Human Resource Strategies during Recession

Business cycles always pose a major challenge for business organizations, especially recession. During 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 recession is managed effectively from an HR perspective, recession 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 recession.

How to manage recession from an HR perspective?

Traditionally whenever there is an economic downswing, the organizations used to focus upon cutting HR costs. One of the most common ways for cost-reduction is to fire the undesirable employees from the organization. Recession is probably considered the perfect time for massive lay-offs in the organizations. Though terminating the unproductive employees is a good strategy during recession, focusing only upon layoffs would not be correct. It is a common mistake committed by most organizations during recession that they divert their attention to firing the undesirable employees instead of focusing upon keeping the desirable ones. 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 recession and deal with recession strategically. There are several strategic moves that can be recommended for HR managers during recession which will not only improve employees’ performance but also help in cost-reduction. These include:

  1. Focus upon improving employee engagement so that there is 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 recession. Freedom from this would ensure better productivity.
  3. Introduce 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 recession. 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.


  • Hewlett, S. (August 17, 2009). “Flex Time: A Recession Triple Win.” Retrieved from:
  • Woods, D. (January 17, 2011). “The Problem with Pay.” Retrieved from:

Ankita Agarwal

Analyst at Project Guru
Ankita is working with the editorial board of Project Guru as a Research Analyst and Writer. With Masters in Commerce and Business Studies, Ankita learned much of what she knows about management through experience. She has previously worked in various financial institutions like Birla Global, HDFC Ltd. and Citi Financial. She is self-motivated and writes for the Knowledge Tank section of Project Guru. She has authored more than 80 articles so far in Human Resources Management, Strategic Management, Finance and Marketing. She likes to pen her thoughts about the latest issues gripping these areas across the world.

Related articles

  • Compensation management during recession During an economic downturn or recession, one of the most severe challenges that HR managers face relates to designing the employees’ compensation structure that serves the needs of both the employees as well as the organization.
  • Impact of Recession on Recruitment The economic booms and slowdowns have serious implications on organisations’ overall business strategy.
  • Work life balance The changing economic and demographic profiles of human lives have posed newer threats to the HR managers in the organizations.
  • Future of Human Resource Management (HRM) in SMEs As it is often said, the future belongs to Small and Medium-sized Enterprizes (SMEs). Not only because they contribute directly to the economy in terms of output and employment, but also because they act as the ladder of success for many large firms.
  • Attrition at CEO level Attrition refers to the departure of employees from an organization by means of either retirement, death, resignation or termination.


We are looking for candidates who have completed their master's degree or Ph.D. Click here to know more about our vacancies.