Are we in a recession? Technically, not yet. Despite this, many Americans are concerned. A recent poll found that:
- 46% think the economy is currently in a recession
- 22% don’t believe we are in one but will be within a year
- 41% are shifting financial behaviors to prepare for a recession
- 41% say they aren’t able to prepare but wish they could
While many consider the recent layoffs, particularly in the tech industry, as a sign of an impending recession, the unemployment rate is only 3.6% as of February 2023. For context, from 1948 until 2023, it averaged 5.73%.
That said, we already know that people are concerned about the impact of inflation. And with the unprecedented events of the last three years and the uncertainty of our economic future, it’s wise to recession-proof your small business and employees. Keep reading for five key tips.
Assess Your Personnel & Retention
Whether in or preparing for a recession, it’s always a good time to evaluate your team from leadership to staff level. Consider:
- Who are your top performers, and how can you retain them?
- How is each employee and department’s productivity?
- Who is struggling and why?
- Are they receiving the necessary support and resources they need to succeed?
- Do you have the right people in the right positions?
Collaborate with your internal human resources department or invest in an outsourced HR consultant to ensure you’re making optimal hiring and employee retention decisions. This will help you scale appropriately and lower your chances of having to make layoffs later.
Hire Strategically
If you are concerned about your small business’s payroll costs, consider alternatives to full-time employees. Outsource some work to freelancers or independent contractors. This is ideal for specific tasks and projects that ebb and flow.
Consider hiring part-time employees, or even remote employees (both full- and part-time) in locations with a lower cost of living. However, check each state’s wage and labor laws and other requirements you’ll need to follow regarding foreign qualification registration, payroll taxes, or sales taxes.
Communicate Openly & Often
Frequent and transparent communication is crucial to maintaining positive morale and preventing employee stress as you recession-proof your business. If they are left wondering about the state of the business, assumptions and rumors about everything from job security to essential processes will swirl. This could result in unnecessary panic, workplace conflicts, and turnover.
Instead, share regular updates to:
- Inform employees how the business is performing
- Share what you’re doing to take care of them
- Remind them of the company mission and values to strengthen the feeling of connection
- Recognize those who have stepped up even during challenging times
- Share concerns honestly and delicately, along with steps of how you will handle them
Get Employee Insights
Speaking of employee communication, why not look to your team for input first? After all, they have direct insight into your daily operations. Ask them for ways to reduce business expenses, streamline processes, and ideas for future growth. Can you:
- Eliminate certain tools, equipment, or subscriptions?
- Find more affordable options?
- Build new partnerships?
- Enter a new market?
- Add a new solution with high demand?
Your employees will know best! Plus, asking for their input will make them feel valued.
Provide Tools & Resources
Help employees prepare for a recession by reminding them of the available resources and, if possible, offer other financial support. This doesn’t necessarily mean your small business has to incur new expenses—simply promote existing programs, like:
- Employee Assistance Program (EAP): This typically includes some counseling services, referrals, and other mental health support for those struggling.
- Health & Wellness Perks: Whether fully subsidized or discounted, additional benefits like gym memberships can help employees stay healthy while saving.
- Financial Resources: If you offer one, encourage workers to take advantage of their retirement accounts and advisors. Resend the plan information and enrollment instructions.
We may not be in a recession yet, but if recent history has taught (or reminded) us of anything, it’s that we must prepare for the unknown. One of the most important ways to protect your small business is by first protecting your employees. By operating with your team front-of-mind, you’ll:
- Foster a positive workplace culture and loyalty even during tough times
- Promote growth thanks to an engaged team
- Reduce personnel and financial risk
- Lower business expenses without having to lay off employees
Do you need guidance in optimizing your team’s efficiency, preparing for a recession, and supporting employees during uncertain times? Contact our HR professionals at 603-818-4131 or info@bluelionllc.com today to learn how we can help!
The information on this website, including its newsletters, is not, nor is it intended to be legal advice. You should contact an attorney or HR specialist for advice on your individual situation.
