A nationwide financial recession is incredibly difficult for everyone in a workforce, from frontline workers to chief officers. It brings some organizations a general sense of unease, while it brings other organizations layoffs and downsizing initiatives.
A struggling economy brings an especially tough challenge for HR teams, who don’t just have to worry about their own positions, but the positions of the rest of the company. Immense pressure is put on the HR department to keep employees informed and taken care of.
Experts are warning that a recession may be on the horizon, and Google’s searches for “recession” have quadrupled over the past six months. Here are some pieces of advice for all the HR teams out there that may be facing a difficult road ahead:
Hiring the right candidates
Everyone in a company has to step up to keep an organization running smoothly during a slow economy, but one of the roles that has to deliver the most is actually the recruiters and hiring managers. A lot of companies still hire critical roles in spite of economic downturns – the difference is now they can’t afford to make mistakes.
When hiring, you’re not just seeking the most qualified employees, but you’re seeking employees that will remain committed to the company and help improve employee retention. New hires have a 33% turnover rate in their first year, which slows productivity and ends up being much more costly than you’d think.
How do you find talent that will stay at your organization longer in the middle of a recession? You could include it in the interview process on a case-by-case basis, asking about their plans for the future and the reasons they’re interested in the position. Before you even send them their first message, though, you can get an idea through demographic statistics.
Employees most likely to stay include Baby Boomers, employees with more than 10 years of tenure, and individuals working in government and education. Millennials, on the other hand, are more than twice as likely to quit as Baby Boomers. While statistics like these never tell the full story of any one individual, it seems like targeting an older, more experienced generation will result in stronger employee retention, which is what any business needs to maintain a profit.
There’s one more secret demographic you should look for if you’re hiring during a recession: recently laid-off workers from other companies. Plenty of organizations are shedding some of their most skilled employees, meaning the talent pool available is as strong as ever. Keep an ear out for news regarding layoffs – you may be able to get in touch with fantastic employees before they send out their first application.
Maintain employee confidence
An economic recession is defined by worry. Folks worry about their futures, their finances, and most importantly, the stability of their position and the company that’s employing them. If your business is crumbling around you, then this step might be a bit tough. However, if you’re confident that you’ll be able to avoid making layoffs and downsizing, then you should be totally transparent.
Assure everyone that their positions are safe and that the company has a plan for both the short term and long term. An overlooked factor that contributes to high turnover is the employee’s search for new jobs due to fear of instability at their current one. Even if the recession is weighing down on some corners of the business, it’s important to emphasize to your team that everything is running smoothly overall and that they should feel secure in their future.
Managers should use one-on-one meetings to open up communication between them and their staff, answering questions and receiving feedback about any shortcomings the workplace may have that management isn’t aware of. Open communication is the key to trust.
Stay focused and boost engagement
Sometimes a recession can completely psych leaders out of doing what they do best: leading their team. When money gets tight, it can feel instinctive to begin focusing on productivity over profit, making the average workday drier and more strenuous. The economy may be changing, but human nature has not – you have to engage your team to boost profit and employee retention.
An employee who identifies as engaged and inspired is an enormous 125% more productive than an employee who isn’t, per Bain and Company. Pushing too hard to speed up profits can actually have the opposite effect, creating burnout and hurting engagement. The issue, though, is that most engagement/retention initiatives do cost money, and you may have your budgets cut too thin for non-work expenditures. If so, you’ve got two options.
You could break the budget and spend a bit more on employee retention strategies for the sake of ROI, as advised by CFO Chris Caprio. If you truly can’t spend any extra, though, there are plenty of cheap ways to engage your team, such as on-site/remote games, happy hours, and thoughtful surveys. Check out our article on creative ways to retain employees here!
Laying off employees… the right way
You might just have no choice. Laying off workers is by no means unusual – we all remember 2008 – and the fact that you have to do it doesn’t make you a bad leader or HR manager. When we do remember ‘08, however, we remember that some folks were okay with the way their time ended at their organization, and some were not.
The right way to let an employee go isn’t as simple as being extra sympathetic when you tell them the news. There are actionable steps to making an employee’s lay-off a positive experience that could even leave the door open for a re-hire later down the road.
The first step is looking at a severance package, which is typically 1-2 weeks of paid salary for every year worked. That sounds great to your veterans, but doesn’t help out newer hires a whole lot. That’s why the next steps you should take should be to assist laid-off employees with receiving unemployment and resources for finding new positions. Tight-knit teams will be able to refer employees to specific job openings, making their transition between jobs as quick as possible.
Layoffs, though, should be your last option. Before letting anyone go, consider moving workers laterally to departments that need more help. Sometimes reallocation of resources is truly what an organization needs.
Ultimately, we hope your company never finds itself in a position where you’re not ready to face a recession. Boost productivity and profit by focusing on boosting employee retention. We have a ton on the subject in our library, but we’ll begin by directing you here and here. While you’re there, take a look at our e-book on Mastering the Employee Experience, or our 10 HR Strategies For the Retention Crisis! To take a tour of HelloTeam, the employee retention platform, click here — and to book a demo with us, go here!