“The thing recessions do over and over again is they skewer sacred cows. If you want to look at what's going to change, look at the things that seem most permanent."
When it comes to the next recession, it's not a matter of if but when. This month, the economic expansion the United States has been experiencing for the past decade became its longest ever. And if the old saying holds true, what goes up must come down.
As an HR manager, you're probably aware of this impending reality, but the real question is: Are you prepared for it?
According to Gartner research, likely not: Nearly 70% of managers across all business functions—including HR—do not know how to prepare their own functions for upcoming business declines (full research available to Gartner clients).
To help, I asked five HR experts to weigh in with tips, tricks, and tools that can help you prepare your organization for a recession that threatens to turn the world of recruiting and retention on its head.
1. It's time for a frank conversation about engagement
John Sumser
Principal analyst at HRExaminer
The concept of employee engagement—where workers are motivated to be passionate about their work and committed to the goals of the organization—took off after the last recession as businesses tried to wring more productivity from the workers they had left.
Engagement has brought employees closer to their employer than ever before. And according to John Sumser, principal analyst at HRExaminer, that emotional contract could backfire in the next recession when HR once again has to play the role of executioner.
“Engagement is a two-way street," Sumser says. “Do you think engagement survives massive layoffs? I don't. And, in fact, the lesson may be that making a promise that big demoralizes your workforce even more when the hard times come."
To make the transition easier, Sumser recommends you talk to management about pulling back on this idea of engagement. While it may be uncomfortable initially, it could benefit your organization in the long run.
"The thing recessions do over and over again is they skewer sacred cows," Sumser says. "If you want to look at what's going to change, you look at the things that seem most permanent. I would start talking to the leadership of the company and say, 'There's some danger that this relationship is getting too tight, and we need to figure out ways to loosen it up.'"
What does loosening it up look like? For one, it could mean sending out fewer engagement surveys. You could also talk to leadership about discouraging fraternization between managers and their direct reports.
2. Embrace new technology now
Leesa Schipani
SHRM-SCP and partner at KardasLarson LLC
If you've been holding off on implementing new technology at your organization, Leesa Schipani, SHRM-SCP and partner at KardasLarson LLC, believes that now is the time to make the move before the downturn takes effect.
“Should organizations incur significant job loss, the folks left behind will still need to get the work done," Schipani says. “Embracing new technologies to ease the burden will be critical."
Schipani recommends leveraging artificial intelligence (AI) to automate the simple stuff: “It allows employees to focus on more complex customer experience and business issues."
She also suggests prioritizing systems that can handle historically paper-driven processes: “Automating expense reports, accounts payable, or travel requests will free up employees to work on new responsibilities."
If it's an HR system that's employee-facing, the bulk of the research and implementation work will fall on you. But any department that's implementing new technology will look to you to make the transition as easy as possible for employees.
“While organizations should continually evaluate new technologies, often times it becomes a necessity during an economic downturn," Schipani says. “When looking to adopt and implement a new technology, HR must have a solid change strategy and get buy-in from the leadership of an organization."
3. Identify the flight risk of your best people
Ira Wolfe
President of Success Performance Solutions
At a time when companies are pulling out all the stops to attract top talent from competitors, including raising their pay, HR is struggling to retain their best people. When the next recession hits, and you're relying even more on these top players to keep you afloat, their absence (should they leave) will only cause bigger issues.
That's why, according to Ira Wolfe, president of Success Performance Solutions, you should do the work today to identify your best performers, determine who's most at risk of leaving, and implement specific retention efforts.
“The unexpected loss of a key employee, especially one with the right experience and critical skills, can bring a project or even the company growth strategy to a screeching halt," Wolfe says. “Now is the time to prepare."
Again, AI will be critical in getting this done, as AI can aggregate and analyze massive amounts of employee data to determine the traits that indicate a significant flight risk. If you're not an AI expert, don't worry: Wolfe recommends partnering with people who are in order to give your department the best chance to retain your organization's best and brightest.
“AI is not something that can be turned on overnight," Wolfe says. “The first step is centralizing all the data and identifying the key performance indicators buried in employee data. The next step is building a dashboard that tells the story through visualization."
"Rarely does HR have the analytical skills to accomplish this on their own. It's essential to partner with experts, develop your own HR analytical abilities, and leverage technology to turn your data into a differentiating and competitive asset."
4. Explore out-of-the-box approaches to cutbacks
Laura Handrick
Careers and workplace analyst at FitSmallBusiness.com
Unless your company has been preparing financially, or is in a relatively stable industry, layoffs will be a necessary evil in the next recession—and HR will play a significant role in who gets the axe.
Laura Handrick, careers and workplace analyst at FitSmallBusiness.com, says using performance metrics can be a relatively objective way to force-rank employees. However, she also advises that you should be careful when using these performance tools to avoid short-sighted decisions.
“Those tools were built to identify and develop top talent, not to decide which workers to cut," Handrick says. “Poor performance is more likely to be related to job or manager mismatch, or lack of training, than a lack of potential."
"Employers [also] need to be aware of the risk when the low-ranked employees fall into a protected class such as an older worker or one with a disability. Companies need to be very careful that they can defend their rationale for which workers they let go."
Before it gets to that point, Handrick suggests you explore some other routes to reduce payroll costs that won't have as devastating an effect on morale. You may have more levers to pull at your disposal than you thought.
“Thoughtful approaches [can be] taken, such as allowing early retirements or allowing willing employees to reduce their work hours," Handrick says. “Another example is across-the-board pay cuts. Some employees may want to take an unpaid sabbatical."
5. Keep an eye open for the skill sets you're having trouble hiring today
Henry Goldbeck
President of Goldbeck Recruiting, Inc.
Recessions are nasty business, but if there's a silver lining in all of this, savvy organizations may finally be able to hire people they've been desperate to find in a talent market defined by record-low unemployment.
Henry Goldbeck, president of Goldbeck Recruiting, Inc., says you should identify the skill sets you've had trouble hiring now, because those skill sets may become more available in the next recession. Being able to snatch up these workers while everyone else is cutting back could be a significant competitive advantage.
“From an internal recruiting point of view, what skill sets are going to be on the horizon?" Goldbeck says. “Thinking ahead and building a database, building a bench, that's going to help you when you need it."
Besides looking at your long-standing vacancies, Goldbeck also recommends pursuing succession planning as a way to better predict who's going to retire soon, so you can be prepared to replace those skills quickly.
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