5 Steps Employers Need to Take in a Slowing Economy
The once rock-solid labour market is on shaky ground. Are you ready for what’s ahead?
For nearly two years, filling open positions has been a major struggle for employers, and some companies are still facing labour shortages. But as the likelihood that we’re heading into an economic slowdown grows, the pendulum is shifting.
Layoffs have already become a frequent occurrence with a growing number of companies laying off, start-up's have let go of thousands of employees in recent weeks. While many of the cuts so far have been in the tech industry, which expanded rapidly during the pandemic, job reductions are making their way to financial services companies, manufacturers, and other sectors.
The weakening global economy means employers will be facing big decisions. What can they do to avoid layoffs?
If they’re forced to let go workers, how can they minimise the damage to their employer brands?
With hiring slowing down, should companies hold on to their talent acquisition teams?
The following are five steps employers should take as the economy stutters.
1. Don’t rush into layoffs without considering alternatives
When you let go workers, you lose some of your most valuable assets, individuals who have a deep knowledge of your business, market intelligence, and ties to your customers.
People who leave take years of experience, relationships, and customer value with them.”
A hasty layoff could leave you regretting your move especially if the economy bounces back quickly and the labour market tightens again.
Exhaust alternatives, whether that means asking employees to take pay cuts, instituting shorter working week, or cutting back on benefits.
The global economy is very volatile, and it’s difficult to predict what’s going to happen. Companies need to think very carefully about laying off people because it may be that hiring people back is a very difficult thing to do.
2. Set up an employee mobility program
Even during a downturn, there might be parts of your business that continue to grow. By redeploying workers, you can minimise the need for layoffs.
Understanding the skills that your workforce already has.
Do we need to hire this many people?
Can we move people around internally?
Can we reskill people?”
Consider setting up an internal talent marketplace that catalogues the skills and competencies of your workers and matches them with internal job openings. Doing that will make it easier for your talent acquisition teams and hiring managers to spot internal candidates for open positions and possibly spare those workers from losing their jobs.
3. Handle layoffs the right way
While there’s no such thing as a happy layoff, there are ways to create the best possible experience for those who’ve been let go. Carrying out job cuts thoughtfully is the humane thing to do and it can also mitigate possible damage to your employer brand.
There’s a lot at stake. Witness the fierce backlash against companies for laying workers off over Zoom or for outing them and sharing their personal information on social media networks.
It’s important to be transparent in your communications, show empathy for laid-off employees, and provide them with as much help as possible.
The more generous you can be, the better.
Good severance packages, good reference programs, and alumni connections are all ways to ease the pain. Remember that every person you let go is a human being with a family, career, and lots of connections. You want them to be a brand ambassador and understand that your company is doing good things for them, despite the financial issues you may face.
4. Keep remaining employees engaged
Researchers have found that after a layoff, employees who remain at a company experience a 41% drop in job satisfaction and a 20% decline in job performance. Some experience survivor’s guilt or worry their own jobs are in danger.
Layoffs give existing employees a sense of doom or worry that ‘maybe the management team isn’t telling us something.
Assuming their jobs are safe, provide surviving staff with reassurance that this is the case.
Start by identifying the additional training, resources, and support each employee feels they need.
and then make sure you provide it.
5. Put your talent acquisition team to work
During past downturns, employers have been quick to let go of their recruiting teams. But doing that could hinder your ability to compete for talent when the job market tightens.
What work talent acquisition teams can be doing now to best position your company for an economic rebound. A slowdown in hiring frees up time for recruiters to focus on important initiatives such as improving employer branding, nurturing relationships with future job candidates, and refining recruiting systems and processes.
Most organisations haven’t been able to catch a breath in the past 18 months. You want to retain and develop your talent team and continue to improve your processes and experience.
Laying off recruiters is, a historic mistake that companies have made every single time there’s been a downturn. Employers are not focused on what acquisition teams can do during those quiet times, in terms of building the employer brand and getting better technology in place. This is the opportunity to do that, because when things turn up again and companies return to growth, they’ll reap the benefits massively.
During tough times, it’s natural for companies to make quick decisions to preserve cash and stay afloat.
But especially when it comes to human capital, it’s important to pause and think about the lasting consequences of your actions.
All the indicators show that we’re heading toward some kind of recession, but what if all that changes in six months. Companies need to consider how volatile things are and make sure that they’re putting long-term strategies in place.