Once the word “recession” appears in newspaper headlines, it’s only a matter of time until businesses start making changes to prepare for the potential economic impact.
In the face of an uncertain future, companies often change strategies. Some companies like UnitedHealthcare Group and CVS Health are hiring more to prepare for a new operating environment. And some companies, like Walmart, Shopify, and Netflix, make significant cuts to their workforce.
To help lessen the impact an economic downturn has on your company, here are five ways to position your organization to thrive during and after a recession:
#1. Integrate Workforce Plans With Finance Plans
Finance should pay special attention to workforce planning during a recession for several reasons. Not only is the workforce your company’s single most significant expense, but, with the right planning, it is also a secret weapon to becoming more nimble and profitable.
Where finance teams are primarily concerned with the costs associated with compensation, turnover, and benefits packages, the HR team offers a wider perspective. Workforce planning includes examining employee engagement, attrition, and retention rates, as well as talent attracting and recruiting efforts.
While these issues are rarely addressed in financial plans, they directly impact a company’s bottom line. According to Gallup, employees who are not engaged can cost a company 18% of their annual salary, and data from SHRM shows it costs an employer one-third of a worker’s yearly wages to replace them. Additionally, an ever-growing skills gap is projected to result in 8.5 trillion in unrealized revenue by 2030.
Integrating workforce planning with an organization’s overall financial planning enables a more holistic approach, enabling companies to prioritize and implement programs that can help them successfully navigate the effects of a recession.
#2. Implement Agility
Thriving in a recession requires a company to be agile. Economic uncertainty often results in sudden and unexpected change, so it’s crucial that companies have the ability to adjust and adapt quickly. And to do so, your business needs to have the right tools and technology in place.
A Human Capital Management (HCM) platform can help your company achieve the agility needed to quickly and effectively react to ever-changing business demands. HCMs give teams real-time access to data from various sources like HR, payroll and accounting, and benefits administration. This helps streamline recruiting and hiring processes, identify short-term gaps, and quickly move team members into new roles to address those needs.
HCMs also provide powerful automations that enable HR team members to shift their focus from routine, time-consuming tasks to higher-value activities that facilitate informed decision-making so that your organization can quickly adjust to new challenges and opportunities.
#3. Become a Workforce Planning Expert
Workforce planning is a complex process, and it’s even more challenging in times of uncertainty or economic volatility. But focusing on developing a flexible workforce can help ensure your organization will have the right staff to meet both current and future needs.
A flexible workforce allows companies to pivot in response to change, but only if they can harness the right talent at the right time. Following these best practices for workforce planning can help position your company to become a thriving business during recession:
- Redeploy existing workers
- Data shows that hiring new employees costs companies twice as much as retaining their existing staff. When planning for change, prioritize redeploying employees to different roles whenever possible. By keeping existing staff, your company can avoid costly onboarding and training and retain valuable institutional knowledge in the process.
- Reskill and upskill
- As business needs change, redeployment won’t always be possible, as some employees may not have the right skills. But in a recession, hiring new talent is not always possible. A flexible workforce plan should identify opportunities for upskilling employees to gain the more advanced skills needed to fulfill more senior-level roles and include reskilling opportunities by identifying workers with ‘adjacent skills’ that can be laterally repositioned to address changing needs.
- Use predictive people analytics
- Many companies make it a priority to collect HR data. Using available data can help your company gain valuable insights into your talent pool, enabling your HR teams to quickly recognize where there are gaps to fill and where to make shifts in order to improve efficiencies and increase engagement and productivity, which ultimately drives profitability.
#4. Plan for Multiple Scenarios
Scenario planning involves making roadmaps for hypothetical circumstances, so organizations can implement new plans quickly when a foreseen situation arises. Using extended timelines, companies can forecast and analyze potential future scenarios. Regardless of whether the future brings leaner times or a period of rapid growth, your team will know what decisions to make to address the current reality.
While it’s impossible to completely, and accurately predict the future, businesses that take the time to address the various “what ifs” will position themselves to quickly and efficiently implement alternative plans as soon as changes start to emerge. Planning for multiple potential scenarios helps businesses anticipate and shift in the face of uncertainty and turn it to their advantage.
#5. Lean on Agile Technology
An agile HCM system is ideal for gaining deeper, real-time insights into your business. It allows your teams to better identify and understand where there are opportunities for more efficient and cost-effective operations.
A position-based architecture like SyncHR enables the use of placeholders and timestamps, so you can easily compare current staffing and budget levels with various projections in order to identify what shifts may be required to respond to the changing landscape. And when you do make those changes, your employee data moves with them.
Economic change is a challenge to even the most successful businesses. But companies that implement agility, integrate workforce and financial planning, and arm themselves with tools and technology that empowers them to make faster yet informed decisions will be the ones that are not just surviving, but thriving in a recession.
At SyncHR, we’re no strangers to change. Our position-based platform empowers organizations to achieve agility and adaptability in a rapidly evolving landscape.
We are here to support you with efficient, accurate, and cost-effective workforce management solutions. To learn more about SyncHR, click here.
Please read our disclaimer here.
Back To Resources