Survey: HR Leaders Considering Strategies to Prep for Recession

U.S. executives are concerned that a recession is looming within the next six months, and a majority of HR leaders are already implementing at least one strategy to reduce or adjust the size of their organization’s workforce, according to PwC.

The findings are from PwC’s latest pulse survey, conducted Oct. 12 to Oct. 18 with 657 U.S. executives to track the changing sentiment and priorities of business executives. Respondents included 94 CHROs and HR leaders.

Four out of five executives (81 percent) think a recession is looming. Among CHROs, in addition to layoffs, 81 percent are looking at other ways to reduce headcount—voluntary retirement, performance-based cuts, hiring freezes and not replacing people who leave.

“At the same time,” the report noted, “executives realize that they can’t cut their way to growth.”  Instead, “they have to build a strategic growth agenda to take the company forward.”

Over the next 12 to 18 months:

• 44 percent of executives plan to hire talent with specific skill sets to drive growth.
• 35 percent are considering mergers and acquisitions or divestiture—that’s up 10 percentage points from PwC’s August 2021 Pulse survey findings.

Executives expressed confidence to PwC, though: 77 percent said they believe they can hit near-term growth goals, and 77 percent said their change initiatives will deliver expected results.

Recent headlines underscore the strategies large organizations are taking to weather a potential recession. SHRM Online collected the following news articles on this topic: 

CEOs Are Preparing for a Recession, and They Don’t Think It Will be Short

Major CEOs aren’t buying the notion that the U.S. economy could have a soft landing following a series of historically large interest rate hikes by the Federal Reserve to fight inflation.

According to a survey of 400 leaders of large U.S. companies by consulting firm KPMG, a whopping 91 percent are predicting a recession in the next 12 months. What’s more, the survey, released Oct. 4, found that only 34 percent of these CEOs think the recession will be mild and short.
(CNN) 

Tech Layoff Headlines Are Leaving Out a Lot about Recession Risk and the Economy

U.S. payrolls surged by 261,000 in October, though there was a slight uptick in unemployment to 3.7 percent. While layoffs are making the headlines, from Twitter to Stripe, Bledi Taska, chief economist at labor market consulting and research firm Lightcast, noted that even in tech and at private venture capital-funded companies like Stripe, layoffs are not surging overall.

In the professional and business sector—where most of the tech companies belong— layoffs dropped in September and startup layoffs also dropped over the past few months.

However, Taska and other labor market experts say the way CEOs and CFOs think about layoffs in a slower economy may be due for a change.
(CNBC) 

Employers React to ‘Confusing’ Labor Market with Layoffs, Retention Plans

It’s a perplexing time. Employers desperate to hire and retain talent are planning layoffs and hiring freezes. Organizations addressing labor shortages are boosting pay and benefits to attract candidates while also taking steps to reduce headcount. Companies are pursuing a range of strategies illustrating the paradoxical nature of the current labor market.
(SHRM Online) 

Viewpoint: Human Resource Management in Recession

The coming economic downturn—which will probably become a recession—will change how HR policy should be made by small businesses as well as large corporations. A brief window of easy labor availability will allow a return to basics of good human resources policy, after which we’ll revert to a long-term tight labor market.

We will begin with a huge number of unfilled positions, nearly two for every unemployed person. Some of the cutbacks will be cutting hiring plans rather than actual jobs. The recession or economic slowdown will give managers the opportunity to clean house. They should right now meet with workers who are under-performing and clarify expectations.
(Forbes)

How to Prepare Your Company for a Recession or Economic Downturn

There are two sides to recession-proofing your company. While most companies focus on their bottom line to survive a recession, research on how to help your business survive a recession  has shown that focusing on employee engagement—particularly diversity and inclusion—helps companies thrive during a recession. In fact, Great Place to Work says its data shows that companies that value diversity and inclusion outperform other companies by as much as 400 percent.
(Great Place to Work)