Role of HR During a Recession Period
Human resource management is responsible for seeing that employees of an organization are utilized in the most efficient and economical way possible. During recessionary times, when budgets are tight, this vital human resources role becomes even more important to keep a company on fiscal track. Human resources must pair the staffing needs of the business with the necessity of maintaining lean overhead and operating costs.
Businesses may continue to hire new staffers during recessionary times. However, it is important that human resources recruits, screens and hires individuals who are highly qualified in their field and can bring a significant amount of potential to the business. Human resources is charged with interviewing candidates to ensure each new hire is qualified for the position and is not likely to leave any time soon. Fast turnover in employee ranks is costly to a small business that then has to reinvest in recruitment and rehiring. Human resources must also select employees who can quickly come up to speed to ensure a short learning curve. New employees who take a significant amount of time to become acclimated to the work environment have the potential to slow productivity and decrease earnings.
Layoffs and downsizing are often an inevitable part of business operations during recessionary times. Human resources managers must evaluate current staffers and their responsibilities and make decisions about which positions are expendable and combinable. This can mean reallocating staff members and financial resources to areas of the company that are indispensible to operations. As part of this process, human resources managers may have to determine severance packages, and in some cases, assist terminated employees with job placement assistance and unemployment filing.
Human resources is often involved in conducting employee evaluations. During a recessionary period, it is vital to ensure all employees are performing at optimum levels. An evaluation process usually involves salary adjustments and raises based on performance. This is something that must be carefully taken under advisement based on the company’s available budget. Human resources may need to discuss a freeze on raises as well as potentially renegotiate the terms of some employee contracts to ensure the business remains financially viable.
Human resources managers should be involved in short and long-term strategic planning when it comes to payroll expenditures, particularly as it relates to looking for ways to decrease overhead operating expenses. Some strategies can include reducing full-time positions to part-time positions to save on health care and other benefits; moving some positions from salary or hourly payroll jobs to independent consultant or freelance contracting positions; and introducing job sharing or work-from-home telecommuting positions, which can reduce some overhead and operating expenses.