5 Powerful Ways HR Can Prepare for Economic Disruption

There’s a growing insecurity around the U.S. economy. More than 4 in 10 CHROs (43%) said current economic conditions are poor or very poor, according to SHRM’s Q2 2025 CHRO Economic Outlook, while 53% predicted poor or very poor conditions in the next six months. That unease is even stronger for U.S. workers, 97% of whom agree or strongly agree that there is significant economic uncertainty in the U.S., according to the SHRM June 2025 Current Events Pulse survey.

U.S. tariff policy is a major contributor to the economic malaise. A majority of HR professionals (70%) say their organization is at least slightly concerned about long-term implications of recent tariff changes, the June SHRM survey found. But those concerns aren’t imminent: While about two-thirds of HR professionals (66%) anticipate a negative impact on the economy from tariffs within the next year, just 28% believe there will be negative impacts in the next month, with 71% expecting no short-term impact.

So far, that concern hasn’t turned into action. More than half (55%) of HR professionals report no changes to their workforce strategy due to current U.S. tariff policy, and 84% say their organization hasn’t communicated about the potential impact.

Tariffs are just one potential source of disruption. Changes to immigration policy, the rise of AI, and geopolitical unrest all have the capacity to shake up industries — and even entire economies. Prudent HR departments should be aware of the risks and begin thinking about how they might respond if conditions in their sector began to shift.

“Changing economic factors are impacting organizations’ top and bottom lines,” said Emily Field, a partner at McKinsey & Company. “A great confluence of factors is making organizations say, ‘How do we pause and take stock and then how do we move forward?’”

HR leaders have a critical role to play in navigating economic disruptions. By proactively focusing on five core strategic disciplines, HR professionals and executives can position their organization to thrive even in the most difficult conditions.

Workforce Planning for Agility  

Effective workforce planning is more critical than ever in a climate of ongoing economic uncertainty. HR leaders must balance agility with precision — ensuring the organization has the right talent in the right roles, while maintaining the flexibility to pivot as conditions change.

“In a year like 2025, where uncertainty and volatility are the norm, organizations need to build strategic workforce planning models that are inherently flexible and scenario-based,” said Charlotte Seiler, an associate partner at McKinsey & Company. “The key is to think long-term — typically over a three-to-five-year horizon — but with the ability to adapt as the drivers of work evolve.” 

Seiler said planning models should reflect not just where the business is headed, but also how external factors, such as economic shifts or technological advancements, might impact workforce needs. “Flexibility is critical as no forecast will ever be perfect, and course corrections will inevitably be required,” she said.

Any consideration of talent planning must include a forecast of the ideal composition of fixed and flexible talent, said Amit Parmar, a veteran talent acquisition leader and CEO of employment brand platform Cliquify in New York City. HR should consider creating a mix of full-time, part-time, contract, and on-demand talent pools that allow the organization to scale up or down as needed without compromising continuity or culture, he said. 

By modeling various economic outcomes — such as a prolonged downturn, rapid recovery, or sector-specific disruptions — HR leaders can prepare for multiple futures. This forward-looking approach allows HR teams to stress-test workforce plans, identify talent vulnerabilities, and determine where to invest or conserve resources.

Megan Bazan, vice president of people, people partners and talent management at Cisco, said her teams work closely with business leaders to understand critical business milestones, as well as expansion plans for how certain teams will leverage AI, allowing HR to assess where gaps or needs are. 

By analyzing headcount, productivity metrics, and labor costs, HR can identify areas of overstaffing and underutilization, as well as critical skill shortages. This insight enables smarter decisions about redeployment, hiring freezes, and targeted upskilling efforts, ensuring that adjustments are strategic rather than reactive.

SHRM CHRO Jim Link, SHRM-SCP, agreed, saying that times of change are an opportunity to be creative and provide nontraditional solutions. “Rather than easy cost-cutting, business leaders expect their CHROs to find new ways to think about operational effectiveness and productivity,” he said. This is all while “setting the standard for guiding the workforce through times of change with empathy.”

