Adding to an already complex work landscape, the looming economic downturn comes amid an unprecedented labor shortage and a global pandemic. This combination paints a complicated and anxiety-inducing time for HR leaders everywhere. The real challenge for HR leaders, however, is to reimagine talent management while balancing rising employee expectations and business needs during market turmoil — not an easy task.
While an economic slowdown presents challenges, it also presents an opportunity to refocus hiring practices and adopt skills-based strategies demanded by the new world of work. Use this time to reimagine your organization leveraging the following expertise.
Economic Slowdown vs. Recession – Is It the Same Thing?
Despite their common association, economic slowdowns and recessions are two separate concepts.
Here’s the main difference — slowdowns typically follow recessions, which are defined as two or more consecutive quarters of negative economic growth. A slowdown refers to a drop in economic growth over a sustained period of time. Signs of a downturn include higher unemployment rates, lower consumer spending, a decline in housing prices and a spike in government borrowing.
So, is the U.S. economy indicative of an economic slowdown or a recession? The fall in GDP coupled with the seemingly strong labor market makes for a complex economic scene, but the U.S. is likely facing an economic slowdown, rather than a recession . . . so far.
How Does an Economic Downturn Impact Businesses?
A slowing economy affects the entire organization, requiring leaders from all departments to completely shift gears. It’s not uncommon for HR to be asked to take various cost-cutting measures, including hiring freezes, layoffs, restructuring compensation, reducing benefits and more.
Neither large nor small businesses are immune to the effects of an economic downturn, and it’s imperative for organizations to be equipped with the knowledge needed to survive or, ideally, thrive amid tumultuous times.
3 Steps HR Leaders Can Take to Guide Their Organizations Through Economic Uncertainty
1. Reimagine Hiring Strategies — Gone are the days of relying on external hiring. Thinking outside of the box when it comes to new hiring strategies could be all the difference your organization needs. Activating internal mobility and prioritizing reallocations and deployments are the perfect way to reinvent your recruitment techniques. Embrace the movement of talent within your organization — both laterally and vertically.
2. Prioritize Critical Skills — Building up your organization’s skills during a time filled with economic turmoil is a clever way to future-proof your company and combat the growing skills gap. A skills-based organization is vital for the survival of today’s companies. Try integrating strategic skill discussions in your business strategies and core HR processes (e.g., talent management, talent attraction, performance discussions).
3. Embrace Flexibility — As it becomes harder to retain all-star employees without hefty salary raises, HR leaders need to come up with new ideas to enhance employee value. One of the most impactful steps HR leaders can take is ensuring that flexibility and mobility are core components of the employee experience. Be it accepting remote work preferences or having empathy toward taking time off, a positive employee experience will not be forgotten amid trying times.
To learn more about what it takes to thrive in times of uncertainty and future-proofing your workforce, check out the CBIZ Inflation/Recession Resource Center.