How an HR professional can plan for a recession
The cost of living crisis and other social and political issues are creating a sense of uncertainty and fear on a global scale, while the recession is causing anxiety for everyone, especially businesses. There is a real danger of losing customers and having to cut the budget. Many employees, on the other hand, are in constant fear of layoffs or wage cuts. This can affect not only their work performance and productivity, but also their mental health. Fortunately, HR departments can provide solutions to most of these problems. HR professionals are trained in crisis management and can offer their insights on how to plan for a recession to minimize its negative effects on the company.
8 Ways to Master Recession Planning
1. Build a strong HR foundation
Recession planning will not be successful unless you build a strong core of your HR department. As a professional, you know how important security and stability is to a company and its employees, especially in difficult times. You need to constantly update company policies according to the needs of your people. Gather the necessary information to answer questions they may have and put them at ease and create resources to support your employees in their time of need.
2. Focus on employee engagement
Engaged employees are more focused and productive and therefore contribute more to the company. However, your job as an HR professional is to build enthusiasm and keep them motivated. Try team building events or workshops that allow them to collaborate with colleagues and learn from SMEs. You can also practice transparency by sharing critical company issues with them and involving them in the decision-making process.
3. Provide opportunities for retraining
In tough financial times, your recession planning must include retraining because every employee counts and has value. How else can they contribute to the company? Make your employees feel valued by giving them new projects and training opportunities so they can reach their full potential in the workplace. This is often more cost effective as you can increase their salaries so they can take on more responsibility instead of recruiting and onboarding new people. Engage each team member, regardless of their experience level or position in the company, and ask them what skills they would like to develop or improve.
4. Communicate clearly
By keeping an open line of communication, you ensure that each employee’s concerns are addressed as quickly as possible. This will also prevent false rumors from spreading, so you need to be clear about the company’s intentions. Communicate everything effectively to reduce doubt. Even if you have to announce layoffs, do it transparently. Better yet, if you hear false speculation, make an appointment to debunk it.
5. Evaluate the benefits packages
Instead of cutting benefits, see if you can create more meaningful benefits that meet the needs of your employees as cost-effectively as possible. Focus on what you offer rather than how much. Some benefits may need to be cut back, but try to keep those that give your company a competitive advantage when it comes to recruiting. To compensate for leaner programs, you can offer each employee a customized package that works for them while staying within budget. For example, some employees prefer more time off over cash incentives. Conduct research, collect their feedback, and then create an action plan.
6. Offer flexibility
Another key step in recession planning is workplace flexibility. Employees tend to prefer to work from home and have a schedule that suits their personal life. This offers them a sense of control and autonomy. However, this should also include establishing new guidelines, such as policies regarding telecommuting or PTO leaves. If there are layoffs, the people who remain are more likely to be stressed or burn out, and more flexibility will make them feel comfortable and secure in their jobs.
7. Know your expenses
Companies may reach a point where they have to cut costs. But first, do your homework to be well informed. What are your top costs? Do you need to reduce the number of employees or stop specific programs? If you can’t identify areas of overspending, consult the experts. Remember that it is essential to consider the impact of cost reduction in the long term as well. How are your spending or budget cuts affecting your staff morale?
8. Create a strong company culture
The recession will end, but the company culture that trains and supports employees during potential crises will remain. This is also a lesson learned from difficult times. You should make inclusion and diversity core to your culture. This will offer different perspectives on company affairs and innovation, leading to faster problem solving. Ultimately, your company’s values are what will give you a competitive advantage.
Your HR team must have a stable core to weather the tough times and set an example for the rest of the team. They have the power to boost morale, motivate employees and analyze where spending can be cut to minimize the impact on the workforce.
For more tips on how to sharpen your HR skills and improve employee retention, download our e-book Industry Breakthrough: The Ultimate Guide for New HR Development Professionals. It covers the basics of HR, the qualities of a good HR employee, and 12 concepts that every HR leader should master.