As a recession looms, many organizations will be thinking about how they can adjust their budgets to compensate for the economic downturn. Obviously, many business leaders (over half of them, according to a survey conducted by KPMG) consider lay-offs as the first port of call for reducing overhead expenses. After all, salaries and wages arguably constitute the majority of a company's costs.
However, dismissing employees might not be the smartest financial decision. Given the current labor and skills shortages, it's more important than ever to retain the highly skilled and experienced workers you already have on your team. It's not wise to cut down on sustainability or diversity, equity and inclusion (DEI) initiatives, either.
So, as an employer, what other options are you left with when it comes to budgets and your workforce? Let's explore some options:
Stay committed to your environmental, social and governance efforts
Although programs dedicated to reducing an organization's negative impact on the environment or improving workplace inclusivity may seem like an unnecessary expense during economically tough times, the payoff is worth it.
As CNBC explains, consumers increasingly prefer to purchase from brands that are responsible. During periods when customers have less spending power, staying in favor with your audience is invaluable for keeping your business afloat. So, even if you have to decrease your budget in this regard, don't cut it altogether.
Upskill your employees and hire internally
The recruitment and onboarding process for new employees is undoubtedly a costly exercise. Implementing training programs to improve your current workforce's skills can be a more cost-effective alternative to hiring workers.
Although such initiatives do often cost a pretty penny, focusing on your existing team members' capabilities is almost guaranteed to be a more affordable strategy in the long run. If you choose to promote employees, make sure you raise their pay appropriately to avoid losing them. In fact, on that note, it's prudent not to decrease salaries at all. On the contrary, you might want to increase remuneration for strong retention levels.
Continue offering employee benefits
Yes, paid time off and sick leave can decrease productivity. However, burnout and chronic illness are even more detrimental to your company's bottom line. By continuing to provide your employees with PTO and sick leave (within reason, of course), you can maintain a healthy and efficient workforce. Leave days should already be factored into your budget, so don't do away with them.
If your workers are part of a health insurance plan, keep it in place. Not only do these benefits help employees perform to the best of their ability, but they also encourage workers to stay at your organization, and high employee retention rates are crucial during lean periods. Further, they help workers cope with the added stresses associated with a recession.
Regardless of which avenue(s) you choose to pursue, you should put your employees first.
