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HR's Role in Preparing for an Economic Downturn, Part 1: The Basics

The U.S. just had a historic quarterly fall in GDP at a 32.9% annualized rate. That’s worse than even during the Great Depression. According to Bloomberg, U.S. workers filed an additional 1.4 million applications for unemployment insurance in the week ending July 18. That’s double the worst week of the Great Recession.

As employers prepare for what may be a troubled economic outlook, what can HR do to help?

Re-skill or up-skill employees.

To prepare your workforce, use the same tactics as when faced with serious talent shortages. One of the principal strategies is to help employees with skills development. Consider: if your workforce shrinks due to layoffs, will the remaining workers all be able to pick up the slack? Will they know how to? Additionally, remember that this economic contraction is happening simultaneously with a pandemic that can leave workers sick and unable to work. Who will fill in for them? Make sure your workforce has the skills they need to be able to flexibly step in wherever they’re needed.

Get good data, and base business decisions on facts.

Recessions can be hugely idiosyncratic, and we can’t necessarily use past recessions to predict what will happen with this one. The 2008 Great Recession, for example, proceeded differently from how 2020 is playing out, with different parts of the economy affected most severely. So, to be able to make good, smart business decisions, you need an accurate understanding of what’s actually happening and how it’s affecting your business. That’s the only way to know how to target business responses to the situation.

Focus on gaining efficiencies: eliminate, automate, outsource.

During times of plenty, businesses can become lax about their operations and labor spending. This is the time to think about operating at peak efficiency. Trim the fat and eliminate the unnecessary or the unhelpful. Automate manual activities that don’t strictly require human operation. And finally, outsourcing can yield tremendous business efficiencies by lowering costs and improving business outcomes.

CoAdvantage, one of the nation’s largest Professional Employer Organizations (PEOs), helps small to mid-sized companies with HR administration, benefits, payroll, and compliance. To learn more about our ability to create a strategic HR function in your business that drives business growth potential, contact us today.