Skip to main content
  • Foundation
  • Executive network
  • CEO Circle
  • Enterprise Solutions
  • Linkage Logo
  • Store
  • Sign In
  • Account
    • My Account
    • Logout
    • Global
    • India
    • MENA
SHRM
About
Book a Speaker
Join Today
Renew
Rejoin Now
Renew
  • Membership
  • Certification
    Certification

    Smiling asian student studying in library with laptop books doing online research for coursework, making notes for essay homework assignment, online education e-learning concept
    Get Certified!

    Be recognized as an HR leader with your SHRM-CP or SHRM-SCP credential.

    • How to Get Certified

      Demonstrate your ability to apply HR principles to real-life situations. No other HR certification compares.

      • How to Get Certified
      • Eligibility Criteria
      • Exam Details and Fees
      • SHRM-CP
      • SHRM-SCP
      • Which Certification is Best for Me
      • Certification FAQs
    • Prepare for the Exam

      Give yourself the best chance to pass your SHRM certification exam.

      • Exam Preparation
      • SHRM BASK
      • SHRM Learning System
      • Instructor-Led Learning
      • Self-Study
      • Study Aids & Add-ons
    • Recertification

      Recertify your SHRM Credentials before your end date!

      • Specialty Credentials
      • Qualifications
  • Topics & Tools
    Topics & Tools

    Stay up to date with workplace news and leverage our vast library of resources to streamline day-to-day HR tasks.

    The white house in washington, dc.
    Executive Order Impact Zone

    Do not abandon, but evaluate and evolve. It is about legal, equal opportunity for all.

    • News & Trends

      Follow breaking news and emerging workplace trends.

      Legal & Compliance

      Stay informed on workplace legal updates and their impacts.

      From the Workplace

      Explore diverse perspectives from your peers on today's workplaces.

      Flagships

      Get curated collections of podcasts, videos, articles, and more produced by SHRM.

    • HR Topics
      • AI in the Workplace
      • Civility at Work
      • Compensation & Benefits
      • Inclusion & Diversity
      • Talent Acquisition
      • Workplace Technology
      • Workplace Violence Prevention
      SEE ALL
      SHRM Research
    • Tools & Samples

      Access member resources and tools to streamline HR tasks.

      • Forms & Checklists
      • How-To Guides
      • Interactive Tools
      • Job Descriptions
      • Policies
      • Toolkits
      SEE ALL
      Ask an Advisor
  • Events & Education
    Events & Education

    SHRM25 in San Diego, June 29 - July 2, 2025
    Join us for SHRM25 in San Diego

    Register for the World’s Largest HR Conference being held on June 29 - July 2, 2025

    • Events
      • SHRM25
      • The AI+HI Project 2025
      • INCLUSION 2025
      • Talent 2026
      • Linkage Institute 2025
      SEE ALL
      Webinars
    • Educational Programs

      Designed and delivered by HR experts to empower you with the knowledge and tools you need to drive lasting change in the workplace.

      Specialty Credentials

      Demonstrate targeted competence and enhance credibility among peers and employers.

      Qualifications

      Gain a deeper understanding and develop critical skills.

    • Team Training & Development

      Customized training programs unique to your organization’s needs.

  • Business Solutions
  • Advocacy
    Advocacy

    Make your voice heard on public policy issues impacting the workplace.

    Advocacy
    SHRM's President & CEO testifies to Congress on "The State of American Education"
    • Policy Areas
      • Workforce Development
      • Workplace Inclusion
      • Workplace Flexibility & Leave
      • Workplace Governance
      • Workplace Health Care
      • Workplace Immigration
      State Affairs

      SHRM advances policy solutions in state legislatures nationwide.

      Global Policy

      SHRM is the go-to for global HR leaders and businesses on workplace matters.

    • Advocacy Team (A-Team)

      SHRM’s A-Team is a key member benefit, giving you the tools, insights, and opportunities to shape workplace policy and drive real impact.

      Take Action

      Urge lawmakers to support policies that create lasting, positive change.

