How the Recession May Be Affecting Your Business and What You Can Do about It

"Come gather 'round people, wherever you roam, and admit that the waters around you have grown. And accept it that soon you'll be drenched to the bone. If your time to you is worth savin' then you better start swimmin' or you'll sink like a stone. For the times they are a-changin'." – Bob Dylan

The Global Recession

Re-ces-sion \ri-se-sh?n\ “a period of reduced economic activity”1

Recession: it’s an ugly word, but unfortunately a fact of life—especially these days. The current economic crisis not only affects individuals and businesses in North America, but those around the globe as well.

Nearly every day during the last six months when I’ve opened up the newspaper, there’s been some story about a company that has laid off its employees. The sad truth is that many of these layoffs are targeted toward individuals who have been working for the same company for many years and now are finding themselves looking for work in a job market for which they may not possess the skills required.

So what are these individuals and businesses doing to weather the storm? Well, I guess you could say it depends on the individual and what business he or she is in. Some industries have been harder hit than others (e.g., construction and manufacturing), but one thing is certain—the recession’s effect is being felt by everyone everywhere.

Unemployment Rates on the Rise

During the Great Depression (from 1929 to the mid 1930s), the unemployment rate reached 25 percent. Those kinds of numbers make today’s economic difficulties pale in comparison. That being said, today’s unemployment rates are still steadily rising—with no immediate end in sight.

According to the United States Department of Labor’s Bureau of Labor Statistics (BLS)2, in February 2009, the overall unemployment rate was at 7.2 percent—a 15-year high. Since the current recession began in December 2007, the news has been full of reports of job layoffs. More recently, the US government released a report showing that the number of Americans filing for unemployment benefits was at its highest level in 25 years, as more and more workers sought government assistance.

Unemployment by the Numbers


The Human Element

Managing your workforce when times are good is hard enough; managing it when times are tough can be extremely taxing on everyone involved. Dealing with people and emotions can take its toll, even on the most change-resilient businesses.

One important factor that has to be considered throughout this period of economic difficulty is your people. People are a business’ greatest—and most important—asset. In the Webster Buchanan Research report Managing Change and Growth, the author brings this fact to light by saying: “The importance of the people/performance equation is only just starting to be understood but has important implications for organizations that rely on their human assets to deliver financial success.”4

If this statement is indeed true, then what does a company do when it must lay off the very employees that aid in its success? A financial crisis often allows a business to take a deeper look at its staff and their potential to grow with the company; then, it makes the decision about which ones are expendable. This decision can be based on many factors; however, reasons often given to employees are due to “downsizing” or “a lack of performance.” Another reason may be the simple fact that one employee has less seniority than another.

In large companies, employees already feel like they’re “just another number”—with uncertainty about their opportunity for growth within the firm. During tough economic times (often due to cutbacks), these employees feel even more at risk, and are afraid of being laid off when their “number” is up. Stress levels are high, and employees often fear for their future—and the welfare of their families.

Change Is Perpetual—and Inevitable

Change is perpetual—and inevitable (especially if that change comes by way of an economic crisis). But what happens when the change is global? The US and Canada are just two countries working toward fixing the problem. Let’s take a closer look at just what they’re doing.

Government Stimulus Programs

Canada is attempting to tackle its economic situation by taking a deeper look at its Employment Insurance program. Ken Georgetti, president of the Canadian Labor Congress, says: "The hard working people of this country are getting hammered by job losses. People are fed up with a government that refuses to fix the Employment Insurance (EI) program. Simply put, if the government doesn't fix the problems with EI now, this recession will get a lot worse, more people will suffer and the recovery will take longer."

Georgetti goes on to say that Employment Insurance is an important form of economic stimulus. "It helps people deal with tough times like these. It ensures that while the mill or the factory is shut down, money is in peoples' pockets so the grocery store, shops, and other services in the community aren't driven out of business too."

Canadians are not alone in the fight to keep the economy stimulated. In January 2009, the US President, Barack Obama, unveiled a plan to revitalize the economy in the short term with a stimulus package that will immediately inject $75 billion (USD) into the economy—in the form of tax cuts and direct spending targeted to working families, seniors, homeowners, and the unemployed.5

Besides providing an immediate $250 (USD) tax cut for workers and their families and an additional $250 tax cut to workers and seniors if the economy continues to worsen, the stimulus package will also provide relief to homeowners hit by the housing crisis. President Obama believes that the areas hardest hit by the housing crisis (state and local governments) should be provided immediate, temporary funding too so that the decline in property values does not cause these levels of government to reduce critical public services and cut vital infrastructure spending.6

As the economy slows, state and local governments should avoid postponing major infrastructure spending. Doing so would only exacerbate the economic slowdown.

Managing Your Workforce in a Recession

While governments are hard at work putting together their stimulus packages, companies must also do their part to take care of their employees. Many companies understand these fears, but they often lack a strategy or plan to help calm them. Creating a long-range plan will not only help calm the fears of your employees, it can help motivate and reenergize them as well.

