HR strategies in times of global recession
While Poland is still managing to slow down the expansion of COVID-19, in many countries the pandemic is taking the form of an unbridled element. The global economy is facing a deep recession. Most companies and managers limit their activities only to preventive activities, because defeatism spreading from everywhere takes away the courage to think in the long term. However, only those who act temporarily and plan for the future emerge victorious from each crisis. How to take advantage of the time of slowdown in the HR area is told by Andżelika Majewska, Vice President of the LeasingTeam employment agency.
The largest corporations in the United States are reducing their spending by record due to the all-encompassing and unpredictable coronavirus pandemic1. And this is not surprising. Throughout Europe, including Poland, companies are hoarding cash, saving, minimizing or completely abandoning investments. The priority is to maintain financial liquidity. However, it is increasingly said that the economy cannot afford downtime, and cash alone will not provide business with a future. A holistic approach to fixed costs is necessary. We are now passing the test of management flexibility, but we must be aware that it will continue for some time – the peak wave of infections announced by the government and a return to reality after the pandemic are ahead of us. According to the forecasts of the International Monetary Fund2 , this year the global economy is expected to fall into a 3% depression (for comparison, during the crisis in 2009 it was -0.3%), but in the next year, i.e. 2021, global growth is expected to reach the highest rate in years of +5.8%.
RECRUITMENT
The largest share in the profits from future growth will be achieved only by organizations that will be able to dynamically respond to the rapidly growing market needs, i.e. those that will have easily available human and financial resources and a strategy for their effective use. So should we suspend the processes carried out so far? The answer is not obvious, but using the downtime period for what we should do anyway to make our business more effective in the future is important. Many corporations are now deciding to renovate offices, modernize production lines, rebuild IT systems, and recruit specialists with niche qualifications at several stages. Until recently, the employee’s market made the last task quite difficult and required a competitive offer from the employer. The decrease in demand for new employment visible since March and the reduction of current resources make it easier to recruit a highly qualified employee for a relatively lower salary.
EXTERNAL EMPLOYMENT
In view of the employee’s labour market from only 2 months ago and the amendment to the Act on Temporary Employment (as a reminder: in 2017, the responsibility for the time of posting an employee was transferred from the employment agency to the employer), very often large organisations began to take over external resources to their structures. This gave the impression of greater employee loyalty, commitment or efficiency. However, this has not been confirmed by any research, and even niche research conducted on selective professional groups has shown that people working under flexible forms of employment value them highly, and they are skeptical about every change, even for the “better”, because it requires verification of habits or family life. The process of quite widespread absorption of temporary workers has contributed to increased employment, and now results in the need for redundancies. What’s more, these employees are the most vulnerable group in the organization due to the type of positions, seniority, or their easy replacement.
Today, more than ever, the safest and optimal solution is to use various forms of external employment: temporary work, body leasing or outsourcing, which allow for a faster and much less costly response to the dynamically changing situation of the company.
FLEXIBILITY
An economic slowdown always makes us reflect on how to react quickly and flexibly to changes and how to protect ourselves against similar situations in the future. Research conducted after the economic crisis in 2009 by Boston Consulting Group3 among German companies showed that those entities that used various forms of external employment survived the crisis with much smaller declines compared to companies employing only full-time employees (within the organization). German entrepreneurs who relied on external resources motivated it primarily by the ability to quickly respond to business requirements (about 80% of respondents), the desire to increase employment flexibility (about 67%), the possibility of trying out potential permanent employment (53%), and the desire to keep fixed costs low (35%). The German economy was then experiencing a GDP decline of -4.5%. Polish entrepreneurs, although not affected by such a large decline in GDP in 2009 (-0.3%), also drew appropriate conclusions, but the employee’s market has recently significantly changed the assumptions of the employment strategy.
Meanwhile, we have another turn in the economy. The economic crisis predicted by analysts was ultimately caused by the COVID-19 coronavirus, which no one predicted. The recession will undoubtedly verify the strategies and methods of doing business. Solutions that will enable quick response to changes will gain popularity – short-term rental of offices, cars, but also flexible forms of employment, allowing for much easier access to human resources, not only those easily replaceable, but also specialized or project (long- and short-term). Employees, in turn, will have the opportunity to manage their time more freely and reconcile private and professional life.
In most companies, human resources are a basic fixed cost. They are also a key investment that plays the most important role in the expected development or growth. Layoffs or restructuring will not help in the future, but redefining forms of employment will. After the pandemic period, we will return to a different reality, richer in experience, full of inevitable changes, but also good reflection for the future. HR strategy has always had a huge impact on business assumptions, so the verification and review of its concept will be critical for the further fate of any organization. Difficult periods have their undeniable drawbacks, but by seeing value in them, we can prepare better for any eventuality. As Peter Drucker used to say – we will have the ability to create the future instead of predicting it.
3 Source: “Adaptive to change”, International Confederation of Private Employment Agencies, The Boston Consulting Group, 2019.
Doświadczony analityk rynku pracy, specjalizuje się w badaniach nad trendami zatrudnienia i zmianami w strukturze zawodowej. Jego artykuły, publikowane w renomowanych czasopismach branżowych, pomagają czytelnikom zrozumieć dynamikę rynku pracy.