      Advocacy & Legislative Resources

      Access SHRM’s curated policy materials and content.

    • SHRM-Led Coalitions
      • Generation Cares
      • The Section 127 Coalition
      • Learn More & Partner with SHRM Government Affairs
  • Community
    Community

    Woman raising hand in group
    Find a SHRM Chapter

    Easily find a local professional or student chapter in your area.

    • Chapters

      Find local connections from over 607 chapters and state councils and create your personalized HR network.

      SHRM Connect

      Post polls, get crowdsourced answers to your questions and network with other HR professionals online.

      SHRM Northern California

      Join SHRM members in the greater San Francisco Bay area for local events and networking.

    • Membership Councils

      Learn about SHRM's five regional councils and the Membership Advisory Council (MAC).

      • Membership Advisory Council
      • Regional Councils
    • Volunteers

      Learn about volunteer opportunities with SHRM.

      • Volunteer Leader Resource Center
Close
  • Membership
  • Certification
    back
    Certification
    Smiling asian student studying in library with laptop books doing online research for coursework, making notes for essay homework assignment, online education e-learning concept
    Get Certified!

    Be recognized as an HR leader with your SHRM-CP or SHRM-SCP credential.

    • How to Get Certified

      Demonstrate your ability to apply HR principles to real-life situations. No other HR certification compares.

      • How to Get Certified
      • Eligibility Criteria
      • Exam Details and Fees
      • SHRM-CP
      • SHRM-SCP
      • Which Certification is Best for Me
      • Certification FAQs
    • Prepare for the Exam

      Give yourself the best chance to pass your SHRM certification exam.

      • Exam Preparation
      • SHRM BASK
      • SHRM Learning System
      • Instructor-Led Learning
      • Self-Study
      • Study Aids & Add-ons
    • Recertification

      Recertify your SHRM Credentials before your end date!

      • Specialty Credentials
      • Qualifications
  • Topics & Tools
    back
    Topics & Tools

    Stay up to date with workplace news and leverage our vast library of resources to streamline day-to-day HR tasks.

    The white house in washington, dc.
    Executive Order Impact Zone

    Do not abandon, but evaluate and evolve. It is about legal, equal opportunity for all.

    • News & Trends

      Follow breaking news and emerging workplace trends.

      Legal & Compliance

      Stay informed on workplace legal updates and their impacts.

      From the Workplace

      Explore diverse perspectives from your peers on today's workplaces.

      Flagships

      Get curated collections of podcasts, videos, articles, and more produced by SHRM.

    • HR Topics
      • AI in the Workplace
      • Civility at Work
      • Compensation & Benefits
      • Inclusion & Diversity
      • Talent Acquisition
      • Workplace Technology
      • Workplace Violence Prevention
      SEE ALL
      SHRM Research
    • Tools & Samples

      Access member resources and tools to streamline HR tasks.

      • Forms & Checklists
      • How-To Guides
      • Interactive Tools
      • Job Descriptions
      • Policies
      • Toolkits
      SEE ALL
      Ask an Advisor
  • Events & Education
    back
    Events & Education
    SHRM25 in San Diego, June 29 - July 2, 2025
    Join us for SHRM25 in San Diego

    Register for the World’s Largest HR Conference being held on June 29 - July 2, 2025

    • Events
      • SHRM25
      • The AI+HI Project 2025
      • INCLUSION 2025
      • Talent 2026
      • Linkage Institute 2025
      SEE ALL
      Webinars
    • Educational Programs

      Designed and delivered by HR experts to empower you with the knowledge and tools you need to drive lasting change in the workplace.

      Specialty Credentials

      Demonstrate targeted competence and enhance credibility among peers and employers.

      Qualifications

      Gain a deeper understanding and develop critical skills.

    • Team Training & Development

      Customized training programs unique to your organization’s needs.

  • Business Solutions
  • Advocacy
    back
    Advocacy

    Make your voice heard on public policy issues impacting the workplace.

