Though it’s not uncommon to hear the predictions of a worldwide recession, it is also true that India is considered to be one of the most resilient economies when it comes to recession.
Simply put, recession means an economic decline for a few consecutive months, thereby adversely impacting businesses, real GDP, sales, and consumer sentiment. While recession is known to have a cascading impact across all verticals, the most talked-about and most visible aspect is the possibility of an economic plunge and as a result, job losses and slashed pay cheques.
However, such events are likely to take place in extreme situations and advanced preparedness can help prevent them to a great degree. This is why, irrespective of the market conditions, it is still essential for HR leaders and organisations to prepare themselves for the probable slump. Here’s rounding up how HRs can be prepared for a probable recession in India-
Closely Analyse the Cost Vs Value
In an anticipated situation of a slowed-down business, the preliminary action for any organisation is to analyze cost versus value at a micro and macro level. It’s important to prepare ahead in order to power through these roadblocks. Thus, utilizing this time to invest in employees, mapping the right talents to the right role, and training people to step up should be an ideal move.
Human resources play a crucial role in piecing this puzzle together and thereby work along with the respective departments to help them analyze the cost versus value concept. Apart from this, the continued investment in training and development programs can further strengthen this effort. This assessment can be an opportunity to strengthen the talent pool and the skills-set, irrespective of the market conditions.
Cost Comparison and Optimisation
The next associated step in this preparatory phase would be cost comparison and optimisation. Considering the monetary impact, this is the right time to scan the overall expenditure of the company. However, this doesn’t mean cost-saving by taking any drastic steps that could drain your best talent.
Instead, it simply means analyzing and comparing the best options for cost optimisation. The company can formulate temporary policies around optimising variable costs like travel and events that might be consuming the organization’s budget. Alternatively, there are various kinds of liability insurance policies in the market to prepare a company to battle any legal expenses that might arise during such a period.
Ensuring Open Communication and Transparency
The HR team in an organisation acts as a bridge of communication between leadership and employees. Therefore, their role grows to be even more important in the face of an unpleasant phase like recession.
In case, the company is taking any anticipatory or corrective steps, it is important to ensure complete transparency and clarity amongst the employees. Two-way communication not only helps dispel misconceptions but also invites constructive feedback for a better future. Not to forget, this also instils a sense of trust and belongingness within the organisation.
Hiring freeze or workforce reduction can be extreme repercussions of recession. In cases where the company has no option but to take these measures, it should be done empathetically. Experienced HR professionals can vouch for the fact that an organization can ease the impact of the recession by being transparent and adapting quickly to changing conditions.
Though this situation is only likely to arise in extreme cases, being ready with a structure to notify the employees of the process, the timing, and the severance will be beneficial for later.
Continued Investment in Employee Initiatives
Often, employee-oriented initiatives are halted as a necessary measure to fight recession. However, as mentioned, layoff is not the recommended cost-cutting strategy. Rather, it’s better to ensure continued investment in employees.
This is the best time for the HR teams to get a clear view of the cost-benefit factor of retaining workers rather than hiring them. Thus, a forward-looking step is to do an internal restructure. Through this, HR can pass a positive message of assurance to employees that their jobs are safe. They can also initiate employee recognition programs and offer the flexibility of time and location to facilitate work-life balance. This will improve employee retention and satisfaction.
The bottom line is that, unlike developed economies like Europe and the United States, which are likely at the highest risk of recession, India has a minimised probability of slipping into it until 2023, as per a Bloomberg survey of economists. This is mainly because the post-COVID-19 demand across sectors has not been fully recovered.
However, as the Indian economy is interdependent on global scenarios, this situation might change. So, be cautious and examine the abridging of expense. Some may seem like opportunities but may disrupt business and employee morale. Hence, taking care of employees is crucial to successfully navigate through this time.