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The time is nigh. Or at least a possible recession may or may not be around the corner.
With inflation and interest rates trending upwards, many economists are predicting a 2022 recession. That, understandably, has businesses of all sizes concerned.
And while there's no reason to panic yet, smart organisations know to be proactive. If that's you, you're likely already starting to try to figure out how to weather the possible storm ahead.
That starts with reevaluating your strategic workforce planning best practices and goals. After all, in a worst-case scenario, recessions can come with layoffs and other workforce adjustments. But when they're not planned correctly (or avoided completely), layoffs can affect your ability to meet your business goals, bring down employee morale and threaten your company culture and productivity as a whole.
So how do you use workforce planning to recession-proof your business while still keeping your team working at its maximum capacity? We have five strategic workforce planning best practices to help:
If you do find yourself needing to make adjustments to your workforce in the near future, you want to be prepared. And that starts by getting a clear idea of the strengths and weaknesses of the workforce you already have in place.
One of the strategic workforce planning best practices we recommend, then, is evaluating your current team. That means looking at all of the relevant data you have with a critical eye, to determine how everyone is contributing to your strategic goals, whether the right leadership is in place to guide them through turbulent times and what mix of skills you need to get you through to the other side of a recession. Where can you make changes to build new efficiencies or optimise what's already in place? And would automation or new technology help?
This kind of workforce analysis will help you determine which layoffs and workforce adjustments will have the least impact on your business objectives--and where those layoffs can be avoided altogether.
But there's more you might want to consider during this stage as well.
A recession doesn't mean it's time to throw out your commitment to the greater good. Diversity, equity and inclusion (DEI) are still important issues for many of your customers, partners and staff. And if you want to be a good corporate citizen, they should be for you as well. In fact, since recession-era unemployment rates are often higher for people of colour (and even more so for women of colour), now is the perfect time to prove your commitment to those ideals.
Source: Forbes via Bureau of Labor Statistics
But even more than that, a diverse workforce is often a more resilient workforce. According to Gartner, companies that demonstrate strong DEI practices during a crisis are often viewed more favourably--but those whose actions don't align with the values they've expressed will be looked at less positively by the customers and stakeholders that help keep your business thriving.
In this video, Vena Chief Customer Officer Debbie Lillitos discusses the importance of not taking workforce data and analytics out of context.
So when you analyse your workforce with the goal of recession-proofing your business, don't forget your DEI goals. Instead, build a plan that keeps diversity and inclusion front and centre.
Drive smarter, more data-driven business decisions with numbers you can trust.
Our next tip? Don't plan for a recession in isolation--get everyone involved.
In other words, don't surprise your teams with layoffs or other major changes that will affect how they do their jobs. It may be a tough conversation to have, but if you want to keep employee morale from sinking and keep productivity up, you need to prepare your employees and make them feel like they're part of the discussion.
If you don't, you risk leaving your employees out on a limb and feeling like you don't care about their well-being.
So be transparent. Share the reality of your business's financial situation and ask your employees for their ideas on how to reduce costs and increase efficiencies. In doing so, you make them part of the process, while also benefiting from a range of perspectives coming from throughout the organisation.
The result? Maybe ideas will emerge that will make layoffs unnecessary. A reduction in hours, perhaps, or voluntary pay cuts. Or something else altogether--something you hadn't even considered.
Which brings us to number four:
If you want to empower your business through the recession and be ready to hit the ground running when the economy turns around again, you need the right people on your team. You want those people to be experienced in your unique way of doing things, and happy and productive so that they're giving you their best work.
For those reasons and more, layoffs shouldn't be the first course of action in your recession plan.
So why not look for other cost savings you can draw on first as you build out a plan to recession-proof your business? By reducing expenses, eliminating redundancies and reimagining business practices that aren't adding to your revenue, you might be able to find the savings you need without laying off any staff at all.
That way, as the economy turns around and your business does as well, you'll have the team you need to keep up.
And that brings us to number five--the last of our strategic workforce best practices.
After crunching the numbers and considering alternatives, you may decide you can't altogether avoid making cuts to your workforce. It's unfortunate, but it happens. However, that doesn't mean you need to make it worse for the people on the other side.
To the people you've decided to lay off, that decision will be life-changing. So treat those people like, well, people--not just numbers on a spreadsheet. By being empathetic to their situation and addressing each layoff like the life-impacting event it is, you'll show how much you really care.
And don't stop caring when the layoffs are over, either. Chances are the team that remains will be left doing more work than they were before, all while worrying about the future status of their own jobs. Programs that support mental and emotional health, non-monetary perks to reward work well done and continual communication can all be ways of making your team feel valued and safe.
Of course, this is all just a start. Preparing for a recession means creating a workplace planning environment that strives for continual improvement. That means looking for ways to constantly add efficiencies, stay agile and optimise the way you do business.
And if you want to truly be proactive, all of that should be in place before the economy takes a downturn. So if you haven't already, start creating that culture of improvement now. That way, if the possibility of a recession turns into the reality of one, you'll already have a plan in place that leaves as few casualties as possible in its wake.
View all your labor expenses in one place, leverage our interactive dashboard and get a detailed breakdown of expenses by type and by month with this free best-practice Excel template.
