Before COVID-19, human resources (HR) was rarely in the top 5 (or 10) concerns for most companies.
While things have clearly changed for the better with remote work adoption, the Great Resignation, the explosion of HR tech, and a renewed focus on culture building and talent development for employer branding, the progress must not be taken for granted.
While no one knows exactly when the economy will contract, the stock market’s fall, rising interest rates, and cooling venture capital (VC) markets are all red flags. Winter is certainly coming.
As we have learned from past recessions and I learned personally during the start of COVID-19, HR is not only “last in” but “first out” when business goes south. Perks and benefits are suspended. Professional development budgets are cut or eliminated. Layoffs follow, and skeleton HR staff are maintained.
Command-and-control leadership is brusquely returned (if it ever left) and strategic HR is again seen as a luxury, even a liability.
Maybe this time will be different. But maybe it won’t. Maybe the red-hot market for talent will cool down and the tables will turn back toward employers. Maybe not, at least not soon.
Maybe remote work is here to stay as an option for most. Maybe many employers will double down on in-person work.
Either way, HR has evolved and is no longer a talent backwater or afterthought for running a successful business. Many, if not most, businesses just starting out are already seeing the benefits of lower overhead on benefits and commutes, as well as more eager workers in multiple time zones.
And of course, the expectations of top talent have changed. Few are keen to waste an entire workday commuting every week. Flexible work hours are more valuable than bonuses and high salaries. Location independence is the only way to save up for a family and real estate outside of large urban areas.
If you’re a CEO or founder gearing up for the inevitable, you would do well not to follow past road maps for HR, culture, and talent.
Here are some guidelines to keep in mind:
1. Avoid the temptation to drastically cut headcount and budgets for HR, especially the strategic parts (employer brand, employee experience, learning and development, quality performance management, coaching).
While tactical HR (benefits/payroll, rewards/recognition, employee surveys) can be optimized for savings and growth-hacked without much manpower, the strategic pieces do require meaningful experience and thoughtful strategy and design, plus the stamina to execute.
2. Ignore employee feedback at your own risk. Surveys alone don’t fix problems. Closing loops quickly to address employee concerns shows your people you actually care and want them around. Or they’ll leave quickly.
3. If you have to cut HR headcount, leave at least one strategist and one hungry builder; let go of the middle manager.
4. Get rid of your top-performing drama queens and hire more hungry, resourceful, high-potentials in their place.
5. Prioritize great internal communication from the top down and bottom up. Fear and uncertainty alienate people when the messages are infrequent, mixed, and indirect.
6. Increase, rather than cut, learning and development and coaching. Those who are left on your team must be reskilled, trained, reincentivized, and better equipped to succeed in the face of longer work hours, uncertainty, and limited resources.
7. If you have to significantly cut your software-as-a-service (SaaS) costs, find open-source solutions to implement rather than returning to the Stone Age of HR. Prioritize communications, especially employee listening, along with project management and performance management. Benefits and perks can be retooled to cost less, but the incentives should improve, rather than degrade or stay the same.
8. Before you make any changes in HR headcount or processes, invest a lot of time and resources in documenting, solidifying and optimizing your internal processes, workflows, culture, and communication channels. Without these, you’ll be flying blind when the bad times come. New people can be hired less expensively but can’t be expected to do this hardest and most important of work calmly in a time of hardship and chaos.
Whatever your views of HR and its work, the ship has long sailed since the days of “The Office.” If you want them as partners in growing and scaling—or just keeping afloat—your business, even (and especially) in hard times, you must treat your HR team like adults, including empowering and trusting them to do their best work.
If the last two years are any indication, HR is the front line, not in the back office. Act accordingly, or else.
Award-winning CHRO/Head of Remote/Corporate Trainer, Fortune 500 + Inc 5000, leadership coach, author; CEO: HR, Talent & Systems Consulting