Upskilling and Reskilling for Future Competitiveness  

The rise of automation and digital transformation is fundamentally reshaping the skill sets needed to succeed. Demand for data literacy, digital collaboration, and machine learning is growing. At the same time, soft skills such as analytical thinking, agility, and leadership are poised to grow in importance, according to the World Economic Forum’s Future of Jobs Report 2025. The organizations that invest in talent development are better positioned to adapt, innovate, and maintain a competitive edge.

“Talent development is a cornerstone of resilience and ensures that teams can be flexible and agile, especially during times of uncertainty,” Bazan said. “While technical upskilling is critical to keeping pace with innovation, they cannot be separated from what we call ‘power skills,’ which include analytical thinking, empathy, creative problem-solving, curiosity, and adaptability. These human-centric capabilities are what differentiate high-performing teams and strong leadership.”  

For HR leaders, identifying skills gaps and aligning training programs with future business needs is a core part of workforce strategy. 

“Make sure you have a good understanding of the competencies and capabilities you currently have in the organization,” Link said. “Traditional ways to do this include skill inventories and capability studies. During a time of flux, the skills in the organization will take on a different value. Knowing what you have and how that manifests itself in your workforce is a requirement before entering into an economic downturn.” 

HR must start preparing now for future training and development, said Robin Erickson, Ph.D., head of human capital research at The Conference Board. “It takes a long time to create learning content, and the CEO is going to show up and say we need it now,” she explained.

Erickson said that employees will need to be developed to be more agile and resilient, while managers should be trained in change management. “People were not traditionally taught to be that agile, and with the speed of change happening so fast now, it really is a challenge,” she said.  

Ultimately, talent development isn’t just a response to disruption — it’s a proactive lever for growth. “Developing talent is often deprioritized in uncertain times,” Field said. “But it’s particularly in these times that we need to build on learning. If the jobs are changing, what are the next-level skills that workers will need? If roles are going away, how does your career pathing change?”

Link added that the best leaders build their teams up during a crisis. “When times are uncertain, that’s when you double down on your employees,” he said. “Invest in their knowledge, skills, and capabilities when things are down, because when the cycle turns, you spring out of it faster than your competitors.”

Retaining Critical Talent During Turbulent Times  

Periods of economic and organizational uncertainty pose serious challenges for HR leaders, and chief among them is the risk of losing key talent. Turnover risk rises significantly during uncertainty due to a convergence of factors, including restructuring, hiring freezes, shifting business priorities, and a perceived lack of career stability. Stressed employees are not only more likely to underperform, they’re also more likely to burn out and leave, taking institutional knowledge and critical skills with them.

“First you have to know what your baseline is,” Link said. “Survey, use stay and exit interviews, do everything you can to assess the mood of your workforce. Then, depending on the culture you have, decide where to invest in order to keep high-performing talent.”

Link said there are many ways to address dissatisfaction other than with more money. “Find out what is important to your workers,” he said. “Great HR leaders understand the needs and motivations of their workforce and work hard to address them.”    

Experts agree that retention strategies must go beyond compensation alone.

“At Cisco, we’ve found that offering flexible work arrangements, maintaining clear, consistent communication around expectations, and prioritizing wellness are key drivers in retaining top talent,” Bazan said. “Flexibility is a key priority for high performers. In fact, 78% of respondents to the Cisco Global Hybrid Work Study 2025 report have considered a career change due to rigid in-office policies.”  

Any employers concerned about recruiting and retention must allow flexibility, Erickson said. “It doesn’t have to be fully remote. But research shows that it’s easier to retain employees if you don’t institute a return-to-office mandate,” she explained.

Implementing a continuous listening strategy is also important, Erickson said: “Doing an employee survey every year or two is not going to cut it.”

