Top 5 Priorities For CHROs During An Economic Downturn
The past three years have taught us how an economic downturn can transform the way we work. Rapid digitization, economic uncertainty and hybrid work are placing new demands on employees who require different skills to cope with the new normal of work.
HR leaders have been challenged like never before to lead their employees through an unpredictable environment. Evolving business demands, shifting priorities, and new skill development needs highlight the role of HR in crisis management and subsequent recovery.
It’s important for HR leaders to prioritize their focus areas especially when they have a growing “to-do” list of responsibilities. What will be the focus for HR leaders in 2023? How can they contribute to building critical skills and competencies that will make their organization and employees future-ready?
Understanding HR challenges is the first step
Before defining the focus areas for CHROs during a recession, it’s important to understand the top challenges that impact effective human resource management.
1. Ensuring productivity in a downsized environment
Downsizing through layoffs can take a toll on workforce morale – HR leaders must handhold employees to overcome their fear, insecurity, and uncertainty, and help them remain productive and engaged.
HR leaders need to:
- Educate and inform employees about how they can go on to become productive in a downsized environment
- Reallocate job responsibilities wisely – effective restructuring and reassignments will help ensure that the work is performed efficiently and effectively
- Communicate continuously and comprehensively to realign the workforce with current business conditions
- Retrain the surviving employees to keep them engaged and feel more valued and satisfied at work
2. Boosting the morale of surviving employees after layoffs
During a recession, many organizations are forced to reduce their workforce. Many of the surviving employees are often wracked with fear as they continue working while their colleagues are laid off or furloughed. It’s imperative for HR managers to have a plan to boost employee morale post-downsizing.
HR leaders should:
- Personalize organizational training to develop the skills of remaining employees and focus on team-building activities
- Eliminate the uncertainty by having an open communication platform where company leaders address their workforce’s concerns
- Foster better relationships between employees and the organizational leadership through frequent one-on-one meetings, creation of focus groups, and feedback-sharing
- Explain to employees why certain roles have become obsolete and what skills should they develop to survive in the new workplace
- Set up a feasible L&D strategy to minimize the learning curve for surviving employees, so they will be equipped to take up the new roles with confidence
3. Training organizational leadership to help them adapt to the new reality
Many organizations overlook training thinking that their leaders have reached a stage where they don’t require ongoing training. However, lack of leadership development can lead to employee-employer discord, workplace disagreements, toxic work environments, and sudden quitting of employees due to poor relationships with their managers.
It’s crucial for HR leaders to conduct leadership development training to encourage managers and leaders to:
- Tackle the post-downsizing challenges faced by their organization and employees
- Reduce employee turnover and increase engagement and workplace morale
- Identify new business opportunities that help them maximize returns with minimum investments
- Implement new, innovative, and empathetic ways of managing people and retaining top talent
4. Managing HR operations effectively on a limited budget
Economic downturns necessitate organizations to cut business spending, which often results in hiring freezes, layoffs, furloughs, reducing benefits, restructuring jobs, and ending relationships with costly vendors. The biggest challenge for HR managers is to make strategic shifts that will help them cut costs and boost productivity simultaneously.
During a recession, HR executives should:
- Optimize the long-term budget by reevaluating their processes, refining the hiring process, and identifying manual operations that can be eliminated or automated or shifted into employee self-service mode
- Determine what kind of benefits will make the most sense for their budget while retaining the competitive advantage in talent attraction and retention
- Offer employees workplace flexibility, adequate career development opportunities, and meaningful work roles with proper training
- Digitize the aspects of employee hiring, onboarding, new-hire training, employee management, role-based training, leaves, payroll etc. to free up time for workers to work on higher-level tasks
5. Making room for internal mobility and reskilling programs
Internal mobility is important for boosting employee retention and engagement during a recession. Restructuring or reskilling your current workforce allows you to remain agile and adapt quickly to the shifting business priorities.
When moving into a recession, HR leaders should take special care to:
- Instill confidence in people’s financial security and their position within the company by moving them into relevant roles
- Invest in the career growth and development of existing employees by committing to a robust learning program
- Align the learning programs with the organization’s upskilling and reskilling needs to close skill gaps and prepare employees for open roles across the company
- Implement radical redeployment programs to move displaced workers successfully into new and meaningful roles
- Review internal talent pool to identify employees who have the right skills and are willing to take on new or emerging roles that will be required in the future workforce
All these challenges prove that there are no shortcuts for HR teams to deal with the unknown or unexpected consequences of an economic downturn. It’s a time when HR professionals should demonstrate their business acumen and focus on building a robust learning and development strategy that aligns with the organizational goals and objectives
5 focus areas for CHROs and L&D experts to recession-proof their business
1. Align training with organizational goals
When your employees’ skills and knowledge are aligned to your business goals, your organization will gain a significant competitive advantage, enhanced productivity, increased sales, and improved brand reputation.
To align training with business goals, HR leaders should:
- Understand and decide on the long-term goals of the business.
- Analyze how and what kind of training programs will meet the organizational requirements.
- Identify the new skills and competencies that employees will need to achieve the desired performance.
- Figure out what kind of modalities (forms of learning) can best meet the training needs – instructor-led live sessions, eLearning, webinars, etc.
