In today’s economic uncertainty—marked by high inflation, rising interest rates, record-low unemployment, and strong consumer spending—HR professionals are preparing to pivot to meet the needs of their organizations should the economy go into recession. They are no strangers to navigating and leading through turbulent times: throughout the pandemic, they led change from the front lines, creating a culture and space that supported a massive transition to remote work and to greatly modified work environments. More than ever before, they found themselves helping organizations navigate difficult business decisions, solving problems creatively, and managing talent and culture, all while keeping a focus on minimizing costs and engaging staff during challenging times. With their skills and experience, HR professionals are well positioned to continue to help their organizations weather the current economic crisis.
Assessing and Addressing Talent Needs
It may be expected that HR’s role during an economic crisis would center around talent. As companies make critical staffing decisions, the evaluation of talent and the use of that talent become paramount. With cost-saving conversations often focusing on how to make effective use of staff, HR leaders can address these priorities through performance evaluations, development tools, succession plans, and cross-training initiatives.
Unemployment remains at historic lows, and the Great Resignation may signal the beginning of a long-term shift in the labor market. For many businesses, growth has been slowed because of workforce shortages: “U.S. workforce participation rate has fallen to 62.3 percent, down from 67 percent in the late 1990s.” Now more than ever, HR professionals need to focus on strategies to help their organizations attract, retain, and develop high performers.
As organizations strive to meet their attraction and retention goals, they are also faced with the realities of current economic conditions. The soaring cost of living has placed pressure on employers to increase salaries as paychecks are stretched by the significant increase in the prices of household goods. HR’s role is to help businesses remain competitive in the job market by developing total compensation programs designed to motivate and reward high performance.
In addition to ensuring that compensation and benefits are appropriate for market conditions, employers are challenged with meeting the needs and expectations of a multigenerational workforce. With job seekers across all generations pointing to work-life balance and the availability of growth opportunities as two of the main factors they consider when choosing to join a company, HR can champion programs that motivate employees of all ages by offering ample paid time off, flexibility, and professional development opportunities.
Reskilling for the Future
As technology rapidly advances, many businesses find their growth hindered by skills gaps within their workforces. During an economic slowdown, HR can shift the focus to the future and find ways to fill skill gaps by providing training and development opportunities to current employees. This can be a win-win situation: not only does this arrangement help the business to better meet its needs, but it also provides growth opportunities for those employees who want them.
Managing the Mood
During an economic crisis, HR should partner with the leadership team to encourage and embrace a culture open to flexibility, evolution, and grace toward others. Maintaining the team’s psychological safety can be particularly challenging during economic downturns or layoffs. In those times, it’s critical for HR to be transparent in its communications about what is happening in the organization, as well as acknowledge what is unknown. Employees who are left in the dark can become disengaged, putting the organization at risk of fostering a culture of quiet quitters.
Supporting Mental Health and Well-Being
Economic challenges always take a toll on employees in one way or another. To ensure a thriving and productive environment, consideration must be given for their mental health and well-being. HR should promote the organization’s employee assistance plans, take advantage of the copay waiver for many mental health plans, and communicate regularly to staff about community resources and financial offers from local banks.
HR’s role has shifted and grown during this period of economic challenge, which has put pressure on HR professionals and business leaders to do more with less. Businesses across the board are all looking for creative ways to engage their workforces, reinforce productive and positive behavior, and retain staff—all while allaying employee concerns and fears. HR professionals can and should seize this unique opportunity to play a significant role in leading their organizations through this national crisis. By supporting their companies through appropriate economic-driven actions, they can promote their organizations’ vision and goals as well as their employees’ health and well-being.
