A recession can be an incredibly stressful time for working professionals. With a cloud of uncertainty looming over everyone, it is a testing time for employees, employers, and the overall economy.
The Federal Reserve confirmed on July 28, 2022, that the GDP shrank for the second consecutive quarter this year. Some organizations may withstand a recession better than others, but they are all affected. Many organizations are wading through financial hardships with layoffs, revenue losses, and even shutdowns.
Thus, experts such as HR professionals are of great importance during economic crises, where their efficient staffing insights can help tackle difficult organizational situations. For example, even during the COVID-19 pandemic, HR leaders across the globe helped organizations reduce the impact of the crisis on their business by offering creative problem-solving and managing talent and culture in an unprecedented manner.
However, data from Business Talent Group states that the demand for HR skills is accelerating owing to its alleged “recession-ready” trait. Present times are uncertain and unpredictable. For obvious reasons, people prefer to have a cushion to fall back upon in times of demand shock. As per the research quoted above, a career path that is coming of age lately is HR management.
Why Is HR Management “Recession-Ready?”
“Interest in global human resources professionals rose 314%; demand for interim HR leaders jumped 400%. But requests for cost reduction experts also jumped 400%.”
The Business Talent Group’s data is not entirely surprising as, across the US, UK, and Europe, there has emerged an increasing need for commercially driven HR leaders. As a result, organizations are looking to strike an equilibrium between the talent required to deal with uncertain economic conditions and uninhibited business growth, which is where HR management skills fit the picture.
HR management skills are transition-friendly. In times of distress, they come with the ability to minimize the cost of recruitment or staff engagement. As a result, employers seek professionals who can help them develop creative approaches to help their organizations endure economic shocks.
The Role of HR During a Recession
There is neither a way for an organization to be truly recession-proof nor a quick fix to reverse the recession. Even HR departments can only help minimize the impact of the recession on an organization but cannot outrightly end it. An organization with a robust contingency plan is the closest to becoming recession-proof.
Here’s how HR management can help an organization sail through the turbulent recession-related crisis:
By Strengthening Trust in the Leadership
HR’s role is significant in calming employees when a potential recession creates a feeling of anxiety and fear among them. HR can reassure employees about job security, keep them motivated, and eliminate rumors or misinformation. In addition, they can help organizations reinstate employees’ confidence in the leadership and their managers and boost employees’ morale.
By Providing Overtime Opportunities
An organization would typically avoid recruitment costs during economic strain, and employees would not want to be laid off. In such a situation, HR can provide employees with the opportunity to work overtime and get paid for the same. In times of economic downturns, it’s a win-win situation for both the employer and employees as the employer may not need to hire new employees, and the employees could earn extra.
By Offsetting the Payroll and Benefits
During a recession, employers may find themselves financially strained and, as a result, may temporarily revoke employees’ benefits and incentives. In such a situation, HR devises alternative compensation packages for employees to increase their take-home salary. The alternatives may include withholding allowances, such as commute expenses, travel perks, expense accounts, and so on. Therefore, HR plays a key role in offsetting the recession’s impact on the employees’ take-home compensation.