Affect of Recession on Human Resources

The recession has affects many HR Processes and they need to be adopted to the new situation and they have to be ready for the new reality. The impact of the recession is not the same and many HR Processes can continue their regular operation without any adjustment.

The recruitment process is the first HR Process to be affected by the recession. The recruitment freeze is usually the first top management decision, when the sales numbers goes down. As the top management wants to keep the cash-flow under the control, the recruitment freeze is the first logical decision.

The recruitment after the recruitment freeze is more selective and the company has to clearly decide about its priorities as the organization does not carry additional people on its payroll. The top management decides about the new strategy and the management is allowed to hire just the missing skills and competencies.

The training and development is the second HR Process to be affected by the recession. The management decides about the cuts in the investments and Human Resources has to find a way, how to keep the knowledge in the organization.

The company can survive without training and development for a limited period of time. The cost savings can be huge and the organization feels no impact of the lower training budget. But the period has to be really limited as the organization does not lose the talents and the internal know how.

The compensation and benefits is the HR Process, which is heavily affected by the recession. The bonuses are not paid and the base salaries are under a huge pressure. The compensation and benefits specialists are under the pressure as they have to identify the areas in the organization to realize the redundancies.

The recession is a good opportunity for Human Resources to introduce the changes to the organization. But the reaction of HR has to be quick as the internal opposition has no chance to form their forces.