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How to grin when the forecast is grim –  

Weathering the Economic Storm with your Staff


It's a recession when your neighbour loses his job; it's a depression when you lose your own. 

Harry S Truman 


While economists speculate whether Australia will officially experience a recession in 2009, HR managers are less concerned with semantics, and more concerned with how to maintain staffing and the bottom line in the challenging times ahead. 

With recent media attention on mass redundancies, there is a climate of doom and gloom around the water coolers of the nation, with speculation rife as to who will be next to go.  Without downplaying the obvious and considerable impact on the livelihoods of those in industries and organisations affected by job cuts, there are alternative human resource management strategies that a number of companies are adopting to enable them to weather the storm and keep their staff.    

Some of these strategies include: 

·         reviewing recruitment needs – reconsidering  the need for new positions, or not replacing staff who leave; 

·         strategic (and sometimes, temporary) redeployment or restructuring – moving staff or teams from roles that are no longer or not currently required to other areas of the business where staffing needs continue to exist; 

·         encouraging increased productivity, and focusing performance appraisal and management processes around achieving this; 

·         reducing training and development costs by reviewing the need for and value of such programs, moving them in-house, or seeking local providers, instead of supporting the more budget-intensive interstate courses and conferences more prevalent in boom times;  

·         reviewing bonus levels and salary increases for the greater good, and/or replacing rewards for high performers with non-financial benefits; 

·         supporting work/life balance initiatives that are budget-friendly, such as job-sharing, part-time employment options, unpaid leave/sabbaticals, etc. 

In some industries and organisations, cutting staffing costs as outlined above will be critical to the survival of the business.  However, employers should implement more extreme cost-cutting measures cautiously and only as a last resort.  Organisations in business for the long haul will appreciate that, in almost all cases, staff are their single most valuable resource.  To deliberately retrench, or lose through inadequate retention strategies, their best and brightest, or even their trusty workhorses, could be foolhardy indeed for a company hoping to bounce back post-recession. 

The cost of recruiting, selecting, inducting, training, developing and retaining new staff, assuming you can find the right people when the time comes, can be considerably higher than the cost of retaining the right people in the first place.  The loss of corporate knowledge and expertise of an employee with five or ten years’ experience can have a significant impact on the productivity of that role, team, department, and even (depending on the role) company for months or even years after their successor has been appointed.  The impact on morale of job losses within an organisation may also be considerable and long-lasting, including lack of trust in management, who may be suspected of treating staff as expendable. 

Another argument that may be made is that it is easier, in practical terms, to downsize a company than it is to grow (or re-grow) one.  Looking back over Australia’s recent history, recessions of varying degrees were experienced in 1974, 1982 and 1990.  Businesses with plans for a long future of trading would struggle if they chose to shed staff each time there was a recession, only to hire again when the market rebounds, as markets always do.   

Perhaps the most convincing argument against job cuts as a strategy for weathering recession, however, is that periods of recession are associated with a cycle of: reduced spending – decreased demand for goods and services – decreased profits – increased unemployment – decreased income – decreased demand for goods and services/investment in research and development, etc, ultimately leading to business failure.  If unemployment can be minimised, the cycle can be interrupted, and the serious, long term impact on business reduced.   If the human cost and the economic cost of recession can both be lessened, everyone wins, and an earlier end to the recession is more likely. 




By Trevor Neville, Principal, and Kirsten Ferguson (Human Resource Management Consultant and Life Coach), TranZition Professional and Executive Recruitment, Level 3 Waterfront Place, 1 Eagle Street, Brisbane Qld 4000. Email:  Web: 


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