Why HR specialists will be even more important in a recession

It doesn’t take Einstein to work out that the global economy is in a mess right now. The pandemic and lockdown, Brexit, the war in Ukraine, and oil and gas shortages have all had a part to play, and local factors make their own contribution close to wherever home might be for you.

Many analysts now suggest there is a near 50% chance of a global recession happening within the next year as the world’s most developed economies slow to somewhere around the 1% mark – a stark comedown from the 5% or thereabouts seen in 2021.

With recession comes the increasing threat of business closures or restructuring and the inevitable layoffs that come with them.

I have written in the past about the tendency within businesses to see their HR function as a cost centre rather than profit centre. This is because most companies simply don’t have a metric that can link the valuable work their HR teams to the productivity and outcomes that the organisation’s workforce achieves.

Knowing HR professionals as I do, the prospect of a recession is more likely to see them focus on planning how they will support their own business through the changes that it may be forced to make, than on their own futures.

Yet, the same organisations that fail to join the dots between their HR function and the company’s success today will also be the ones that will look at their financials as the economy puts the squeeze on and be tempted to see an opportunity in the HR line to cut costs.

The truth, though, is that in a recession your HR team is more important than ever, and for a number of reasons:

Restructuring is a minefield at the best of times, never mind when you don’t have specialist advice on hand

Employment law is complicated and getting it wrong can be very, very expensive – not only financially, but also in terms of brand reputation and value. Trying to navigate redundancies, TUPE processes, and redeployment without good advice is a huge gamble.

Any employee who is at risk has a long list of rights, and it’s vital that they – and you – are properly advised.

Your HR team will have the expert knowledge and training to ensure that you are able to achieve your aims without falling foul of the law.

Your HR team can work with you strategically

If you’re smart, you’ll have made sure your HR team has been fully involved in setting your strategic business goals.

Hopefully, the HR policies and processes that they have developed to reflect those objectives will give instant insight into how your business will be able to change and at the same time deliver on those aims.

That means less time wasted trying to identify what the shape and structure of your organisation will be on the other side of the reorganisation.

Fewer staff need more support

Ultimately, most businesses exit a restructuring or reorganisation process with few staff than they had when they began it.

It is rare these days to find any business that has enough ‘fat’ to cut that it comes through with all its operational bases covered in terms of skills, experience, and expertise.

And for those who remain once the dust settles, help and support will be needed through sensible objective-setting processes, access to development tools and training, and staff engagement processes like employee surveys.

Regrowth needs HR, too

The hope, in any process of cutting costs, is that the organisation will eventually – and hopefully reasonably quickly – need to start growing again as the economy improves and a focus returns to expansion.

When that moment comes, you will nee HR professionals who not only understand how best to attract and then recruit the best people, but also understand your business and how those HR strategies should be deployed to best serve the long-term aims of the organisation.

The last thing any business needs when it’s getting back up to full operational size and power is to begin its recruitment drive by having to appoint a team of ‘strangers’ who will need time to learn and understand the organisation and its goals.

In the end, a good HR team is always the key to profitability – either through the recruitment strategies they identify and implement, or the employee support and management processes they put in place, or both (and hopefully it’s always both!)

So, whether you have a full in-house team, or you’re working with an HR consultancy, now is the time to be investing in human resource management.

If you’d like to know how Constantia Consulting can help you to do that, please get in touch – we’d love to hear from you.