Fears of a recession in the UK have been increasing in recent months. Rising inflation and interest rates, energy costs soaring, GDP stagnating, and supply chain issues affecting many industries, have resulted in a loss of business productivity and confidence, all of which can lead to a slowdown in hiring.
As budgets tighten and senior leaders are bracing for a potential recession, investing in a solid talent strategy to retain top candidates is still a high priority. From leadership pipeline development, effective succession planning to workforce restructuring, HR has a pivotal role in adapting to and implementing different business changes brought up by any economic downturn. Preparation is key to weathering the storm, and businesses must use this time to ready their hiring strategies for a possible economic downturn.
How Economic Uncertainty Affects Employment?
When the economy slows it can significantly impact employment in different ways. From hiring strategies, job security and wages to overall career perspectives across diverse sectors and industries.
During periods of economic uncertainty, businesses often become cautious about their financial budget. This can lead to hiring freezes, where new recruitment is put on hold, or even layoffs to cut costs and maintain financial stability. Businesses may delay or cancel expansion plans due to uncertain economic conditions, which can impact job opportunities that would have arisen from new branches, offices, or facilities.
To control costs, companies might reduce employee benefits, bonuses, or even decrease working hours. This scenario of economic uncertainty can also lead to postponed promotions, salary increases, and performance bonuses as companies prioritise cost containment.
Some companies can remain economically resistant during a recession due to its assets or industry, earning the label of a recession-proof business. Certain services, products, and industries have shown resistance to economic downturns such as healthcare and education.
Even if your company does not fall into the ‘recession-proof’ category, there are different measures to fortify your business during challenging economic times.
What Can Be Done to Recession-Proof Your Company?
Navigating uncertain situations may impact a company's choices regarding hiring, training, promotions and dismissal, and facing changes through transitional processes for new technologies such as AI, together with a scarcity of skilled employees. This uncertain scenario calls for different strategies which go from cash flow forecasting to continue investing in your people and empower the company’s workforce.
Make The Most of Data
At all times, especially during a recession, it is vital to focus on different metrics such as staff skills data, productivity, ROI, compensation and performance to ensure they align with your company’s business goals.
Keeping an eye on employee data allows decisions about layoffs, promotions and redundancies to be kept free of bias from managers and linked to objective data.
Increasing Internal Talent Mobility
During a recession, internal mobility can be an effective approach to layoffs and helps in filling job vacancies. Furthermore, it is a powerful strategy to boost employee morale and retention rates during uncertain times. Managers can identify which team members have specific skills to ensure enough redundancy within the department so that there is not one single person responsible for keeping the projects moving. This opportunity can also foster cross-training initiatives so that team members can share knowledge among themselves.
Make Staff Wellbeing a Priority
The recent years of uncertainty brought up by the pandemic have highlighted a shift in employee expectations, where organisations are now anticipated to provide both a professional and safety net. This trend has been seen through mental health programmes and staff wellbeing initiatives.
Employees may become worried about their job security, which can affect morale, productivity, and overall workplace atmosphere. These factors could significantly hamper your staff mental wellbeing, leading to stress and anxiety, causing over 70 million working days to be lost each year.
Invest in Learning and Development Opportunities
As businesses adapt to challenging times, there may be a shift in required skills. Staff with outdated skill sets might face hurdles in securing or retaining their jobs. Is in this scenario, upskilling a team can be a long-term investment for both the organisation and employees and can help reduce layoffs and concerns with staffing shortages.
Measuring and evaluating L&D initiatives during periods of uncertainty can provide companies with data of the efficiency and effectiveness of the budget allocated for upskilling employees. Companies can integrate skills assessment before and after the upskilling training to measure the knowledge gained.
Additionally, incorporating a skills intelligence platform can offer insights into the proficiency levels of your workforce, shedding light on the success of the L&D initiatives.
Prioritise Cross-Skilling Activities
During these challenging times, companies would have to manage with limited resources and, due to budget cuts, hiring new staff might not be an option in most cases. At Morgan Philips, we offer talent assessments with a wide range of tests, scenarios and exercises that allows you to have a clear vision of the strengths and development areas of your candidates and employees.
Specialists in Sourcing and Recruiting Top Talent
Retaining top performers during uncertain times can be a challenge even for the most robust companies. With over a decade of experience, Morgan Philips specialises in identifying global talent across different industries and sectors that disrupts conventional thinking in headhunting, recruitment and talent consulting.
Looking for your next top candidate? Talk to our expert team in recruitment and consulting today to find the quality talent you need. Or, use our job search function to find your next executive role.