    Advocacy
    SHRM's President & CEO testifies to Congress on "The State of American Education"
    • Policy Areas
      • Workforce Development
      • Workplace Inclusion
      • Workplace Flexibility & Leave
      • Workplace Governance
      • Workplace Health Care
      • Workplace Immigration
      State Affairs

      SHRM advances policy solutions in state legislatures nationwide.

      Global Policy

      SHRM is the go-to for global HR leaders and businesses on workplace matters.

    • Advocacy Team (A-Team)

      SHRM’s A-Team is a key member benefit, giving you the tools, insights, and opportunities to shape workplace policy and drive real impact.

      Take Action

      Urge lawmakers to support policies that create lasting, positive change.

      Advocacy & Legislative Resources

      Access SHRM’s curated policy materials and content.

    • SHRM-Led Coalitions
      • Generation Cares
      • The Section 127 Coalition
      • Learn More & Partner with SHRM Government Affairs
  • Community
    back
    Community
    Woman raising hand in group
    Find a SHRM Chapter

    Easily find a local professional or student chapter in your area.

    • Chapters

      Find local connections from over 607 chapters and state councils and create your personalized HR network.

      SHRM Connect

      Post polls, get crowdsourced answers to your questions and network with other HR professionals online.

      SHRM Northern California

      Join SHRM members in the greater San Francisco Bay area for local events and networking.

    • Membership Councils

      Learn about SHRM's five regional councils and the Membership Advisory Council (MAC).

      • Membership Advisory Council
      • Regional Councils
    • Volunteers

      Learn about volunteer opportunities with SHRM.

      • Volunteer Leader Resource Center
Join Today
Renew
Rejoin Now
Renew
  • Store
    • Global
    • India
    • MENA
  • About
  • Book a Speaker
  • Foundation
  • Executive network
  • CEO Circle
  • Enterprise Solutions
  • Linkage Logo
SHRM
Sign In
  • Account
    • My Account
    • Logout
Close

  1. Topics & Tools
  2. Workplace News & Trends
  3. HR Magazine
  4. How HR Can Prepare for the Next Recession
Share
  • Linked In
  • Facebook
  • Twitter
  • Email

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Vivamus convallis sem tellus, vitae egestas felis vestibule ut.


Error message details.

Copy button
Reuse Permissions

Request permission to republish or redistribute SHRM content and materials.


Learn More
News

How HR Can Prepare for the Next Recession

Economic downturns are inevitable, so HR should act now to prepare for the next one.

February 22, 2017 | Tamara Lytle



Introduction

​Nearly 9 million Americans lost their jobs during the last recession. The unemployment rate peaked at 10 percent. More than 170,000 small businesses closed. And it could happen again—maybe this year.

Recessions are less predictable than taxes but as inevitable as death. Business cycles tend to run for seven or eight years, and the most recent economic downturn—the Great Recession—ended in June 2009.   

The chance of another slump this year is 20 or 25 percent, according to Gregory Daco, head of U.S. macroeconomics for Oxford Economics, a U.K.-based economic forecasting group. (The odds of the pendulum swinging the other way and the economy growing at a higher rate are roughly the same, he says.)

​“We should always be prepared for anything. That’s what any smart business would do,” says Miranda Kitterlin, assistant professor of hospitality management at Florida International University.

A recession forces painful choices for HR, so it makes good strategic sense to take steps now in anticipation of the next slump. Should the company reduce hiring, cap bonuses, alter its mix of staff and contractors? Should recruiters work overtime trying to fill openings knowing that unfilled positions may be eliminated?

Absent a crystal ball, economists suggest focusing on macroeconomic signs to determine if a recession is approaching: falling payroll, rising unemployment and declining quit rates. However, those data points generally lag the actual onset of a downturn. Instead, HR departments can find a quicker source of information that’s close to home: their own recruiters. 

“When they tell you the number of job postings is going down critically, it’s usually three to six months ahead of the recession,” says Paul Falcone, an author and longtime HR executive in the entertainment industry who now works as an independent consultant in San Diego.

