You have probably seen the headlines: ''globe is ‘perilously close’ to recession''; ''global economy on ‘razor’s edge’ of recession''; ''A recession is coming''. Let’s face it, the economic recession is here, and with inflation hitting a 40-year high, recessionary times are now more than ever a reality.
And as the sister of the ‘great recession’ kicks in, businesses are often among the first to feel the brunt of financial hardship. Maybe you’ve already felt it in your business—slowing cash flow and tightening budgets. Or perhaps you’re currently in the midst of preparing for the economic downturn to hit by recession-proofing your business.
No matter where you are in the recession cycle, or whether your type of business falls into one of these recession-proof industries: healthcare, education, accounting services, information technology, or social media—it pays to recession-proof your business with an effective HR strategy. At the end of the day, it could be the difference between staying afloat during hard times and shuttering your doors until economic conditions improve.
In this article, we are bringing to you 10 recession-proof business ideas to help you through these turbulent economic times.
1. Use data-driven insights to improve employee engagement strategies
In uncertain times, it pays to have a robust employee engagement strategy in place. According to recent research from Gallup, organizations with high levels of employee engagement have lower turnover rates, higher productivity, lower absenteeism, and higher profitability.
But improving your employee engagement strategies isn’t a one-size-fits-all approach. It requires understanding the unique needs, motivations, and desires of your employees.
This is where data-driven insights come in. By leveraging employee surveys and analytics tools that measure employee sentiment, you can identify which strategies are working and which areas require improvement to create a recession-resistant business.
2. Understanding whether ‘labor hoarding’ is right for your business
When the world came to a pause during the early onset of the COVID-19 pandemic, redundancies and layoffs were a common trend with businesses focusing on keeping short-term overhead costs at a low.
But once the economy opened up, these organizations - such as airlines and hospitality businesses - scrambled to rehire employees as they needed labor to get operations running back at full capacity again.
So now, amidst fears of an economic downturn, many organizations are considering the option of labor hoarding - i.e., keeping employees on even if their job roles no longer exist, in order to avoid rehiring costs (which can often be high).
The key here is to understand whether this strategy will work for your business or not. Can you afford to keep your employees on, even if their job roles no longer exist? Are their skills transferable and can they be employed for other job roles in your organization?
3. Focus on skills to ensure adequate staffing during market contractions
On the note of labor hoarding, if you are going to keep staff on even if their job roles no longer exist, you need to ensure that they have transferable job skills to be employed for other roles in your organization.
For example, if an employee is employed in supply chain and business conditions demand that the role be made redundant, can they be trained in digital marketing?
This is where focusing on skills rather than roles comes in. Job roles tend to be fluid and change with the times. But having a pool of employees with transferable skills ensures that you can adequately staff your business, without needing to rehire from the market.
4. Take a contingent worker first-approach to recruitment
Despite assessing the current skills of your workforce, you may still need to hire from the external talent market.
This is where a contingent worker-first approach comes in. Instead of investing in full-time hires, consider hiring freelancers and contractors on a project-by-project basis. This gives you more control over costs, as you don’t need to pay those benefits or other overhead costs associated with an employee.
So, instead of hiring a permanent assistant, why not opt for a virtual assistant? Instead of a full-time writer, why not hire a freelance writer on an as-needed basis? This will help you recession-proof your business by keeping costs low and avoiding long-term commitments.
5. Work on your employer brand and EVP
As the recession hits home, you would think that employees would be more cautious about changing jobs.
But according to research conducted by Robert Half, 46% of Americans are planning to seek new employment in the first half of 2023. This is up by 41% from 6 months ago.
So recession or no recession, you need to take steps to build your employer brand and EVP (employee value proposition) in order to attract the right talent.
Your employer brand is more than just a logo - it’s about creating an identity for your organization that resonates with prospective employees. Think of it as a promise–the promise of an engaging and meaningful work experience.
