HR Recession Lessons

2009 will go down as a year to remember but for many businesses the memories may be painful ones. As we move from depths of the recession into the glimmer of a recovery we have an opportunity to reflect on valuable HR lessons learned and use those lessons to become more resilient, to survive and thrive despite the inevitable ups and downs of a complex global economy.

The most recent economic downturn is still too fresh for us to have the full benefit of 20/20 hindsight but this is the perfect moment to start to analyze what worked, what got us into trouble and how we can more effectively manage, train and deploy our human capital resources.

Some companies gain market share during a recession and even during the Great Depression Kellog, Proctor & Gamble and Chevrolet all managed to grow. Google and Amazon showed it could happen during the 2000-2001 recession and continue to be resilient and successful even in the current troubled economy. These large companies are not alone. Many small and midsize businesses also have demonstrated a winning business strategy can work even in the midst of a raging economic storm and a major key to success is a focused, efficient and engaged workforce

So what are some of the “first glance” HR lessons from the current recession?

• Head in the sand is not a winning strategy. Employees have powerful antennae that tell them when there is trouble in the company so don’t let the elephant in the room go unacknowledged.
• Rumors and fear are costly distractions and will eat time and resources if not addressed. The truth is seldom as awful as the collective imaginations of your employees who hear doom and gloom on the nightly news and project it into the workplace.
• Cutting your payroll too deeply can leave you without the talent necessary to respond to changing market conditions. If cuts are inevitable make them as strategically as possible because talent is expensive to acquire and train.
• Outsourcing can maintain the key HR functions while controlling costs and minimizing risks. HR related complaints and lawsuits rise in seemingly direct correlation to worsening economic conditions.
• Even in a tight job market talented employees have other options. If you cannot offer raises or other incentives to your superstars get creative about what you can offer. Your human capital investment may be your most valuable business asset when times are tough.
• Focus on the positive and encourage innovation. Everyone wants to be part of a winning team and your talent in the trenches may have the fresh ideas or vision your company needs to succeed in challenging economic times.
• The job market will improve sooner or later and employees will remember how they were treated during the difficult times. In many companies cutbacks were so extreme that the survivors are exhausted and unhappy. If your employees have been pushed to the breaking point and are poised to bolt at the first opportunity now is the time to begin rebuilding relationships.
• Employees will want to be rewarded for their efforts as the economy gets better. Employers should plan to evaluate compensation and benefits as the economy improves in order to remain competitive when the job market opens up again but not at the expense of rebuilding capital reserves.
• HR expertise is invaluable when addressing a complex and challenging employment landscape and bringing HR into the strategic process early can help avoid costly mistakes. HR will play a vital role in the transition from recession to recovery, especially in companies where the economic crisis has been severe and survival mode has meant putting out HR fires but left little time or attention to strategic HR. A good look back gives us an opportunity to assess and reevaluate as we formulate new strategies that incorporate the lessons learned.