Despite nine million roles being placed on furlough under the Government’s Coronavirus Job Retention Scheme since it began, predictions are that businesses will face the “,worst global recession since World War II“. The fallout from the COVID-19 pandemic is currently forecast to result in a recession twice as bad as seen in 2008/09. Even with the Chancellor’s latest pledge of bonuses for employers that bring employees back from furlough and incentives to hire young people, many organisations face unheralded challenges – particularly as government support is withdrawn in the autumn. And HR will be at the heart of the human capital response from organisations.
Learning from the recession of 2008/09
Many HR professionals will have been through the recession in 2008/09, when a series of failures at key financial institutions such as Lehman Brothers caused stock markets to crash and job losses soon followed globally – with UK unemployment peaking at just over 8% at the end of 2011. Utilising and building on the learning during that period will be crucial for HR professionals. Ruth Smyth, head of HR at Alexander Mann Solutions, believes that many of the challenges HR professionals face in the coming months are similar to that period, but there will be some striking contrasts.
“The financial crash had a domino effect on businesses so that we could react in a more piecemeal way,” she says. “Whereas this time around, we have had to plan for the worst and hope for the best. Employers had to put all scenarios and contingency plans on the table straight away and decide which order to enact decisions as it has been almost impossible to predict what will happen next.” She is clear that it is “hugely critical” that employers look at what did and did not work in 2008 to provide a guideline for their future plans.
HR is more influential than ever – use this influence
Dr Washika Haak-Saheem, associate professor of human resources management at Henley Business School, agrees that HR is more influential in 2020. She says: “Although both crises were results of external shocks, the impact of COVID-19 on HR differs in several ways. First, like never before, companies have needed competent and clear-headed HR managers who are able to lead the workforce through a time of increased uncertainty and volatility. Second, during and post COVID-19, HR must ensure that employees’ wellbeing and morale are maintained,” which is challenging in its own right. On top of this, HR managers have been juggling sensitive issues such as furlough and job losses with adjusting policies, while trying to build resilience in the wider workforce.
Many describe the key difference between the two crises as a contrast between economic and human. Tough HR decisions in the last recession were made in light of a series of economic failures, compared to the unique situation they face now, underpinned by the stark personal realities of a global pandemic.
Gwenan West, head of people at software company CIPHR, worked in HR for property services company Countrywide in 2008, and the impact of the financial crash on that sector was sudden and catastrophic. “We had to strip headcount quickly, and as HR people it felt counterintuitive to take the emotion out and look at it from a business perspective. We had to put our commercial heads on and think of it as numbers rather than people,” she says.
At the time, HR tended to implement decisions that had been made by the board, she adds. This time around, the conversation has flipped. “HR is now different to 2008 – we’re more involved in the business, in making the decisions. We’ve been brought into decisions much earlier and rather than being led from the top, we’re telling senior leaders what they need to look at.” This also means that if bad news needs to be communicated, it’s easier to convey that message knowing that the business has looked at all the options, she adds.
Build line managers’ skills to support their teams
Rebekah Tapping, group HR director of Personal Group, an insurance and benefits provider, thinks the difference with the past recession was that the exit strategy was more visible. “With a ‘typical’ recession you know you’ll come out of it at some point. You know to some degree what that will look like,” she says. “With this, the pandemic has affected everybody, every country has shut down. Our employees have been taking calls about death claims and the impact has really hit home.” Because of the more personal impact this recession could have, HR has been focusing on building managers’ skills to support their teams emotionally as well as a practical perspective. “We had been planning some management development with business psychologists and rather than cancel it due to the pandemic, we made it virtual – managers are going to need these skills more than ever.”
Keep an eye on the future
The biggest lesson Dawn Moore learnt from the last recession was that “regardless of sector, those organisations that balanced the crisis management with keeping an eye on the future were those that came out best”. The group people director at construction company J Murphy says that “a crisis can hit people in a variety of ways, there can be a sense of short-term panic, while some might not take it seriously enough. You have to be able to support those around you who have different challenges and different ways of thinking to get over this.” An example of this is the company’s decision to continue with the bulk of its recruitment plans for this year, particularly graduates and apprentices. “We talked about stopping all of it,” she said. “There may be some roles we can’t fill because we can’t get the right experience or skills, but entry-level jobs are the future of the business, so we’ll keep supporting that.”
How an organisation responds will be remembered post-crisis
Without a doubt, HR professionals will need to be effective communicators as they support the workforce through uncertain times ahead. Smyth at Alexander Mann Solutions believes reputational issues are more prominent than in 2008/09, and this will drive how HR communicates and engages with employees. She says: “While back in 2008 the main concern for many businesses was reducing the financial impact on the organisation, the long-lasting effects that stringent budget cuts had on those that took this approach has created a much bigger focus now on ‘how we will be remembered post-crisis’.” The employers that panicked and cut costs and headcount took a greater reputational hit that was difficult to recover from, she adds. “As such, more are concerned now about the lasting impact on their company and are instead focusing on how to carefully communicate and engage with the workforce so that no matter what unfortunate steps have to be taken, their long-term employer brand reputation remains intact.”
Retaining communication skills while using different means
Those communication skills will be essential when it comes to broaching difficult conversations with employees in the months ahead. However, sensitive discussions around redundancy or job changes – as well as developing managers’ skills to deal with them – can be more difficult when everyone is operating virtually. West says this is something her team has had to pick up gradually: “We’re contacting people on a regular basis and getting to know more about their lives, but we’re looking forward to getting people together,” she says. “We had to communicate everything through video, which means everything you’ve learnt as a HR professional about having tough conversations – that you should have them face to face – is completely turned around.” CIPHR has responded to this by sending more information out over channels such as Yammer and adapting communications into digestible formats such as infographics.
Moore from J Murphy advocates a coaching approach, supporting managers and their teams to understand their own motivations and empathise with others. “There’s a tactical role for HR during a recession but they also need a coaching approach and neutral perspective that helps people to understand themselves. I think a recession draws out a broad portfolio of these skills,” she explains.
This approach will help employees navigate the “change curve” in place as organisations gradually return to work and make decisions about how to operate differently in the future, she adds.
For many HR professionals, the weeks since the coronavirus pandemic began will have been the busiest and most stressful they have faced in their careers. But while those months often required a tactical and reactive approach, the focus moving forward must be on the longer term. As Moore concludes: “One of the positives of this being a shorter economic cycle between recessions is that strong HR teams will have been through this a couple of times, and will have delivered a successful operational response, with one eye on the softer issues and another on the future. Something like this really reinforces the skills of good HR teams.”
Author: Jo Faragher