The increasing frequency and impact of crises in the business world cannot be ignored. From economic downturns to pandemics, from natural disasters to cyber-attacks or other tech issues, every business faces these potential crises. These disruptions can occur unexpectedly, putting immense pressure on businesses to respond effectively.
This is where Human Resources (HR) plays a crucial role in managing these potential threats. HR is responsible for maintaining clear communication with employees, ensuring their well-being, and supporting organizational stability. Effective crisis management by HR can mean the difference between a business that survives and one that falters.
By being prepared for disruptions in business operations, HR can reduce risks, maintain productivity and preserve reputation. Through proactive crisis planning HR can build trust among key stakeholders with transparent communication and effective leadership. This enables businesses to navigate these challenges with resilience and emerge stronger than ever.
But what specifically should HR do to ensure they are maximally prepared for crises, disasters, and other business-disrupting incidents?
Many more companies think about crises than actually do anything about them. This has resulted in a huge preparedness gap. Consider: A 2019 PwC survey found that 95% of respondents expected a crisis within the following two years.
However, only 31% of respondents to a 2021 survey said they had a crisis management team in place when the Covid-19 pandemic hit. That’s a 64-point gap! This highlights a significant issue: acknowledging the risk of crises is not enough.
To bridge this gap, HR can take the following practical steps:
Review Past Crises. Start by reviewing past crises or disruptions the business has faced. Analyzing past crises can give insights into areas needing improvement and aid in developing stronger crises management plan.
Develop or Refine Crisis Management Plans. Based on your analysis, create or update crisis management plans. Make sure these action plans are comprehensive, covering various potential risks. Each plan should outline clear roles, communication, and contingency measures for different scenarios.
Establish Teams. Form a dedicated crisis management teams made up of members from different departments. Ensure these teams are well-trained and capable of managing different crisis aspects.
One word of warning: try to make plans for future incidents crisis-flexible to make them maximally applicable and effective. As PwC writes: “Given the variety of threats today's business leaders face, it's important to design a built-for-purpose, crisis-agnostic program with the flexibility to adapt to whatever comes next.”
Never lose sight of the true goal of crisis preparation: business continuity, survivability, and sustainability. Many companies engage in a crisis preparation process that puts more emphasis on just having a crisis management plan in place than on making sure they are genuinely prepared.
The Society for Human Resource Management (SHRM) explains, “The real danger here is slipping into a trap where the organization is carrying out extensive business continuity activity for business continuity's sake, which only delivers value on an arbitrary or periodic basis and could create a false sense of preparedness in departments where little actually exists.” Instead, all crisis preparedness and business continuity planning should be linked directly to delivering real value in the event of a crisis scenario.
Here’s a specific example of how to avoid strategic planning for planning’s sake: move away from Recovery Time Objectives (RTOs) and Recovery Point Objectives (RPOs) when they are not conducive to producing value in the time of crisis. SHRM argues that RTOs/RPOs are “best applied where truly static, precise, and predetermined time restrictions exist.” However, in many cases, they are subjective and arbitrary and can prove restrictive when what’s really needed is flexibility and adaptability.
Rather than being bound by rigid RTOs and RPOs, businesses should prioritize flexibility in their crisis responses. This involves adjusting recovery goals based on the specific crisis. This approach helps businesses address the specific challenges of each disruption, leading to a more effective and flexible response.
Make sure crisis response includes support for employee needs. The COVID-19 pandemic showed us why this is important. Research from The International Journal of Human Resource Management found that when businesses provided health and safety measures and employee interventions during the pandemic it brought various benefits.
This includes increased employee retention with committed employees, experience less burnout, and they continue to perform at higher levels. As one transportation and logistics company told PwC: "Once employees understood they were safe and comfortable, productivity zoomed."
HR should focus on mental health support and make sure that employees have the resources they need during a crisis situations. This could include flexible work arrangements, access to counseling services, and a supportive workplace culture.
Another simple and straightforward way to support employees and build trust during times of strain: maintain transparency and open communication with all stakeholders, especially employees. During the 2008 financial crisis, effective communication strategies were crucial. Companies that stayed transparent, supported their employees, and fostered cooperation were better able to navigate the economic downturn.
“We’ve partnered with clients where the CEOs have done regular Q&A sessions where nothing is off the table,” says Justine Cooper, former head of Asia Pacific for Australia-based diversity and inclusion consultancy Brook Graham and new VP, Human Resources for Schneider Electric. “Some really difficult and uncomfortable questions come through, and the CEO responds with honesty and transparency – ‘We don’t have all the answers, but this is what I can tell you’.”
In fact, this is one of the most common takeaways from companies after a crisis. Advisory group Deloitte surveyed companies that had gone through a crisis, and communication dominates the list of most important lessons learned: “execute a more timely and robust communications plan” and then communicate more effectively with employees, business partners, suppliers, and customers.
Remember: businesses don’t necessarily have to—and often shouldn’t—navigate crises on their own. Crisis management often requires specific expertise, as well as the resources or personnel that may be in short supply during the event. So, leverage the capabilities of others to maximum advantage.
For example, research from the National Association of Professional Employer Organizations found that PEO clients outperformed non-PEO users throughout the COVID-19 pandemic. PEOs specialize in HR management, compliance, and employee benefits, helping businesses navigate crises more effectively and maintain operational continuity.
As a result, PEO clients were 60% less likely to have permanently closed during the early stages of the pandemic. PEO clients were also 119% more likely to have received Paycheck Protection Program (PPP) loans. Expert help can truly make a tremendous difference in a crisis event.
Ultimately, HR professionals play a pivotal role in preparing for and managing crises. By adopting flexible, adaptive strategies and learning from historical examples, HR can ensure their business is resilient and capable of thriving even in the most adverse conditions. Continuous learning, effective communication, and a focus on employee well-being are key to building a strong, prepared workforce.
Ready to optimize your HR operations and boost business productivity? Consider partnering with CoAdvantage, a nationwide Professional Employer Organization (PEO). With our comprehensive and cost-effective HR solutions, including but not limited to: HR administration, HR technology, workers' compensation management, and tailored health insurance packages. From payroll to compliance and risk management, we've got you covered.
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