When a recession begins, there’s no secret formula for HR. It’s hard to know what to cut because each company and industry is different. Hospitality, for instance, may be the first to take a hit in a downturn as tourists eliminate extras. But the sector also has high labor costs that often can’t be slashed too deeply since beds and food still need to be made. Whatever the industry, HR can act now to prepare.

Reviewing Operations

​There’s no substitute for good information. Armed with the right data, you can confidently adjust organizational policies based on economic conditions.

Track metrics. Measuring the right things is an important start. “In planning for a recession, if you don’t have metrics in place, you’ve got to get them. Otherwise, you’re shooting in the dark,” says Debra Solt, director of workforce training and economic development at PBS in Las Vegas. “I look to HR to be the one that has a calming effect. You don’t want knee jerk. You’re making decisions with facts and figures.”

Data on productivity, compensation, training and other items related to business goals and financial results can help an organization know what impact downsizing will have. Cutting across the board generally isn’t effective, Solt notes, so HR needs the information to make changes strategically—but carefully. “If you cut critical positions, it can make a company anorexic,” she says.

​Document performance issues. Before a recession, it’s important for HR to make sure that evaluations accurately reflect the work of employees. Some businesses think they can sweep underperforming employees out as part of a reduction in force. But if there’s no indication of problems in reviews, the organization opens itself up to lawsuits. A less-productive worker who’s older, for instance, can file suit claiming he was laid off because of age. “You don’t want to be stuck with a nine-month litigation. That will upset your team,” Falcone says.

Allocate scarce resources. Companies anticipating a poor economy can save money by making cuts to merit increases and bonuses. It’s up to HR to figure out how to allocate limited bonus money by working with managers and looking at performance reviews, Falcone points out. But salary reductions are another story. Starting new employees at lower levels can lead to discontent when they find out colleagues are earning more. “A lot of times employers think they are going to save money on salary … but you have to keep internal equity in mind,” he says.

Evaluate ongoing programs. Data can reveal what programs can be trimmed and which are effective and needed. For instance, if the company has a high rate of workplace accidents, it might need to increase, not cut, safety training.

‘A downturn, for a smart HR person, is a golden opportunity to highlight ... business acumen.’ 
—Tom Wimer, OneDigital

Training and development programs tend to be first on the chopping block. But training is often critical since it builds capabilities and focuses workers on the future, says consultant Tom Wimer, principal of human capital solutions for OneDigital in Reston, Va.

Using a SWOT (strengths, weaknesses, opportunities and threats) analysis, HR can pull together cost-benefit information about which initiatives contribute the most to the business and its bottom line. Which programs should be scratched depends on the organization and its values and weaknesses, so the analysis will differ by employer.

HR departments need to ask themselves, “What can we eliminate, what can we automate, what can we outsource?” Wimer says.

Recruiting is another function that is often flagged to be scaled back, and sometimes reductions there make good sense. “If you’re rightsizing your organization, you may need fewer recruiters,” Solt says.

HR departments should be willing to look hard at their own budgets instead of worrying about building fiefdoms, Wimer says. “A downturn, for a smart HR person, is a golden opportunity to highlight their business acumen,” he says. “Using good business logic, to come back to the organization and say, ‘We’re not just a cost center. We’ve got a business head that will save this organization money.’ That’s the way to absolutely become a hero.”

Managing Staff

​HR professionals who have been around a while know that the impact of a recession can be eased when the organization is in a position to react quickly to changing conditions.

Ensure flexibility. Develop a plan to move people to where they’re needed most. Look at the age and other demographics of your workforce so you can anticipate future needs and groom people to take on jobs from within the company when a slowdown suspends hiring, Solt advises.

Technology can affect how future staffing needs may change. Solt’s PBS station, for instance, is making hiring decisions strategically because it’s incorporating new technology that will impact staffing levels and comes with high capital costs that need to be absorbed. She has prepared contingency plans for the station so it can cut or expand as the economy changes. A company implementing new technology, she says, needs to think about both which jobs can be reduced and which ones, such as IT positions for people to support the new technology, need to be increased.

