Keeping employees engaged during the recession

Macroeconomic indicators which means production as measured by Gross Domestic Product (GDP), employment, investment spending, capacity utilization, household incomes, and business profits……….when all of this fall, that’s when the alarm rises!

For once, if we look at these indicators, one might question what has it to do with HR? But unfortunately, it does because all of this culminates into “uncertainty” or what we call “recession”.

“According to a Deloitte report published this year which surveyed and drew responses from 158 CFOs, 75% believed that an economic slowdown or recession is looming ahead in 2020.”

Hence, there is a pressing need to construct an organization that is tough, resilient and able to combat the impact of a recession. Each recession, as it uncoils, creates the demand for HR practitioners to understand their role in keeping employees engaged in this downtime. While a lot has been written and spoken about this, I have tried to cover a few aspects below which I feel are simple and which can be easily adopted by HR professionals.

• Arm yourself with data: This will help in understanding the business so that you can confidently adjust HR facets with the economic conditions be it in terms of policies, staffing, training, productivity, compensation, and other items related to business goals and financial results that can help to know what impact downsizing will have.
  • Must do: Get metrics in place else it will be like shooting in the dark and make decisions only with facts and figures else it will lead to knee-jerk.

• Communicate, Communicate, Communicate: Maintain a constant flow of communication by keeping employees informed about the current scenario, steps the company is taking to be profitable and what employees need to do to ensure commitment to the company’s vision.
  • Must do: HR needs to review comments on platforms like Glassdoor etc. and publicly respond on behalf of their company providing additional context and information. This is important for employer branding among future hires when the economy revives again.

• Appreciate & Recognize: During times of recession, it is important to nutriment and nurture existing clients, hence appreciating and rewarding employees who excel in this aspect becomes very critical.
  • Must do: Calling out employees who have made significant contributions, shown extra effort and gone the extra mile can provide a real boost to morale and encourage healthy competition.

• Don’t eliminate training: The Boston Consulting Group survey conducted with the European Association for People Management revealed that more than 30 percent of the companies that scaled back training in times of recession were less effective and demonstrated lower commitment levels.
  • Must do: Focus on cross-functional training which would simply mean that you are preparing them for continued employment in case their current jobs are eliminated owing to recession.

• Breathe in the human element: One of the essential aspects of a smooth layover is to treat the departing workforce with empathy and compassion.
  • Must do: Explain the workforce what jobs were eliminated, severance benefits that employees will get, train managers to let them know it’s OK to tell the laid-off people that their work was appreciated and that they will be eligible to reapply when the company starts hiring.

• Compensation and Benefits: While HR cannot guarantee employees stability in their year-end bonuses or wage increases, the least they can do is to guide employees to manage their finances.
  • Must do: More of compensation should be shifted to base salary than incentives and allow employees the flexibility to add new compensation components to their existing remuneration packages such as overtime support during a recession even as the company shrinks recruitment costs.

• Get bold and act quickly: In the event of downsizing, once the decision is taken, the moves have to be bold and quick else with each action, the morale dips a little more. Organizations need to avoid a demoralizing cycle of repeated layoffs.
  • Must do: Eliminate the low value-added tasks so that people who stay back do not have to make up the work of those who left. 

• Optimize: Promote cross-divisional and cross-functional collaboration, redefine and expand spheres of authority and responsibility of star employees, use a SWOT analysis to pull together cost-benefit information so that HR is aware of the items that contribute the most to business and its bottom line.
  • Must do: Ask yourself – what can we eliminate, what can we automate and what can we outsource?

• No lawsuits please: It is extremely crucial to document performance issues so that it accurately reflects the work of employees and any lay-off decision was taken during the recession will not create an adverse impact or the organization or open up lawsuits.
  • Must do: Document everything.

Always remember your best people are going to have choices, so you always have the risk of losing them. Hence make sure employee engagement is managed in such a way that you don’t breed discontent among your top people and for that matter anybody who stays back during the recession and is a contributor to the organization.

What companies did during the recession

1. Top Pharma company: CEO kept all employees updated on the organization’s response to market changes by communicating through emails, quarterly meetings, blogs accessible only to employees, and by talking to them.
2. Top Beverage company: Leadership team ensured that employees are informed about the business and macroeconomic scenario.
3. Top Bangalore based IT company: Filed applications in the state labour department, declaring their intent to lay off employees.
4. Another IT company: Told employees they can opt for a year-long sabbatical to engage in philanthropic activities while they draw 50% of their salary.
5. Top Retail company: Slashed executive salaries by 5% & lowered travel/ stay entitlement limits for executives.
6. Top Mining Company: Ensured that their shop-floor operators know about the cost of production and the benchmark levels of global competitors.
7. Top FMCG company: Trimmed training budgets, but not the focus on training and development. They looked at the optimization of training programs and depending less on external trainers.