HR Challenges During a Recession
If you are in human resources, you have a lot of responsibilities during a recession. One of the biggest HR challenges during a recession includes keeping employees informed about the company’s status and potentially communicating bad news to them. It also includes identifying gaps in the workforce and recruiting and hiring new talent. To help you navigate these difficult times, here are some tips and suggestions.
Are We Heading Toward a Recession?
It looks like the United States entered a recession in the summer of 2022. Or not. It depends on who you ask.
The U.S. gross domestic product (GDP) did indeed experience two consecutive negative quarters that summer, which satisfies the classical definition of recession.
But the National Bureau of Economic Research (NBER) defines recession differently. NBER cites “a strong labor market and corporate earnings growth,” plus data supporting the claim that the U.S. economy was in recession just 8% of the time over the past 30 years to determine that what happened that summer was not an official recession.
Yet, NBER does acknowledge that a recession happened between February and April of 2020 (known as the Covid Recession), a short time span that does not meet their own definition. The determining factor was the widespread downturn that was more severe than the Great Recession (from December 2007 to June 2009).
Phew! With all this conflicting and often confusing information, what’s an HR professional to do when it comes to human resources and recession?
It’s a good idea first to understand how your organization defines a recession and what it could mean specifically for your business. Then, you want to get ahead of it with quick thinking and positive initiatives.
Here are five tips to help you get ahead of HR challenges during a recession:
- Clean Up Expenses Without It Costing You
- Invest in Current Employees
- Power Up Your Data to Make Informed Decisions
- Help Employees Get Through a Recession with Financial Education
- Keep DEI Programs Alive
Clean Up Expenses Without It Costing You
It’s always a good time to tidy up expenditures, but in a recession, you want to do it first thing – in advance, if possible.
- Review your employee recognition and service award programs to assess whether you are paying too much or not getting the value you are paying for.
- Cut out extra expenses that can’t be justified or aren’t necessary.
- Examine employee compensation and benefits packages to determine whether they bring value to your organization.
- Make sure each short-term saving will benefit the organization in the long term.
- Look for ways to get ahead of your spending, such as renegotiating vendor contracts or bringing services back in-house.
Invest in Current Employees
Before laying employees off to save costs, make sure you’re utilizing the talents of your current employees as best you can. Review your organizational structure and brainstorm about changes that will enable you to use their strengths better. Providing mobility and reskilling programs can improve retention, increase engagement, respond faster to unexpected challenges, and make your organization more agile in an uncertain business environment. Your employees will not only be grateful to stay with your organization, but it could inspire loyalty in the workforce.
Power Up Your Data to Make Informed Decisions
During a recession, everyone in your organization will strive to make informed decisions. Leaders must be able to access the data they need to decide at a moment’s notice. This is one of the major HR challenges during a recession. HR leaders need to spend less time gathering data and more time analyzing the information strategically. A good people management software product can make it easier to access the right data, make ongoing decisions more efficiently, and measure the impact through powerful data reporting.
Help Employees Get Through with Financial Education
As Americans face recession, a recent study shows:
- 55% of Americans are living paycheck to paycheck.
- 46% of Americans above the age of 55 are postponing retirement.
- 41% of Americans don’t have an emergency fund.
- 40% of Americans are worried about not having enough money to pay for necessities.
- 39% of Americans are struggling to afford enough food for their families.
- 34% of Americans are worried about going into debt.
- 17% of Americans are unable to pay their bills on time.
The last thing you want your employees to do during a recession is to make hasty financial decisions or take on more debt. Arm them with resources that will prepare them for a downturn.
Consider offering webinars, classes, or other training in:
- How to create a budget.
- How to start and maintain an emergency fund.
- How to avoid soaring interest rates by paying down credit balances.
- How to use simple strategies to reduce expenditures, such as canceling unnecessary subscriptions and more.
Keep DEI Programs Alive
If you have a diversity, equity, and inclusion (DEI) program in place, keep in mind the same advantages that it brings to you now will help you in tough times, too. You’ll continue to enjoy improved profitability, better decision-making, greater innovation, and outstanding performance. Employees will continue to feel valued and engaged.
Let Us Help You Recession-Proof Your Employee Service Award Program
At CoreCentive, we are passionate about helping you build a comprehensive, scalable employee service award program that works for your employees and creates a culture of recognition in your organization.
Whether you are dealing with HR challenges during a recession or enjoying a robust economy, we want to see your employees feel recognized in ways that help boost their engagement with your organization while helping you retain your top talent.
Request a Free Service Award Program Assessment today. We look forward to discussing how CoreCentive can help you through a recession with flying colors.