Impact of recession on recruitment

By Ankita Agarwal on August 20, 2012

The economic booms and slowdowns have serious implications on organisations’ overall business strategy. The economic swings create a need to redefine the corporate as well as functional objectives of the organisation in accordance with the current economic environment prevailing in the country and the world. Human Resource (HR) is one such functional area which is severely affected by economic swings. Both boom and recession demand quick actions from the HR managers especially regarding recruitment.

Defining recruitment

Recruitment in simple terms refers to hiring. Robbins (1982) provides, “Recruitment is the discovering of potential applicants for actual or anticipated organizational activities.”Whether to recruit or not during recession is one of the important HR decisions. Recession is a time to cut costs and maintain profits. As such, the companies many times engage in massive layoffs. Large pools of employees are thrown out of the company, mostly the non-performers. The attrition rate thus reaches high and the labor market gets flooded with job seekers.

Recession and recruitment

Recession is many-a-times conceived in a very restricted manner and thus all recruitment activities are postponed as a move to avoid costs. But there are several benefits attached to hiring during recession which the firms generally oversee. Recession causes supply of labor in excess to the demand thereby making labor cheaper and easily available. Companies, especially the Small and Medium Enterprises (SMEs) can take advantage of recession and do massive recruitment for present and anticipated organizational vacancies. These companies otherwise don’t get enough opportunities to hire the best talent at a cost they can afford.


Moreover, recession is also a good time for succession planning. Zero attrition is neither possible nor desirable and therefore the companies must be prepared for attrition uncertainties. A way out is to do succession planning much in advance to avoid shortage of labor at anytime in the organization. Recession is the right time to prepare pool of talented employees for future. It also helps in avoiding the situations of hiring in a hurry which may not only lead to wrong hiring but also involves high costs. Recession must therefore be given a second thought from this perspective as well.


  • Robbins, S. 2nd Edition. (1982). Personnel: The Management of Human Resources. New Jersey: Prentice-Hall.
  • Fernandez-Araoz. C., Groysberg, B. & Nohria, N. (May 2009). “The Definitive Guide to Recruiting in Good Times and Bad. Harvard Business Review.


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