Recession: How to Prepare for the Worst

A good business is always prepared for anything, especially a recession. 

If the employer knows that a recession is around the corner, there are strategies that they can take to prepare their employees. Here’s how HR can prepare for a recession.
 

Track Metrics

First, you need a metric in place. Without a tracking metric, your company might end up having to cut even more in spending than needed. This system should review information about compensation, training, productivity, and other subjects related to business goals and the financial aspect.

These data will give you insight on what’s to come if you need to downsize and help you in minimising layoffs.

HR must work hard to prepare for the recession so the company stays afloat.

Performance Issues

There are times where you can’t do much but to layoff your employees. Before the recession arrives, HR needs to evaluate and document the employee’s work. 

A common mistake that companies make is laying off employees that underperform without enough evidence. If there’s no proof the employee is underperforming, you’ll have a lawsuit waiting to happen.

Be cautious when 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.

Allocate Resources

Your company can save money by decreasing the number of bonuses that they give to employees. HR needs to figure out how to allocate limited rewards and monetary benefits to workers by checking the performance review.

Of course, the last category of spending you want to reduce is employee wages. But, you may need to do it if it is inevitable.

Evaluate Programs

Check which programs to cut down by identifying which programs are useful and should continue throughout the recession.  For example, if the company has a high rate of accidents, then they should not remove 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.

Using SWOT (Strength, Weakness, Opportunity, and Threats) Analysis to Help You

This analysis allows HR to create cost-benefit data about which strategies contribute the most to the business. It helps them to identify which programs should stay and which should go.

It can also indicate if recruitment should be reduced or not. The report will also show if there are enough funds to hire more workers and how many current employees you can maintain. The SWOT analysis provides a great way to avoid unnecessary employee cuts. 

With deep analysis, you can identify wasteful fund usage in areas such as corporate events, technology, and other categories where the budget restriction isn’t as important as it is for your employees. 

A SWOT analysis can help you prepare for the recession.

Flexibility

Sometimes you need to move workers where they need to be. Train your workers to take on various roles in the company, in case you may have to pause the hiring process.

Avoid Constant Layoffs

Constant layoffs demoralise your employees. Layoffs should be the last resort, and you should instead make other cuts so your employees still feel a personal connection to your company.

If your most experienced and hardworking worker sees massive layoffs during the recession, they would be discouraged from continuing their work.

Keep Employees Informed

There’s a balance between transparency and not scaring the workers. You need to keep your employees informed about the recession and how to deal with it, but don’t share too much information that would risk personal connections.

No one wants to walk into work and find out that the company is firing half of its employees. Honest internal communication is important, and it stops 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. 

Empathy

The worst way to handle a layoff is to have security escort the employee out of the door. The right way is to show empathy. Understand how they feel about the situation. Be respectful with the employee getting laid off by explaining the reasons and thanking them for being in the company.

It is also very important to sit down with the remaining employees and discuss potential layoffs, benefits, and severance. HR can let eligible workers that they can reapply when the company is hiring again.

With the correct techniques and skills, your company would be able to prepare employees successfully during the recession if you engage your employees.

Source: VP Legacies

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