- Involve the C-suite in the communication loop for a clearer vision of the organizational goals.
- Decision-makers should be aware of the purpose of the training and how it helps achieve long-term business goals, so they can justify the money spent on training.
- Ensure scope for continual learning through post-training reinforcement.
2. Invest in training to make your business recession-proof
Every organization that invests in training intends to gain better growth, stability, and a brighter future. A recent study by Deloitte states that organizations with a strong learning culture are able to boost their employee engagement and retention rates by 30 to 50%. Continued training through an affordable solution ensures that your people have the skills they need to keep serving customers even during a recession, and keeps their morale high even when increments fail to meet their expectations.
What kind of training can help recession-proof your business?
- Training people on specific soft skills, such as communication, flexibility, emotional intelligence, tolerance, resilience, adaptability, etc. can prepare them to meet any upcoming challenges.
- Interactive training courses that simulate less expected or less likely situations, difficult customer experiences, or other challenging endeavors allow employees to get trained in a completely safe environment.
- Companies that invest in upskilling and reskilling programs are in a better position to help their employees stay ahead of the curve and equip them to deal with any challenge or change in the future.
- Managing finances is a stressful process during an economic downturn. Companies that deliver financial planning/wellness training to their workforce can bring positive changes to their employees’ personal and professional lives.
- Similarly, it’s important to prioritize mental health and wellness training initiatives that will equip employees to focus on their job better, making them more productive and happier.
3. Gauge the impact of training on business growth and ROI
A report by Accenture shows that for every dollar a company invests in training, they receive about USD 4.53 in return, that is, a 353% ROI. It’s important for HR leaders and L&D teams to make a strong business case that will justify the adoption of the right learning technology platform for their organization. When the C-suite has a clear insight regarding the business significance and the potential ROI offered by the learning initiatives and tools, they will be ready to invest in employee development.
Here are a few tips to measure learning ROI and its impact on your business:
- Work with the senior leadership to identify your organization’s desired learning outcomes and determine your training goals.
- Decide the KPIs to be used for calculating training ROI. Choose measurable and quantifiable KPIs that are competency-based, skill-based, and aligned to employee and organizational goals.
- Implement a learning and development (L&D) platform that allows you to track learning analytics and measure outcomes, or integrate your LMS with a trusted third-party analytics platform that can offer actionable insights on your L&D performance.
- Correlate the preferred KPIs against training variables provided by your L&D platform to obtain deep, measurable insights. For example, sales training should improve sales performance and soft skills training should improve communication.
- Test the knowledge gained by employees using periodic quizzes, tests, and assessments. Track the results to understand the level of knowledge retained by employees and analyze how they apply the knowledge back on their jobs.
4. Reduce training & onboarding costs without sacrificing the quality and effectiveness of Learning
According to the ATD State of The Industry Report, an average organization spent USD 1,280 per employee on formal learning in 2022. However, the cost of not training your employees can hurt your bottom line severely, leading to higher employee turnover and more errors at work.
Here are a few tips to help you plan a realistic training budget:
- Choose an L&D platform that helps streamline and automate the routine tasks around planning, assigning, and measuring your training. This will give your admins their time back to focus on valuable tasks like developing courses and defining learning objectives.
- Online training delivered via an L&D will allow your employees to access and learn the courses from anywhere. It saves your employees’ time and traveling costs.
- New employees replacing the existing workforce can leverage an L&D platform to access job-specific and organizational courses, reducing the time taken to settle down and be productive.
- Invest in online, asynchronous training to train your employees without breaking the bank.
- Collaborate with your in-house experts to create internal training programs that can be delivered via an LMS to cut your training costs.
5. Create personalized learning journeys
L&D plays an important role in providing highly engaging, learner-centric development experiences. A survey by Forbes shows that 47% of respondents are not satisfied with their employer’s learning and development programs as they take a blanket approach in which all the learners are served the same content.
Personalized learning, on the other hand, focuses on individual requirements meaning that employees are provided with content that meets their learning needs and objectives.
- Creating personalized learning plans allow L&D leaders to track training progress and performance, and add performance management elements like one-on-ones, feedback, or skills reviews into the process.
- Supervisors or managers will find it easy to stay in touch with their employees during key moments and evaluate their progress on the fly.
- Learners are more likely to remember relevant content and apply the knowledge gained in their day-to-day roles.
- Personalized learning paths aided by Artificial Intelligence (AI) and machine learning powered course recommendations will make it possible for employees to consume relevant content and learn at a faster pace.
- By improving the quality of content and the method of training, employees will be in a better position to create more engaging and relevant customer experiences. Thus, personalized learning helps generate more revenue from your products and services.
To bolster long-term preparedness, organizations must make learning and development a part of their employees’ daily workflow. Nearly 69% of organizations are doing more skill building now than they did before the COVID-19 crisis. “Learning in the flow of work”, which is best managed through a learning management system, will help organizations to upskill and reskill their employees at speed.
What are your organization’s HR priorities to win in today’s business climate? We’d love to hear from you. If you’d like to know how Skill Lake can help ensure continuous learning and development in your workplace, contact our team.
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