How HR Leaders Can Prepare for a Possible Recession

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During the last recession in 2008 and 2009, companies cut 22 million  jobs. In 2022, companies struggled with the Great Resignation and a tight labor market, but now many are worried about the next recession as inflation hits an all-time high .

While layoffs have already started making headlines, many companies are wondering if they need to resort to that just yet. Thankfully, there are a few things that a human resources (HR) manager can do to prepare for a possible recession and minimize as much damage as possible. 

Keep reading to learn about a few strategies to ensure your company makes it through the recession and prepare for the inevitable economic growth afterward.

Minimize Costs

Every company preparing to go into a recession should try to minimize costs in the hopes of reducing layoffs. While layoffs are sometimes necessary, they can hurt your business. Plus, there might be other ways to reduce the costs, and layoffs should only be used as a last resort. Plus, while layoffs can save you money, they can also have a lot of costs associated with them due to hurt employee morale and direct costs like severance pay. 

For example, HR departments should look at long-term workforce planning. This can help reduce layoffs and focus on the team that you have. You may want to try moving internal employees to different employee groups or slow down on hiring. 

Focusing on the long-term is the most crucial aspect when looking at the budget. You don’t want to downsize and lose too many of your critical workers. If the economy picks up shortly after, then you’ll have to spend even more money on hiring and trying to retain new talent after you unnecessarily laid off employees in the beginning. 

The difficult question is to figure out how long the economic downturns will last. Is it affecting your particular industry? Or is it affecting all industries? You should only have layoffs if necessary, and you should look at other means of reducing costs if at all possible. 

Communicate Openly

Whenever there is a recession or economic downturn, the employees and their families will be very worried and likely face the brunt of most problems. They’ll be nervous and scared, and this can make it hard for them to feel safe and focus on their work. 

As leaders of your entire organization, you’ll need to communicate a clear plan of action to help alleviate some of their fears. Remind them that you’re standing by them during this difficult time, and try to be as transparent with your communication as possible. 

When drafting a communication plan, ensure that empathy is at the center. You need to know your audience, which is your scared employees. They’re likely worried that layoffs are coming, and they may be looking for other jobs or ready to find a new job with your competitor if you can’t answer their questions. 

Employers should consider long-term and common sense approaches to their plans. Talk to trusted economics and make sure that a recession is inevitable. If there’s a chance it’s not, you’ll need to be prepared for that as well. You may want to review ways to make your company more efficient and help them save money or boost profits without needing to lay off employees and disrupt the organizational culture. 

Remember that going through a recession is never easy. Still, if you communicate clearly to your employees what is happening, you have better chances of making it through with minimized damage.

Look for New Technology

There are many different new technologies that your company can implement that can make your processes more efficient or help you save money so that you don’t have to lay people off. If there’s a new technology that you’ve been thinking about investing in, now is the perfect time to start investing. 

If you need to lay off some employees, technology can help your employees manage the reduced staff. 

For example, suppose you lay off your recruiters. In that case, you could invest in artificial recruiting intelligence (AI) software that can automate administrative tasks so recruiters can focus on more complicated business matters or handle candidates.’s AI recruiting software can automate the sourcing stage of the recruiting process. Considering that one-third of a recruiter’s week is spent sourcing candidates, you can free up a lot of their time, especially if they’re working with a reduced staff. 

Prepare for Layoffs

If you can’t find a way to avoid layoffs, you need to prepare for them. These decisions are never easy, and employers approach them in different ways. Sometimes a layoff will only affect one department, but other times it could affect the entire company. 

If you’re doing layoffs, you need to explain why you made the decisions that you did. It would be best if you clarified that there wasn’t any discriminatory reasoning for making your choices. 

There are a few questions that you can ask to make sure that you’re picking the right people to lay off. For example, are you going to offer severance pay? Are you legally required to? Do you need to provide health benefits for a certain period afterward? 

What criteria are you going to use to make layoff decisions? And will the requirements be applied fairly to everyone, or will there be notable exceptions? How are your employees going to react to your criteria? Are these requirements going to have a significant impact on your business? 

Looking at your data and all angles before you move forward with layoffs would be best. For example, your criteria might include many older employees, which could bring agist lawsuits against your company. This is why HR professionals need to consider all angles and scenarios that could come from layoffs. 

Focus on Your Employees

Throughout all of the difficulties and uncertainties, HR leaders should make the remaining workers the focus of everything because these are the people who will feel the effects of the changes the most. 

Employees need to be focusing on ensuring that employees are physically healthy but also mentally, socially, and financially healthy. However, doing this doesn’t mean your business needs to spend much money. One of the best things you can do is offer a supportive culture at your company. Showing that you care about your employees as human beings don’t cost much money. 

While you’re talking about initiatives to care about your employees, ensure that you follow up with actions. For example, managers could do something as simple as checking in on their employees and asking how they’re doing. Show that you care about them outside of work as well.

You may also want to host town halls or meetings where you can allow them to ask any questions that they may have. This can help relieve some of the stress and anxiety they may have about how your company is handling the challenging economy. 

Get Ready to Hire 

Recessions are difficult for businesses, but there is a small benefit. If you’ve been struggling to find a specific type of talent, you now may be able to find qualified candidates. Recessions typically come with lower unemployment rates, and as other businesses lay off their current talent, you may be able to hire some incredible talent. Other companies will be worried about cutting costs and hiring freezes, which could give you a competitive advantage.

You should take the time to identify which critical skills or positions you’re struggling to hire for and then be ready to reach out to those employees if they become more available. It would be best if you started building and expanding your talent pools so that you can find the employees you’ll need even after the recession.

It would be best if you also started looking at employees who might be considering retirement soon. You’ll also want to be prepared to hire for those positions, and the recession might be a good time to do that. 

Thankfully, can help you with all of your hiring needs. Whether you’re operating with reduced staff or need the right tools to help your current team, we’ve got you covered. Contact us today to determine what recruiting solution would work best for your business. 


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By Alyssa Harmon