A smart business prepares itself for anything, especially for a recession. A recession forces human resource personnel to make strategic decisions about spending that might affect employees in a negative way. In times like these, effective internal communication is more important than ever.
Luckily, there are signs companies can look for that might indicate a recession so they have ample amount of time to prepare their employees. For example, the rising rate of unemployment and declining quit rate are signs pointing towards a recession. When a recruiter tells the company that the number of job postings is going down, then that means a recession is approaching within six months.
Luckily, if the employer knows that a recession is about to happen, there are strategies that they can take to prepare their employees. At VP Legacies, we help you retain your valuable employees with strategies for personal connection and effective internal communication. Here’s our guide to preparing them for a recession.
The first step in planning for a recession is to have a metric in place. Companies without a tracking metric lack preparation and might end up having to make more spending cuts than necessary. This system should review information about compensation, training, productivity, and other items related to the business goals and the financial aspect. These data will help organizations know what to expect if they were to downsize and might even help them minimize layoffs.
No one wants to layoff their employees, but sometimes, this is inevitable. Before the recession begins, human resources need to evaluate and document the employee’s work. The common mistake that businesses make is laying off employees that underperform without ample documentation. However, if there is no proof that the employee is underperforming, then that is a lawsuit waiting to happen.
Another aspect is to be cautious of the reason for laying off an employee. For example, an older and less productive worker can file a lawsuit claiming that he can’t work in the company anymore because of his age. The last thing you want is a company to be struck with months of litigation that can compromise your team.
Documenting employee performance encourages employees to perform well, exceeding expectations during a recession and helping to minimize the number of cuts your company needs to make.
The company can save money by decreasing the number of bonuses that they give to employees. It’s up to HR to find out how to allocate limited rewards and monetary gains to workers by looking at the performance review. Of course, employee wages are one of the last (if not the last) categories of spending that you’ll want to reduce. Unfortunately, this might be inevitable.
In the meantime, make sure to let employees know you appreciate their efforts. This might be something as simple as sending an email or keeping your office door open at times to indicate you’re willing to talk. Lines of communications are more important then ever, despite (and perhaps even because of) the possibility of disappointing news.
The company should determine which programs to cut down, and which are useful and should continue throughout the recession. For example, if the company has a high rate of accidents, then they should not cut down the safety training program.
A common mistake that employers make is cutting down training development. However, training is vital in building skills and capabilities for future employees. Short, microlearning modules are an affordable option that can minimize spending while ensuring that employees continue to develop necessary skills even during a recession.
Using SWOT Analysis to Help You
The SWOT analysis stands for strength, weakness, opportunity, and threats. This report allows HR to create cost-benefit data about which strategies contribute the most to the business. It helps them indicate which programs should stay and which should go.
Another thing is that SWOT analysis can indicate if recruitment should be reduced or not. The report will show if there are enough funds to incorporate more workers and how many current employees you can maintain. SWOT analysis provides a useful way to avoid unnecessary employee cuts. With thorough analysis, you might even identify wasteful fund usage in areas like corporate events, technology, and other categories where budget restriction isn’t as crucial as it is for your employees.
It’s vital to create a plan to move workers to where they needed to be. That means you should train your workforce to take on various roles in the company in case you may have to suspend the hiring process.
Another creative and flexible approach is to use workers and technology together. That means you can have employees work 30 hours a week, and use technology to perform the remaining jobs. You can also have recruiters to get on board in the company to manage the employee. In order for this to work, internal communication is vital. You must ensure adequate pathways to communicate even between departments.
Avoid Constant Layoffs
Organizations must avoid constant layoffs. This demoralizing cycle can strip employees away from the security and comfort of working for your company. It’s best to use layoffs as a last resort, and instead make other cuts so that your employees still feel a personal connection to your company.
If a worker who has the most experience and works the hardest in the company observes massive layoffs during the recession, then he or she would be discouraged from continuing their work. Your top employees might start looking for another job that will give them the security that they need. This issue would entail losing a valuable worker and wasting hours of training them.
Keep Employees Informed
Companies need to find the right balance between transparency and not scaring the workers. That means it’s essential to keep the employees informed about the recession and solutions to deal with it, but not share too much information that would put personal connections at stake. After all, no one likes walking into work to find out that the business is cutting half of its employees. Honest internal communication is essential, and it prevents the company from burning any bridges with employees.
To prevent social media backlash and maintain the trust of current employees, it’s vital to handle layoffs professionally and respectfully.
Companies need to show gratitude and appreciation for staff members who have worked hard and take on more responsibilities than other workers.
Gratitude often comes in forms of better recognition and new titles. Showing appreciation can reduce the worker’s fear that they could be the next ones to get fired. Gratitude can come in a variety of forms, such as a pizza lunch or gift card as a small token of appreciation to show that the company acknowledges the employee’s hard work. Praise maintains personal connections between employees and managers, even when economic times are difficult.
The worst way to handle a layoff is to have security escort the worker out of the door. This issue can discourage the remaining workers, causing them to look for another job.
There is a proper way of laying someone off. It’s vital to show empathy by understanding how they may feel about the situation. That means being respectful with the individual getting laid off by explaining the reasons and thanking them for being in the company.
It’s also essential for the department to sit down with the remaining workers to discuss potential layoffs, benefits, and severance. HR can let eligible workers know that they can reapply when the company hires again.
Ensure Everyone is Inspired
The most valuable aspect of the survival of the company during a recession is the employee’s passion and love for the organization. If the workers invest their heart and soul in the company, they will take on a new role and work extremely hard to get the task finished despite having a shortage of staff.
They are more likely to take a pay cut but work harder to ensure that the company stays alive. If the workers are inspired and passionate about the organization, they will do whatever it takes to keep it thriving during the recession.
The best way to ensure that everyone is vested in the company’s success is to motivate them and to promise a better future. Employers that are honest and trustworthy are most likely to create inspiring people.
It’s a good idea to let employees know that there could be a potential raise or bonuses after the recession. That way, it keeps them motivated to work twice as hard for the survival of the organization.
Before a recession or anything that happens to a company, the organization must have a good relationship with its employees.
The best way to do this is to hire a consultant such as VP Legacies to create strategies to build a great relationship and identify opportunities for personal growth and connection with employees.
The primary strategy is to focus on empathy and consistency to improve employee retention. These communication strategies are essential to help both employers and employees to cope with the recession.
Keeping Everyone in the Loop
Owning and/or managing a company is like a roller coaster ride. One minute you are on top of the world, and the next you’re facing a recession. It’s easy for a company to thrive and do well during economic growth, but when the recession happens, the organization will have to find ways to survive.
The main objective is to save money and to cut down on unnecessary programs. Another aspect of survival is to lay off employees. However, the best way to help your workers prepare for the recession is to show empathy, gratitude, and keep them informed during the situation.
There are also other strategies, such as understanding the metric, data, and swot analysis of the company to get an overall report of what to expect during the downsizing process.
With the proper techniques and skills, your company would be able to prepare employees successfully during the recession if you engage your employees. To get started with eLearning, microlearning, and other strategies to help your employees feel valued and engaged, check out VP Legacies courses and more.
Related: Custom eLearning Development