Your EVP should focus on the values you bring to your employees - such as job security, career growth opportunities, flexible working arrangements, vibrant company culture etc. The chart below created by Amy Edmonson and Mark Mortensen, is a great indicator of how you can structure your EVP during this rumbling economic situation
Is employee wellness part of your employer brand? Download our free Wellbeing Checklist to learn more!
6. Encourage feedback from employees to allow for continuous improvement and learning
Your employees are your greatest asset. So it’s important to ensure that they have a platform where they can provide feedback and suggestions on how you can improve the workplace.
This is especially important during recessionary periods, as you need to be able to quickly adapt and pivot your business strategy in order to survive.
Encouraging feedback from employees allows for continuous improvement and learning - thus creating a culture of innovation and growth within the organization.
A place where employees feel valued and heard = a stronger employer brand and EVP.
7. Establish a comprehensive recognition and rewards system
Research shows that organizations that invest in recognition and rewards programs tend to have higher productivity, job satisfaction, and employer loyalty.
As a small business owner, entrepreneur, or HR manager of a start-up, you are probably feeling the pinch of the economic situation. You may want to cut back on costs, and rewards may be one of the first things to go.
But don’t be tempted to cut back on recognition and rewards programs - they are essential for keeping employees motivated and engaged - especially during periods of uncertainty.
You don’t need to gift your employees lavish gifts. Simple gestures, such as a ''thank you,'' public recognition, or even something as small as a free coffee, or childcare/daycare discount can go a long way in making your employees feel valued and appreciated.
If you want to learn more about creating effective employee recognition programs, read our article: 5 Tips for Running a Successful Employee Recognition Program
8. Create a culture of collaboration that allows teams to easily share knowledge and best practices between departments
Creating a successful and resilient business during times of economic uncertainty requires a focus on collaboration.
If we look at the statistics:
- Despite 75% of employees confirming that workplace collaboration is essential, only 35% agree that their employers do this correctly.
- Digital collaboration tools have been found to result in productivity boosts of between 20 to 30%, having the potential to unlock over $100 billion in value for companies.
- Employers who invest in collaboration tools can increase performance by 37% and employee retention by 36%.
Clearly, there are enormous benefits to be had from fostering a culture of collaboration within the workplace. It’s about creating an environment where teams can easily share best practices, knowledge, and ideas, without the fear of being judged or reprimanded.
This could be as simple as creating a shared document where employees can drop any ideas that they have. Or it could be something more complex like having monthly brainstorming sessions to come up with new and innovative ways of doing things.
At the end of the day, fostering collaboration creates an environment of trust, which is key for good business.
9. Introduce well-being programs that keep mental health at the forefront while minimizing stress caused by the economic climate
With inflation at its all-time high, and energy, grocery store food prices, and interest rates soaring the roof, recessionary climates can cause stress, anxiety, and depression in the workplace.
This is why it’s important to create a culture of care that supports employees on multiple levels.
One way to do this is by introducing well-being programs that focus on physical, mental, emotional and financial wellness. This could include things like yoga classes, digital mindfulness sessions, healthy cooking classes or even financial planning workshops.
10. Roll out a transparent communication strategy that keeps employees informed and up-to-date
Last, but not least, is the importance of having a transparent communication strategy in place. This is key for recession-proofing your business as it helps to keep everyone informed about any changes or developments around the organization.
Your employees are already going to be feeling anxious and uncertain about what the recession has in store for them - so it’s essential that you keep them up-to-date with any changes or developments.
Whether it’s via email, team meetings, video conferences, or even informal chats over coffee, having a clear communication strategy in place will help to give your organization a sense of direction, even in times of recession.
Remember: Not one-size-fits-all
Overall, these 10 ideas are great proven HR strategies that will help you get started on the path towards creating a resilient business model that can weather any storm. But, as with any business strategy, it’s important to remember that “one-size-fits-all” rarely works.
At the end of the day, if you want to recession-proof your business, you need to be creative, open-minded, and willing to think outside the box.
You need to assess your specific situation and use these strategies as a base for creating a recession-proof business model that is tailored to you and your needs.
Talk to our team about creating a plan for employee engagement!