​Another creative approach to staffing: alternative work schedules, such as 30-hour workweeks, which can reduce costs while preserving continuity, Wimer suggests. Technology might also be used to perform some of the jobs the HR staff handles, such as onboarding or training.

When staffing is tight and everyone needs to pitch in and take on multiple roles, cross-training can teach workers to handle additional duties. In the HR department, for instance, recruiters can help onboard and manage employees during the first 90 days of employment, Falcone says. (That has the additional bonus of giving them an extra incentive to hire good people.)

Optimize outsourcing. Many companies that are skittish about the economy have already become more flexible by carefully deciding what work should be handled by employees versus what should be outsourced. An agile outsourcing strategy can allow organizations to pull back more quickly when necessary, Wimer says.

Conversely, it’s important during a recession to prioritize the retention of full-time staff ahead of contractors and temporary workers. Otherwise, you can breed discontent among your top people and risk losing them. “Your best players are going to have choices,” Falcone says. HR can help keep them in the fold by improving onboarding; training managers; and sussing out whether departures are caused by deficiencies in management, hiring or training, which can be learned through exit interviews to identify underlying problems.

Having data handy about how much the company is spending on all of its buckets of workers helps HR make good decisions. At large businesses, contractors are spread across myriad spreadsheets without, sometimes, a centralized place to look at labor costs overall. HR can help gather that data, working with the supply chain and finance departments.

One tough challenge, though, is that publicly traded companies often see their stock price rise when they announce layoffs, Falcone notes. Cutting contractors, on the other hand, doesn’t get as much love from the markets.

Avoid recurring layoffs. Organizations need to avoid a demoralizing cycle of repeated layoffs. “Try and strip the Band-Aid off at the same time so people can go through this gut-wrenching exercise, but then there’s a sense it’s done,” says Falcone, who has been on both sides of the desk during cutbacks, including being laid off during upheaval in the entertainment industry. “You’re not going to get the best out of people when they are scared for long periods of time. Frightened people don’t do much good.”

Showing Respect

​Communication is more important than ever during a downturn. The following tips provide advice on how to connect with employees during tough times.

Keep employees informed. Companies need to walk a fine line between being transparent as a sign of respect to workers and not scaring them into searching for jobs elsewhere. “When in doubt, err on the side of transparency,” Falcone advises.

No one appreciates walking into work and finding out the business is cutting half the staff that day with no warning.

​“Communication is a good business practice in good times and bad,” Kitterlin says. “If you’re communicating to your employees along the way where your company is, you don’t burn any bridges.”

[SHRM members-only resource: Toolkit—Managing Downsizing by Means of Layoffs]

A strong social media policy will be important. HR professionals should keep a watch out for and respond to disgruntled laid-off workers who could tarnish the organization’s image among future hires when the economy revs up again. HR staff can publicly respond to employee comments made on the website Glassdoor on behalf of their employer, for example, providing additional context and information.

Part of avoiding a social media backlash is, of course, being humane in handling layoffs. A business that mistreats workers during a recession will find that, after it’s over, the people who are left “tend to jump ship right away,” Wimer says.

Demonstrate gratitude. It’s important to show appreciation to staff who are taking on more responsibilities as others leave, Kitterlin says. That can come in the form of new titles, development opportunities or other recognition. Any show of appreciation helps quell workers’ fears that they will be the next ones cut.

Something as simple and inexpensive as a Starbucks gift card or pizza lunch can show workers that the company notices and acknowledges their efforts. “You don’t have to spend a lot of money to tell people ‘thank you,’ ” Wimer says.

‘HR doesn’t get to sleep. You work during a recession. You work out of a recession.’
—Debra Solt, PBS

Show empathy. One of the worst practices in handling layoffs may be to treat departing workers like criminals and walk them out the door with security—and then to discourage remaining workers from ever mentioning them. “You have to have a certain level of respect for your employees,” Falcone says. “You’ve got to heal the wounds.”

