Manage HR Right in a Downturn, and Help Your Company Lead in the Recovery

No one likes managing through a downturn (although it usually beats unemployment or Chapter 11):  there will be unpleasant but necessary policies to implement;  there will be brutal-feeling decisions to make;  there will possibly be people that you like and respect who must be shown the door … very likely with you or your staff involved in the showing.

If there’s a silver lining, it is that by doing this often unpleasant job well, you can literally create competitive advantage for your company that will help it gain ground as the economy recovers.

So what do I mean by doing the job right?  Well, here are six elements to consider:

  • Purge marginal employees.  Let’s be honest:  every company has some.  In good economic times, they hold on by doing just enough to get by (think Wally in the “Dilbert” comic strip).  In tough times, the company just can’t afford them, and they demoralize other employees who are working even harder than usual to help the company get through the downturn.
  • Recruit some top performers.  They may become available due to downsizing by your competitors, or may simply be nervous about their current employer’s stability.  Very likely you can get them for less than would be the case in more normal times.  But they may well be worth acquiring even without a recession discount;  because these are people who will help your firm really take off, once the recession is over.
  • Insulate against losing your top talent.  Create vehicles to publicly recognize outstanding performance;  be sure that your top talent realizes that they’re appreciated.  Stay on top of employee reviews:  make sure they get done on time, and that the process properly classifies employees by performance level and sends unambiguous messages to at least the top and bottom categories.  Make sure that job descriptions are documented and accurately reflect each employee’s actual job content.
  • Over-communicate with the employee population.  Be mindful that they will be nervous in difficult times, and that negative rumors typically fill an information vacuum;  it’s a situation that can foster attrition among your top people, since they’re the most mobile.  Also, ensure that communication is two-way:  mine your employees’ input for new ideas about operational savings and potential new markets or products.  It’s certainly another way to help make those employees feel valued;  and you may actually get some good ideas, even if they can’t all be acted upon in the current climate.
  • Lose unprofitable clients.  Not all clients are equally valuable:  a very few of them cost you employee time (not offset by sufficient revenue) that could be better used servicing your “good” clients.  Subtly aiding those few to drift on over to a competitor can be a triple win:  you handicap that competitor (since such clients aren’t likely to change their ways), reduce your costs without having to cut headcount, and potentially increase revenue and profitability!
  • Be mindful of litigation.  People become more litigious in downturns, in part because they are times of perceived scarcity.  You need to be prepared with “bulletproof” processes that cover voluntary departures as well as downsizing programs (if planned).  Stay on top of all new HR-related regulations, from wage and hour to COBRA and EEOC.  The last thing you need is a dearly departed employee harming the company by exploiting its trade secrets, recruiting its top talent, or launching a frivolous lawsuit.

In sum:  even though it’s difficult and at times unpleasant, managing HR right during an economic downturn can help your company outstrip the competition once the recovery begins, in part as a result of actions such as those just recommended.  If you would value guidance on the subject tailored to your specific business situation, companies such as MyPayrollHR offer clients expert advice at no extra charge.

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