Recent news reports paint a grim picture of the country’s economic outlook. A perfect storm may be brewing for a potential recession with record inflation, declines in the stock market, increases in interest rates, and employers taking steps to reduce their workforces.
Many employees are starting to worry about job security amid reports of hiring freezes and layoffs, in addition to concerns they probably already have about increases in the cost of living and decreases in their pension values.
How can employers prepare for a possible recession?
As the COVID-19 pandemic started to give way to our “new normal,” employers faced a new struggle – rebuilding their workforce to keep up with the increase in business. Some employers are taking lessons learned and endeavoring to retain as much of their workforce as possible, so they are not faced with the same challenges in attracting workers when the economy starts to improve again. This includes getting creative with retention strategies such as:
- Implementing flex scheduling or remote/hybrid work;
- Reducing the number of hours scheduled per week;
- Occasionally scheduling shorter workweeks, allowing for three- or four-day weekends; and
- Cross-training workers.
Other strategies for reducing labor costs without laying off employees include reducing recruiting efforts and allowing vacancies through natural attrition, evaluating job functions that can be automated or improved though use of technology tools (freeing up workers for more value-added work), and assessing hiring and performance standards to ensure the organization is investing in quality, productive workers. Keeping people employed can help reduce the impacts of a recession on the community. It may also enable the employer to have more flexibility in its operations before, during, and after a recession.
What can employers do to take care of employees?
The key is communication. Listen to employees’ concerns and offer resources, when possible. Employers may refer employees to its employee assistance program and consider benefits that will directly address the employees’ needs. Some examples include offering more flexible work schedules/work from home, transportation stipends, child/pet care stipends, and financial wellness programs.
Consider increasing transparency. No one wants to be blindsided with a layoff. Explaining the organization’s financial position and discussing short- and long-term plans may help settle some employee fears. If layoffs look inevitable, letting employees know how and when decisions will be made may enable them to plan ahead and know what to expect from the process.
What should employers avoid doing?
Do not offer unsolicited financial advice. A CEO came under fire recently after emailing staff budget tips that were received as rather out-of-touch. Her tips included shopping your pantry and using canned goods, choosing store brands over name brands, and meal prepping. Not necessarily bad advice, but could be perceived as condescending coming from someone whose salary is well into the six-figures.
If/when layoffs are deemed necessary, do not notify employees identified for layoff en masse via email or a virtual meeting. Be compassionate and humane. Several companies over the past couple of years have conducted mass layoffs via Zoom or email. Layoffs have huge impacts on people’s lives. As difficult as it may be for managers to have that conversation, it is much worse for the employee hearing it. Treating employees as disposable assets may also impact the employer’s ability to attract and retain talent going forward. However, the best reason to treat employees respectfully is because it is the right thing to do.
HEC members can access CCH Answers Now guidance on What Should Employers Consider if Conducting Layoffs and our Comparison of Federal and Hawaii Plant Closing Laws for compliance guidance if considering layoffs.