management practices or popular HRM frameworks. The study shows that context-dependent employee management strategies, suiting the need for maintaining the traditional ethno-