After the tense lockdown period in 2020, many businesses are still experiencing challenges which, now coupled with rising inflation and the threat of a recession, can be incredibly overwhelming. So, what can leaders and owners do to protect their business?
It’s been widely discussed that a global recession is on the way. How severely it’s going to hit, or its duration, is not yet known. Many people and businesses are already feeling the strain as costs rise all around us, from food to fuel, energy, transport and going out. Due to the COVID-19 pandemic, sadly many companies have already closed their doors, but for many businesses, alternative arrangements such as budget cuts, redundancies and reduction of operations may be put in place to stay afloat. With all this in mind, it’s time to consider safeguarding practices to ensure minimal damage and disruption for your staff and your business.
So how can you prepare your business and your workforce for the recession?
Look early for efficiencies
Don’t wait for commercial problems to spiral and erode financial viability. Putting the work in early to evaluate the core processes and roles needed to maintain a successful business will pay dividends. Use this time to identify the activities that are less essential or can be done more efficiently and effectively another way or, if necessary, stopped. It will be easier to manage the change with your current resource, perhaps reallocating people to new roles or tasks and avoiding the need for more major disruption.
Don’t rush the process
There is a great amount of time and planning that goes into implementing real change into your business, especially when these changes are needed due to a recession. It is important to make sure that you are constantly monitoring any changes made so that you can easily alter them if they aren’t the right fit for your business. It is better to approach the implementation of change gradually rather than rush to get things 100% perfect the first time. In the event that the new changes are not the right fit, it may be a lengthier process to reverse some of the changes you’ve made and could pose some serious implications for your business and staff if this process was rushed.
There has been a 24-month high in recruitment for permanent positions (80% of all vacancies while temp fell to 9%). Care assistants, customer service and support workers are among some of the hardest positions to fill, but vacancies for cleaners, delivery drivers and sales assistants are also on the rise. It is becoming increasingly difficult to find candidates for lower salary ranges and the harder-to-fill vacancies offer salaries below £40,000. In these hard-to-fill positions, many candidates are seeking permanent roles rather than temporary work to ensure some stability when the recession hits.
Try to identify which roles in your business would be harder to fill should you decide to make redundancies ahead of the recession. It is a good idea to consider whether permanent staff could be the most suitable solution for your business to secure the workforce you need in the roles that you need them, or if your business needs are better suited by temporary cover.
Don’t panic and rush redundancies or recruitment
Many of the world’s best companies take extra care to retain their most driven and focused employees, who are considered the most important to keep. Replacing people who already had the skills and assets required for your business can be detrimental, so make sure to keep an eye on competitors as they aim to recruit and even steal the best performers from your business. Combine this with the possible impact of redundancies, cutting costs on training and development, you could be harming your business structure more than you think. In addition, it is critical that any decisions made regarding redundancies are made wisely and not rushed; they are difficult decisions to reverse if got wrong and the talent has already left the building.
Re-evaluate pay and incentive schemes with caution
Many businesses link employee benefits to company performance as part of an inclusive, performance-focused culture through stock ownership and profit-sharing. However, when a recession looms, these factors are put under pressure which is often first noticed by the workforce. A workforce will want to see consistency in decisions on incentives, working practices and policies as it underpins their trust in the business and their commitment to going the extra mile when a recession puts more strain on the business.
If it is a requirement that salaries or bonuses need to be cut, you may be tempted to reduce them equally throughout your business in an effort to be seen as ‘fair’ and indicate that everyone is in the same unfortunate position. However, consider this carefully because for some employees this may feel as though they are being under-appreciated for their work, causing them to seek employment elsewhere. Whilst it is sometimes a necessity that costs are reviewed to help a business navigate a recession it is vital to think broadly about the message this will send not only to your workforce but to your competitors.
Flexible and effective workforces are at the heart of what we provide at Thrive. From the strategic to the short term, we help clients deliver their capability & perform at their best, through workforce recruitment, management & planning.
If you would like to hear more about how we could support you and your business during the uncertainty of a recession, please get in touch.