By all accounts, the Unit­ed States is like­ly head­ing into a reces­sion. Already, the coun­try expe­ri­enced two con­sec­u­tive quar­ters of declin­ing gross domes­tic prod­uct (GDP), which is a red flag.

Oth­er signs include infla­tion, the cool­ing down of ven­ture cap­i­tal­ist’s invest­ment, a declin­ing stock mar­ket, and vary­ing inter­est rates. How­ev­er, a strong job mar­ket per­sists, which throws off the usu­al domi­no effect, accord­ing to CNBC. Still, how peo­ple feel about their finan­cial prospects mat­ters, too.

Most Human Resources lead­ers are prepar­ing for the worst. A reces­sion is marked by an extend­ed down­turn in the econ­o­my, lay­offs, unem­ploy­ment, and low­er con­sumer spend­ing. For HR, reces­sions are mag­ni­fied because they usu­al­ly face the down­siz­ing of their own depart­ment and the need to lay­off tal­ent, make due with less, and face the obvi­ous con­se­quences, which include hav­ing to con­strict bud­get and lose tal­ent pipelines for succession.

There­fore, Human Resources is usu­al­ly keen on reces­sion-proof­ing their busi­ness, and many have begun to do just that. Here are some ways to pre­pare for the com­ing storm:

Stick to the Budget

The pan­dem­ic made employ­ees rethink their lives and shift their pri­or­i­ties. As a result, many were will­ing to leave the work­force unless employ­ers trans­formed how they worked. The con­se­quence was the Great Res­ig­na­tion. Whether one likes or hates that title, there is no ques­tion that the phe­nom­e­non of peo­ple quit­ting and a result­ing labor short­age, which is also depen­dent on chang­ing demo­graph­ics, are real.

HR respond­ed with sign­ing bonus­es and hefty pay rais­es. They plussed perks and ben­e­fits. With an oncom­ing reces­sion, how­ev­er, some of these tools for attract­ing tal­ent must be cur­tailed or flat out stopped. Those with the future in mind are cut­ting back and avoid­ing risk when devel­op­ing budgets.

Prioritize Employee Engagement and Experience

Smart Human Resources lead­ers rec­og­nize that the pan­dem­ic earned them their seat among C‑suite exec­u­tives. Busi­ness lead­ers are well aware that the tal­ent churn­ing out the work is vital to their success.

In many ways, employ­ee engage­ment and expe­ri­ence is even more impor­tant in a reces­sion. If there are lay­offs, the peo­ple who remain become para­mount. At the same time, they are like­ly over­worked and stressed by the econ­o­my, not to men­tion the prospects of their orga­ni­za­tion. HR should step in and show grat­i­tude and do what it can to keep up morale. Writ­ing thank you cards and lend­ing an ear are afford­able ways to con­nect with workers.

Be Transparent

Trans­paren­cy is of the utmost impor­tance dur­ing a reces­sion. Obvi­ous­ly, orga­ni­za­tions keep their plans for lay­offs under wraps until the last minute. How­ev­er, they should be able to offer hon­esty to the employ­ees who remain.

Obvi­ous­ly, they are going to be con­cerned for their own future, what these lay­offs mean for the future of the com­pa­ny, and how their work life will change from this point on. Will they be doing more work to fill in for those who had been let go? Are there going to be freezes on annu­al rais­es? How grave is the situation?

Human Resources is the con­duit for com­mu­ni­ca­tion with work­ers. HR lead­ers can com­mu­ni­cate forth­right­ly and encour­age exec­u­tives to do the same. They can set up town halls, sim­i­lar to the ones they planned dur­ing the pan­dem­ic, with busi­ness lead­ers in their orga­ni­za­tion. This kind of approach is cri­sis man­age­ment 101.

Be Prepared for Layoffs

Lay­offs are already hap­pen­ing at a num­ber of com­pa­nies, includ­ing Pelo­ton, Net­flix, and Ford. Google announced a hir­ing freeze. So, real­is­tic HR lead­ers will pre­pare them­selves for the pos­si­bil­i­ty of stale­mate at best and lay­offs at worst. Also, they will avoid lay­off mis­takes, like inform­ing peo­ple they are being let go in a cru­el way like, for exam­ple, over a group Zoom meet­ing. While no one wants a reces­sion to hap­pen, smart HR lead­ers are get­ting ready for the worst case scenarios.

By Francesca Di Meglio

Orig­i­nal­ly post­ed on HR Exchange Network