During a recession, many businesses succumb to the pressures of sustaining workforce costs amidst diminishing revenues. More than 75 percent of employers manage during a recession by cutting out holiday bonuses, scaling back on wage increases or conducting layoffs, according to the Families and Work Institute in its 2009 publication, “The Impact of the Recession on Employers.”
Companies committed to surviving a recession have an obligation to their employees. Their human resources departments play an integral role in reassuring employees about matters such as job security, earnings and the company’s strategic direction.
The role of HR is to build employees’ trust in leadership through honest, effective and frequent communication, regardless of the circumstances. One of the reasons employees report leaving their jobs is that they lose trust in company leadership, according to Leigh Branham’s book titled, “The 7 Hidden Reasons Employees Leave: How to Recognize the Subtle Signs and Act Before It’s Too Late.” Branham studied more than 19,000 exit interviews produced between 1999 and 2003 by the Saratoga Institute to write his book. When HR or company leadership neglects communication, the result is that employers risk their employees losing confidence in them. During a recession, it’s all that more important to communicate and build employees’ trust.
If the company is recession-proof, meaning it provides necessary products or services, the role of HR is to remind employees that the company is forging ahead despite an economic meltdown. As the saying goes, the only sure things in life are death and taxes; therefore, the most recession-proof businesses are likely mortuaries and accounting firms. On the other hand, if the company will be affected by a recession, HR’s role is to assist company leaders in describing the business strategy for staying afloat and keeping employees apprised of the company’s status and direction.
During a recession, employers may be inclined to offer overtime hours instead of hiring new workers. The cost-benefit factor is that hiring new employees costs more money than paying overtime wages to current employees. Therefore, some employees may welcome the opportunity to increase their paychecks. In either case, HR’s role is to assure employees that their jobs are safe. If employees’ jobs are at stake, HR should explain what process the company will use to notify employees of layoffs, whether they will receive severance or early retirement opportunities and the timing of potential layoffs.
Payroll and Benefits
During a recession, employees’ pay might not go as far as it would during an economic recovery. Therefore, HR should provide employees with options for increasing their take-home pay. Options might include adjusting withholding allowances, reducing contributions to their savings accounts or re-evaluating their health plan choices. HR also should counsel employees on additional ways to reduce payroll deductions, such as suspending payroll deductions that some employees elect to donate to charitable foundations.
Source – http://smallbusiness.chron.com/role-hr-during-recession-period-59133.html