February 3, 2023

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4 ways HR can respond during economic changes

4 ways HR can respond during economic changes

Change and uncertainty are increasingly becoming the only certainty today; however, HR can help. HR in economic changes is critical for how businesses navigate these changes. Continue learning the role of HR in economic changes. Later, explore HR strategies to help ensure resiliency.

HR in economic changes: the challenges

From the rising cost of living and operation, to the implications of climate change and COVID-19, we are constantly facing new global challenges. These changes, along with changing employee expectations, make HR’s response certainly more vital than ever.

Changes to consider

  • Dealing with COVID-19
  • Impacts of climate change
  • War in Ukraine
  • Inflation
  • Rising cost of living
  • Increasing operating costs
  • The Great Resignation
  • Changing employee expectations
  • Increased flexible and remote working
  • Spotlight on wellbeing and DEI

Here are the stats:

How employees are feeling:
  • 78% are worried about losing their jobs
  • 77% report feeling anxious about their financial situation
  • 25% say money worries affect their ability to do their job
How companies are responding:

52% have implemented hiring freezes

62% are focused simply on surviving over the next 6 months

50% of executives are reducing headcount or plan to

These are the business implications
that HR should be aware of.

  • A shift in financial strategies because:
    : Companies shift focus from growth to cash flow and managing costs
  • Re-entry into ‘survival mode’ because:
    Companies must be able to adapt quickly and be resilient
  • Decreased employee wellbeing because:
    Increased tiredness, stress, and inability to concentrate
  • Pressure on salary increases because:
    Employees seek to offset the cost of living by asking for pay rises
  • Halting hiring because:
    Companies may look to reduce costs by pausing hiring
  • Tightly managing salary increases because:
    Businesses have less flexibility to increase reward and compensation
  • Reducing headcount costs because:
    Some organisations may cut headcount to reduce fixed costs

HR and workforce strategies: Four ways HR teams can respond

Manage fixed costs tightly by all means

  • Try to avoid layoffs of valued employees
  • Listen to employees with regular pulse surveys
  • Focus on productivity – pay for performance

Emphasise company values and culture in support of difficult decisions

  • Be agile and adaptive when navigating problems
  • Look at ways to boost employee productivity sustainably

Increase total compensation through variable cost incentives

· Use bonuses, stock grants and other incentives to offset lower base
salaries

· Use gift cards and gifts such as company swag as small recognition awards

  • Consider wellbeing incentives
  • Offer additional paid time off
  • Be open and transparent about pay and benefits

Offer flexibility as a financial incentive

  • Offer increased remote working

· Consider more flexible and hybrid working strategies to attract top
talent

· Can you offer a shorter working week, compressed hours or part time work

· Think about company wide holidays, unpaid sabbaticals and relocation to
lower cost regions

  • Selective hiring from cost competitive locales
  • Consider pay advances or pay on demand

· Offer meaningful and worthwhile work to help boost performance and
commitment

Personalise employee experiences

· Improve employee segmentation and create targeted, more tailored
experiences

  • Adjust management styles to suit different teams
  • Communicate early and often – be open about company performance
  • Provide employees with more autonomy in decision making
  • Create a listening culture: act on feedback, communicate, repeat
  • Provide stretch assignments and growth opportunities
  • Ensure work is meaningful and worthwhile
  • Automate low value or boring work

The role of HR tech

Some HR tech requirements for managing in a down economy

  • Sophisticated reward and recognition options
  • Ability to tailor experiences to groups
  • Pulse surveys including sentiment
  • Ability to design great hybrid experiences

· End to end automation of core HR processes

· Consistent and accurate data

  • Analytics that provide actionable insights

· Functionality to support changing global policies and local compliance

  • Highly configurable and extendable
  • Supported by vendor customer success teams
  • Simple and flexible pricing

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Find out how the future of HR is changing in our research report ‘HR in
2030’.

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[ENDS]


20% of workers would take a 10% pay cut if they had more
flexibility; 56% would trade lower pay for job security –
Prudential 2022