Cisco prioritizes cultivating what Bazan calls a “conscious culture,” focused on nurturing trust, transparency, and a supportive work environment. 

“To help achieve this, Cisco places a strong emphasis on gathering employee feedback through surveys and one-on-one conversations, ensuring concerns are addressed and the employee experience is continually improved,” she said.  

To maintain morale and engagement, HR leaders must ensure that support systems are robust and managers are equipped to lead with empathy. At a time when organizational stability feels uncertain, employees look for fairness and care. Focusing on these human factors can be the difference between talent flight and long-term loyalty.

“It’s important to think about how you balance cost-cutting measures with employee morale,” Erickson said. “How you manage layoffs and the survivors of layoffs will have an impact on retention.”

Leveraging Data and Analytics for Strategic HR Decisions

HR leaders are under growing pressure to make decisions that are not only fast but also informed and forward-looking. By harnessing workforce data, HR can better understand trends, predict challenges, and act with precision. Core metrics such as turnover rates, employee engagement scores, and talent pipeline strength provide critical insight into organizational health. 

For example, elevated turnover may point to culture or workload issues, while declining engagement can signal misalignment between leadership and employee sentiment. A robust talent pipeline, meanwhile, reflects the organization’s ability to sustain performance and manage succession risk.

Advanced analytics allows HR teams to track additional metrics such as internal mobility and learning participation rates. These metrics help HR assess whether current strategies are cultivating the right skills and supporting a future-ready workforce.

“Predictive analytics and modeling can also simulate various economic scenarios to guide strategic decisions for success and prioritize where investments are made,” Bazan said. “Furthermore, employee listening and engagement metrics reveal how disruptions affect the workforce. They allow us to proactively address issues that could lower productivity or increase turnover, allowing leaders to take the necessary action to boost engagement and retention.”

Erickson said that predictive workforce analytics that uses external labor market data and internal workforce data is critical for forecasting, but many organizations don’t try to surface this data because it’s harder to come up with than lagging metrics.    

“I would look at future labor supply and demand, contingency planning, identifying at-risk employees [for attrition],” she said. 

Additionally, paying attention to health care and wellness spending can be illuminating, Link said. “If I see a spike in employees reaching out to our well-being providers, that is a clue,” he said. “That means that the organization is stressed. A signal that something is wrong.”

Link said he tracks the data but also makes sure to listen to what people tell him in the hallway. 

“Asking someone how they are doing and then sticking around to listen to the response goes a long way toward helping address whatever may be going on in the organization,” he said. “Leaders should be more purposefully in touch with their workforce in times of volatility.”

Cultivating a Culture of Resilience  

Resilience is critical for retaining your employees, especially during times of crisis. Employees who demonstrated low levels of resilience were 1.5 to 3 times more likely to have thought about quitting or exploring alternate jobs, according to SHRM and Gap International’s 2022 Organizational and Employee Resilience Report.

“Organizational resilience is the ability to absorb disruption, adapt with agility, and emerge stronger,” said Marjorie Morrison, SHRM’s executive in residence for mental health. “It’s built on more than systems. It’s about building a work culture where people feel supported, empowered, and connected to a shared purpose.”

During volatile periods, maintaining a level of stability is important for employees’ psychological safety.

“During crisis, it’s often not the most efficient companies that succeed — it’s the ones with the most adaptable and well-supported people,” Morrison added.

Conclusion

You have the power to drive change in your organization and empower your high-potential leaders to innovate through economic uncertainty. Developing a team that can weather the storm is critical.

“As HR leaders and business executives see AI adoption growing, having the right talent becomes even more important,” Field said. “The role of people is top of mind for business leaders. Can your employees pivot and build new skills? Can they manage a team of AI agents? HR leaders have a real opportunity to meet this moment and build a future-proof workforce.” 

By aligning your talent strategies with your organization’s long-term mission and goals, you’ll be ready to navigate through times of change.