Human Resource Strategies in "Hard" Times

While there is debate as to whether we're really out of the economic recession, few would argue that some sectors of the economy are performing poorly. As a result, employers should be proactive in human resource management when business is in a downturn.

Recessions, (or whatever term you use) occur during the "down" or contraction phase of business cycles. Since World War II, the U. S. has experienced 10 recessions, most recently between September 1990 and March 1991 and from January to November 2001. Recessions are formally defined as two or more consecutive quarters of falling Gross National Product.

As we know from experience, consumer spending and business investment follow similar patterns of decline. Sales fall and loans become harder to obtain as banks become stingy with their business loans as they seek to improve the quality of their portfolios. All this is worsened by daily reports of the mortgage industry crisis and news of higher gasoline prices at the pump. The jury is still out on how long the current economic downturn will last. However, regardless of how your business in particular is impacted, your employees are likely nervous about their future. In addition to being concerned by the continuous stream of bad economic news, many employees may be experiencing the stress of extra duties if you have had to resort to downsizing your workforce. Here are some suggestions to help maintain morale and productivity during a prolonged slowdown in business activity:

Increase communication — This will enhance management credibility. Explaining to employees your plan(s) to get through tough times can demonstrate that you are prepared to survive and even thrive. However, if news is bad, don't try to soft sell it. Trust will be lost that will be very difficult to gain back when conditions improve.

Continue your investment in organizational development — Though easier said than done, failure to continue to develop your organization and your people can have severe repercussions when the economy improves. You may not be prepared to serve customers if your organization cannot quickly come out of a retrenched mode. This includes, inasmuch as possible, continuing training to keep employees current on the skills and knowledge necessary to be competitive.

Promote from within if at all possible — When jobs, particularly high level staff or management positions come open during tough times, think long and hard before hiring outside candidates. Inside candidates usually know your company and experience less of an unproductive learning curve, a luxury that most companies can ill afford when times are hard. Promotion from within can also enhance morale by demonstrating your commitment to your employees.

Seek alternatives to extensive layoffs — Many employers struggle when the economy rebounds if they have let go large numbers of experienced people. While reducing your workforce may be financially necessary, consider other ways to reduce costs before laying off employees. This might be accomplished by temporarily reducing employee hours. If layoffs are necessary, sometimes asking for those wishing take a voluntary layoff helps reduce employee anxiety. For example, some employees in two income families may be able to get by financially for a short period of time. Others, dependent on your company for their sole source of income, will experience extreme financial hardship if they lose their job.

If you must resort to a reduction in force other than voluntary layoffs, ensure there is a plan. Employees confronted with job loss are often quick to bring a charge of discrimination against their employer.

SESCO Management Consultants is available to assist with your human resource issues. You may contact us by phone at 423-764-4127 or by email at sesco@sescomgt.com .