While global economic activity has picked up since the onset of the COVID-19 pandemic, there's still a long way to go. A recent World Economic Forum report predicts the current recession could last through late 2022, with the recovery hinging on the arrival of a vaccine (Source: World Economic Forum, 2020).
Surviving a recession requires companies to make difficult decisions, and executives will lean heavily on their HR departments for business continuity planning in the months ahead. Disney recently became the latest Fortune 500 firm to announce massive layoffs, and more will likely follow suit (Source: CNN.com, 2020). If your company faces similar prospects, you should be able to count on your HR team to collaborate with business units across your organization to ensure that workforce reductions don't result in substantial service breakdowns.
Even if you're hiring during a recession, you'll need to be agile amid heightened uncertainty. By incorporating HR into your agile strategy, business leaders can help align talent acquisition with core business needs and adjust manual and financial resources to be most effective.
How HR Can Help You Recession-Proof Your Business
When strengthening a company's chances of surviving a recession, HR teams can be an invaluable and useful ally. That process starts with embracing analytics, which companies sometimes struggle to do in a sophisticated way that measures productivity and capacity.
By empowering your HR team to collect and act upon metrics related to employee workload and performance, business leaders can continue to make smarter personnel decisions while business fluctuates. Decision makers will know when the savings from downsizing outweigh lost productivity; they'll understand when layoffs would negatively impact the performance of remaining employees and your ability to serve customers. Conversely, when it's time to hire again, you'll know which functions need to be addressed first and be able to optimize hiring budgets.
HR teams can also help transform company culture into a competitive advantage. Culture always plays a role in talent acquisition and retention, but it's especially crucial during a recession. Uncertainty around employee job security can be detrimental to productivity and engagement, but a united workforce is a powerful and cost-effective antidote to workforce disruption.
3 Moves HR Teams Can Make to Survive a Recession
While the COVID-19 pandemic has been especially brutal for retailers, restaurants, and tourism and hospitality companies, a global recession affects the entire economy. Fortunately, nearly every type of business can reap the benefits of strategic HR planning and improve its chances of surviving this downturn.
With that in mind, here are three steps executives and HR teams should take to bolster their resilience - and bottom line - during an economic downturn:
- Harness the power of automation. Take the time to pinpoint inefficiencies within existing employee workflows and internal processes. If possible, save money by automating functions like payroll, training, and performance management. You may not realize those savings overnight, but you'll be more efficient than many of your competitors by the time the recession is over.
- Explore new staffing options. You can often save money by relying on independent contractors to perform critical project-based work. Moreover, contingent workers who are familiar with your business often become great full-time employees. Contracting with independent contractors or freelancers - or putting contingent workers on your payroll for 90 days - is a relatively risk-free way to assess cultural fit and talent while keeping your business agile during a recession.
- Be proactive about workforce planning. Don't wait until times get hard to assess workforce productivity. Put the solutions and processes in place so HR can see production ebbs and flows to determine what next steps need to be taken.
You might not have layoffs planned, but you should still know how employee workloads could be absorbed should team members leave your company. Agile HR teams should always be looking for ways to streamline processes and optimize human capital around business objectives.
If you're leading a business, setbacks are inevitable. Even the most forward-thinking executives can't plan for everything. By understanding who you'll need to rely on during tough times and ensuring they have the tools and resources they need to act effectively, you'll be able to move forward with confidence.
Sophisticated HR capabilities are increasingly becoming a vital cornerstone of business success. Incorporate HR into your overall business strategy to position your business to survive a prolonged recession and thrive when it eventually ends.
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Kara Hertzog is the president of Innovative Employee Solutions (IES), a leading nationwide provider of contingent workforce solutions, specializing in payrolling and independent contractor compliance services. Founded in 1974 in San Diego, IES has grown into one of the city's largest women-owned businesses.