Operating in tough economic conditions

Recession and economic downturns present challenges for both employers and employees. Below are key actions for people professionals to consider, with links to relevant CIPD resources to help you support your organisation, limit redundancies, and look after your own wellbeing.

Key considerations

Workforce planning

Use our workforce planning and job design factsheets to review the structure of work, teams and job designs to capture synergies. Focus particularly on improving the capability of your line management and customer service. Think long term – protect your training and development budget and, if redundancies are planned, remember that recruiting when the market picks up can be difficult, costly and impact on your reputation.

Keeping employees engaged and informed

Talk to your employees, even when there is little concrete news. Foster open and transparent dialogue, provide direction and manage expectations. Keep your people managers up-to-date – give them tangible support and tools to manage difficult conversations.

Consider non-financial incentives to keep people motivated, such as team-building days and employee awards.

Supporting employees’ wellbeing

Set out processes to deal with workplace stress and potential conflict at an early stage. Recognise the psychological burden of economic turmoil and rising living costs. Establish or review workplace mental health support and financial wellbeing support as well as occupational health provisions to minimise anxiety, especially if there are pay or benefits cuts. If pay is affected, focus on protecting those on the lowest salaries.

Managing a reduction in your workforce

Exhaust all cost-saving options before making job cuts. Cut back on recruitment and review use of temporary staff or outsourcing. Reduce or pause overtime working and ask staff to suggest productivity improvements. Retrain and redeploy staff where possible; consider sabbaticals, temporary lay-offs, short time working, or offering the option of working four days a week for a 20% pay cut. Consider savings through organisational benefits, such as temporarily reducing employer pension contributions, amending the company car policy and so on.

Develop a strategy for redundancy now. It is sensible to have a policy and procedures in place, and have informed employees, before you need them. Develop a skills audit to identify the skills and roles your organisation needs and who has them – to help ensure vital skills aren’t lost during voluntary redundancy. Make sure you understand the law relating to redundancies and above all, manage your redundancies fairly and equitably.

Support employees facing redundancy. Your treatment of departing employees will affect the attitudes and loyalty of those who remain. Explore offering outplacement services and counselling to help them find new employment. Give time off to look for other work or arrange training. Explore possible help or financial support for training and advice through the UK Government website and agencies such as Jobcentre Plus.

Support the remaining workforce. Review team structures to create a fresh start and rearrange workspaces to eliminate gaps where people used to work. Provide documentation, training and support to help employees manage new responsibilities. Use positive language and focus messages on the opportunities as well as the challenges ahead. 

Working with unions and employee representatives

Consult with the appropriate trade union. If there isn't one, set up a special employee forum or consultative body ahead of any cuts to inform and consult with your employees and their representatives. Provide your employee representatives with training, paid time-off and appropriate facilities to engage with those they’re representing.

Build the capability inside the organisation to manage industrial relations.

Manage your own wellbeing

Don’t forget to look after yourself. Operating in difficult times, especially when it involves redundancies, will be stressful and draining for HR teams. Our wellbeing guide for people managers provides practical resources and principles to support anyone involved in managing people. And CIPD members have free access to our wellbeing helpline services.