Human resource strategies to adopt during a recession

By on January 7, 2013

Business cycles always pose a major challenge for business organizations, especially recession. The focus is laid on cost-cutting and restricting the business activities to a few defined lines. Major layoffs are targeted and innovation gets a backseat in the organization. There is widespread dissatisfaction among employees and the attrition rates go up. Though recession affects the whole business, human resource is an area which is probably most severely affected. However, if it is managed effectively from an HR perspective, it can turn out to be an opportunity for the organization in the long-run. Let’s discuss the HR initiatives that need to be adopted during a recession.

How to manage the recession from an HR perspective?

Traditionally whenever there is an economic downswing, the organizations used to focus on cutting HR costs. One of the most common ways for cost-reduction is to fire the undesirable employees from the organization. A recession is probably considered the perfect time for massive layoffs in the organizations. Though terminating the unproductive employees is a good strategy during the recession, focusing only upon layoffs would not be correct. It is a common mistake committed by most organizations during this period that they divert their attention to firing the undesirable employees instead of focusing upon keeping the desirable ones. A recession is a good time for employee poaching. The firms keep an eye on valuable employees of competitive firms; thus it is important to keep manpower motivated so that they do not switch over to the competitors. The time has changed and now there is a need to adopt a broader perspective and make the best use of available human resources instead of throwing out many for no specific reasons. The HR manager needs to adopt a holistic outlook to the recession and deal with it strategically. There are several strategic moves that can be recommended for HR managers during the recession which will not only improve employees’ performance but also help in cost-reduction.

  1. Focus upon improving employee engagement so that there is a lesser need for supervision and the employees are self-motivated to accomplish organizational objectives.
  2. Offer job security to the valued employees because the fear of losing the job is probably the most common employees’ reaction to the recession. Freedom from this would ensure better productivity.
  3. Introduce a performance-based pay system in the organization so that the individual goals are aligned with the organizational goals. This will work for the mutual benefit of employees and the organization.
  4. Ensure transparency in all the HR systems in the organization and offer fair and equitable treatment to all the employees. This will ensure there are lesser incidences of workplace conflicts.
  5. Offer proper recognition for the work. This will not only act as a motivational tool but will also minimize every opportunity for the blame game in the organization.
  6. Provide training to the employees, not only job-related but also for career progression. Recession gives enough time to carry out training programs and the employees also learn better considering it an opportunity for job-security and career growth.
  7. Improve employee retention by offering retention/stay bonus to the valued employees. This will act as a motivation for other employees as well to stay longer in the organization.
  8. Offer employment to the retired staff, either full-time or part-time to tackle with attrition that usually follows recession. By hiring such employees, the organization can save the costs of training. To recruit new employees, however, employee referral bonus can be a great idea during this period. This will save the recruitment costs and motivate the existing employees as well.
  9. Offer flexibility in work to facilitate work-life balance. By offering flexibility in timings and location, employees’ satisfaction, engagement, as well as retention, can be improved.
  10. Utilize this time for carrying innovation and succession planning in the organization. The slowdown in business gives both time and resources to be better utilized for long-term strategic thinking.