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The Adaptive role of HR in Recession

HR plays a crucial role during recession, with inflation at its highest in 40 years, energy cost scoring, gdp stagnating and supply chain issues affecting the industries because of that we are seeing the downfall of the business productivity and faith. Contemplating the trajectory of our national economy prompts a crucial examination of the Human resources function during the times of recession. Beyond the apparent strains and uncertainties that economic downturns impose on our HR professionals, it’s imperative to assert that recessions can save as a crucial moment for the often underestimated HR department to showcase its strategic significance within any business. This article delves into the distinctive impacts of a recession on HR and elucidates the avenues through which HR can proactively shape and navigate these challenging circumstances. 

Are jobs at risk?

As Economic tides shift, casting shadows of uncertainty across industries, the specter of job insecurity looms not only over the general workforce but also within the ranks of HR professionals. While acknowledging that HR roles are not impervious to economic downturns, it is heartening to note that the last recession witnessed minimal job losses in this pivotal sector.

The cornerstone of HR’s significance during periods of economic decline lies in its adept management of a particularly delicate responsibility—layoffs.HR emerged as the compass navigating through the storm. It was HR professionals who, with a delicate blend of empathy and strategic foresight, orchestrated these workforce adjustments, striving to strike a balance between organizational needs and the well-being of employees.

Beyond the somber orchestration of layoffs, HR teams bear the weighty responsibility of optimizing an organization’s most valuable asset—its human capital. This involves a meticulous dance of talent management strategies, ensuring that every member of the workforce contributes effectively to the organization’s goals. Simultaneously, HR shoulders the burden of financial stewardship, steering the organization through the treacherous waters of economic uncertainty.

According to the RBI’s latest forecast, GDP growth is seen at 6.0 percent in October-December 2023 and 5.7 percent in January-March 2024.

Several big companies in the tech sector, including the likes of Meta, Amazon, Twitter, Better.com, Alibaba laid off employees. Indian companies were no strangers to this phenomenon.Social media company ShareChat laid off 20 percent of its workforce due to uncertain market conditions, affecting more than 500 employees.

Companies like Ola (which fired 200 employees) and voice automated startup Skit.ai also dominated the headlines.

Homegrown quick-grocery delivery provider Dunzo has laid off 3 percent of its workforce amid cost-cutting measures.

Global e-commerce giant Amazon announced its intentions to lay off 18,000 employees globally, including nearly 1,000 in India.

Ironically, economic downturns tend to amplify the significance of HR. The need for streamlined operations, heightened efficiency, and fiscal prudence surges, creating a demand for HR’s expertise. In essence, the increased workload paradoxically renders HR jobs more secure, particularly in the initial stages of a recession.

However, job security for HR professionals in times of economic contraction is not solely tethered to operational prowess. The challenge lies in elucidating and substantiating the strategic value that HR brings to the organizational table. Unlike roles with a direct impact on tangible business outputs, HR’s contributions often unfold in the subtleties of organizational dynamics. Hence, in times marked by rampant layoffs and soaring unemployment, the onus falls on HR professionals to meticulously showcase their indispensable role in human resource management and strategy.

Decline in Recruitment process

The imminent decline in recruitment levels presents a distinctive challenge for HR professionals—the task of sifting through higher volumes of applicants for a dwindling number of roles. In this economic difficulty, the ability to pinpoint candidates who not only align with the organization’s current needs but also promise long-term commitment becomes paramount. The goal is to reduce future hiring costs by identifying individuals who will thrive within the organization’s limited resources.

Paradoxically, lower levels of recruitment offer HR professionals an opportunity to invest more time and energy into the hiring process. The focus shifts from the quantity of hires to the quality of the hires—the individuals who are not only suitable for current roles but have the potential to meet future talent needs. This strategic shift in perspective enables HR to play a proactive role in shaping the organization’s workforce for long-term success.

Moreover, HR managers may encounter pressure from leadership to explore cost-effective solutions, such as hiring individuals on part-time or freelance contracts. While this approach can contribute to financial efficiency, it must align with talent management needs. HR must anticipate scenarios where an economic reversal might suddenly necessitate a surge in trained staff, ensuring a delicate balance between cost-effectiveness and strategic workforce planning.
So, how can HR professionals enhance their effectiveness and showcase their value during a recruitment slowdown? The answer lies in leveraging technology to streamline processes. Recruitment and onboarding HR software emerge as indispensable tools, offering a seamless and automated experience for both candidates and new employees. Utilizing features like applicant tracking and self-service functionalities, HR can enhance the efficiency of these processes.

Enhancing Employee Performance

In a recession, employee performance can dip due to reduced resources. HR plays a vital role. HR software is crucial, streamlining feedback, analytics, and record-keeping. It ensures fair performance management and reduces legal risks in terminations.

In conclusion, the unique role of HR during economic decline manifests as a delicate composure between operational proficiency and strategic awareness. While HR jobs are not immune to the seismic shifts of a recession, the multifaceted responsibilities they shoulder contribute to a certain resilience. Yet, the linchpin to sustained job security lies in HR’s ability to articulate its strategic significance, ensuring that leadership perceives the indispensable role HR plays in navigating the organization through the turbulent waters of economic adversity.

Recommended Resources:-
  1. https://www.peoplexcd.com/insights/what-is-the-role-of-hr-during-a-recession/
  2. https://economictimes.indiatimes.com/jobs/recession-fears-tech-companies-laying-off-1600-worker-per-day-in-2023-and-its-increasing/articleshow/97050075.cms

Written by

Yamini

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