That might mean having the department head sit down with remaining workers to explain what jobs were eliminated and that departing colleagues will receive severance and other benefits. And HR can help train managers to let them know it’s OK to tell the laid-off workers that their work was appreciated and that they will be eligible to reapply when the company starts hiring again.

“It’s really about who are we as a company and do we have a consistent message,” Falcone says. “Can we show gratitude to people who are being laid off through no fault of their own? You strip people of their dignity when they’re most vulnerable, and they … call 1-800-LAW-OFFICE and want their pound of flesh.”

Recessions end eventually, and HR needs to have a plan to kick-start hiring when the recovery begins. “HR doesn’t get to sleep,” Solt says. “You work during a recession. You work out of a recession. You have to be prepared to work quickly. If you don’t, your competition will.”  

Tamara Lytle is a freelance writer in the Washington, D.C., area.

Was this article useful? SHRM offers thousands of tools, templates and other exclusive member benefits, including compliance updates, sample policies, HR expert advice, education discounts, a growing online member community and much more. Join/Renew Now and let SHRM help you work smarter. 

COMMUNICATION EXTERNAL RECRUITING TALENT ACQUISITION COMMU


Business Acumen

Related Articles

Kelly Dobbs Bunting speaks onstage at SHRM24
(opens in a new tab)
News
Why AI+HI Is Essential to Compliance

HR must always include human intelligence and oversight of AI in decision-making in hiring and firing, a legal expert said at SHRM24. She added that HR can ensure compliance by meeting the strictest AI standards, which will be in Colorado’s upcoming AI law.

(opens in a new tab)
News
A 4-Day Workweek? AI-Fueled Efficiencies Could Make It Happen

The proliferation of artificial intelligence in the workplace, and the ensuing expected increase in productivity and efficiency, could help usher in the four-day workweek, some experts predict.

(opens in a new tab)
News
How One Company Uses Digital Tools to Boost Employee Well-Being

Learn how Marsh McLennan successfully boosts staff well-being with digital tools, improving productivity and work satisfaction for more than 20,000 employees.

HR Daily Newsletter

Stay up to date with the latest HR news, trends, and expert advice each business day.

Success title

Success caption

Manage Subscriptions
  • About SHRM
  • Careers at SHRM
  • Press Room
  • Contact SHRM
  • Book a SHRM Executive Speaker
  • Advertise with Us
  • Partner with Us
  • Copyright & Permissions
  • Post a Job
  • Find an HR Job
Follow Us
  • LinkedIn
  • Facebook
  • Twitter
  • Instagram
  • YouTube
  • SHRM Newsletters
  • Ask An Advisor

© 2025 SHRM. All Rights Reserved

SHRM provides content as a service to its readers and members. It does not offer legal advice, and cannot guarantee the accuracy or suitability of its content for a particular purpose. Disclaimer


  1. Privacy Policy

  2. Terms of Use

  3. Accessibility

Join SHRM for Exclusive Access to Member Content

SHRM Members enjoy unlimited access to articles and exclusive member resources.

Already a member?
Free Article
Limit Reached

Get unlimited access to articles and member-exclusive resources.

You've reached the limit of 1 free article this month. Join to access unlimited articles and member-only resources.

Already a member?
Free Article
Exclusive Executive-Level Content

This content is for the SHRM Executive Network and Executive Content Subscription members only.

You've reached the limit of 1 free article this month. Join the Executive Network and enjoy unlimited content.

Already a member?
Free Article
Exclusive Executive-Level Content

This content is for the SHRM Executive Network and Executive Content Subscription members only.

You've reached the limit of 1 free article this month. Join and enjoy unlimited access to SHRM Executive Network Content.

Already a member?
Unlock Your Career with SHRM Membership

Please enjoy this free resource! Join SHRM for unlimited access to exclusive articles and tools.

Already a member?

Your membership is almost expired! Renew today for unlimited access to member content.

Renew now

Your membership has expired. Renew today for unlimited access to member content.

Renew Now

Your Executive Network membership is nearing its expiration. Renew now to maintain access.

Renew Now

Your membership has expired. Renew your Executive Network benefits today.

Renew Now