According to research from Personio, more than 50% of HR teams across the UK are expecting to see cuts to their budgets going into 2023. With the cost of living crisis paired with further devaluation of the pound to a record low, the UK economy is in trouble and a recession looms. These factors are all contributing to only 24% of HR Managers across the UK stating they feel prepared to help maintain their business’ strength in the current economic situation.
Any professional in the HR industry will be aware how quickly it can change thanks to new legislation or government updates which leave both employees and employers with something to think about. We are in a world where businesses have adapted to a new way of working, with remote and hybrid approaches the new norm for many. The ups and downs a recession brings can be unpredictable too, but with adequate preparation offers HR an opportunity to shine through.
The 2008 Great Recession
Just like in 2007. People gathered round sporting rolled up sleeves making frantic phone calls for a deal as the stock exchange was booming. Just a year later in the same space, you could almost hear a pin drop. Phones stopped ringing and monitors were stagnant with the lack of activity, all thanks to the stock market crash.
As the UK nears a potential new recession, industry experts predict the economy could actually shrink by up to 0.6% in 2023 – a reality that seems significantly different to the initial predictions of 1.1% growth. If predictions from the Bank of England are anything to go by, the UK will be in recession by the end of this year and could last up to five quarters into 2024 – the same length as the Great Recession of 2008.
However, the next recession looks set to take a path defined by stagflation, meaning inflation is expected to rise, leading to slower GDP growth and an unfortunate increase in UK unemployment rates. Timing couldn’t be much worse with a candidate shortage and the cost of living crisis , leaving lots for HR to tackle. So, what steps can be taken to prepare, and what opportunities are there for HR to transform?
Safeguard existing talent
Dealing with a recession on its own is hard enough, without the added challenge of managing a talent shortage. That’s why HR departments and hiring managers need to start workforce planning – now. Given the current state, it has never been as important to retain the talent you already have across your business – especially if you are in need to recruit for other positions too.
Take the time to understand what skills and competencies are already in your business, allocate people to the right areas and use their expertise – this will ensure you are safeguarding talent you already have.
Invest in upskilling through the recession
As businesses look to curb spending, budgets will become more strained, so choosing to invest in upskilling current employees is a viable option. Whether it’s allocating set time for your people to complete refresher training or paying for employees to complete new training to develop their skillset, it’s vitally important.
A study found that 40% of employees who do not receive the necessary training to become effective will leave their position within a year. With a recession looming, you cannot afford to make that mistake. Find out how your business can actively encourage employee development.
Use the experts
The candidate shortage is making it more and more difficult for hiring managers to find the talent they are looking for. How do you overcome this? Ask the experts.
We have an upcoming Employment Law Update that will explore on how you and your business can deal with the economic difficulties currently facing the UK and assist HR in the turbulent times ahead. The event takes place on Wednesday 9th November from 8:30am. Reserve your FREE place.
Recruiting in the current market is already very difficult, and it is going to become even harder. Businesses do not have the networks to utilise, time to spend headhunting or the databases to tap into. Choosing a true business partner for your HR or Finance recruitment provides you with a solution.