Motivation through Rewards Goes a Long Way

Dealing with the up-and-down cycle of the economy is a part of doing business in a changing world. It’s important to remember, however, that change brought on by recession should be handled in a manner similar to that of any other business change (whether due to a merger or acquisition, organic growth, or a change in business model).

While it’s impossible to control a downturn in the economy, it is possible to control how your business—and more importantly you workforce—will cope. The short- and long-term management of your resources is a crucial aspect of managing a business. In order to get the highest level of performance from your people, your business must continue to develop them—even when times are tough.

A recognition program based on a company’s strategy often helps employees understand its goals more clearly—and then rewards them for delivering. One way to develop this is through the use of human capital management (HCM). HCM—often referred to as talent management—is the strategy of acquiring, retaining, and managing employees. It’s a powerful tool that enables businesses to assess the value of key employees within the organization. By using HCM, organizations can create strategic action plans that are recession-proof.

Mass layoffs are also difficult for those employees left behind. It places extra demand on personnel, including the pressure to take on additional tasks and to perform well. How better to put minds at ease than with a program that recognizes and rewards individuals, ignites motivation, and enhances productivity. One of the best ways to weather an economic storm is as a team—one that feels important. If your people feel that they are valued—and that their contribution to your business makes a difference, you will have both their loyalty and support through difficult times.

Another form of motivation is through employee input. Often the best ideas come from people within your organization. Allow them the freedom to state their ideas and opinions—and then reward them accordingly for their efforts.

Recession Checklist: A Guideline to Managing your Workforce

The UK’s Chartered Institute of Personnel and Development (CIPD)7 is a firm that helps businesses manage and develop people. Along with the Advisory, Conciliation, and Arbitration Service (ACAS)8, it has released an official guideline to managing your workforce during a recession. It’s a great checklist for any business that’s looking to make it through the recession unscathed.

  • Think long term

  • Maintain employee engagement

  • Support your employees’ health and well-being

  • Develop a strategy for redundancy so it’s there when you need it

  • Think about ways to minimize redundancies if workforce reductions are inevitable

  • Consult with your workforce and employee representatives

  • Establish fair and objective selection criteria that will help you to retain key people

  • Help redundant employees find other work

  • Plan for the future

For complete details of the above checklist, visit CIPD’s Web site.

Technology that Can Make a Difference during Times of Change

Change and growth are two forces that can disrupt a business. When change occurs, organizations must take a look at not only their current business processes, but also at the technology they’re using to run the business, to ensure it is capable of handling change effectively. Transactional systems, such as finance and human resources, are the core of a business’s operations and must be able to easily and rapidly adjust to changing conditions.

Recession-proof HR: Agresso Talent Management

One vendor that recognizes and understands change is Agresso. In fact, Agresso has incorporated the whole essence of the word into its product and go-to-market strategy with its Businesses Living in Change (BLINC)™.

Agresso is already widely known for its Agresso Business World (ABW) enterprise resource planning (ERP) solution that enables businesses to capture and deliver unlimited amounts of analytical information across their organizations. With over 1.5 million global users in 100 countries, Agresso is considered by analysts to be one of the leaders in this space.

A Setup for Managing Change

The key drivers for changes in business can range anywhere from restructuring to mergers and acquisitions. But even through the current global recession, Agresso takes managing change to the next level. The key to this is its VITA architecture. This service model-based architecture can make adapting to change easy, fast, and efficient.

In 2000, Agresso took its change management ideas one step further by developing a Web-based human resources (HR) and talent management suite and offering it as an add-on to existing ERP infrastructures. Agresso’s BLINC™ plug-ins allow businesses to easily manage their workforces—especially in times of great change.

Agresso’s talent management suite can help businesses effectively manage change—whether that change is due to an economic downturn or other reasons—by helping to optimize workforce coverage, manage and develop employee competency/skills, as well as create regulatory and statutory training plans for employees’ future career goals. It can also be used to predict or plan competency gaps using a range of tools—including business analysis and reporting. This type of broad functionality makes strategizing and preparing for change (i.e., succession planning) a breeze.

Automation allows data to be entered once, when it then becomes available across the enterprise for those departments or individuals that need it the most.

Other features of Agresso’s HR suite include:

  • HR administration

  • Competency tracking

  • Training administration

  • Payroll

  • Absence tracking

  • Expense ledger

  • Organization management

  • Employee self-service

  • Competence portal


Economic recession—while taxing on businesses—is just one of the changes that businesses must weather. For your business it could be the difference between sink or swim. With a well-constructed “recession action plan”—one that includes recognition and rewards—and a system that can change with the times (such as an HCM or talent management system), managing your workforce through an economic downturn is possible.


1 - Merriam Webster
2 - Bureau of Labor Statistics

3 - Statistics Canada
4 - Webster Buchanan Research

5 - Barack
6 - Barack Obama's Plan to Stimulate the Economy
7 - CIPD
8 - ACAS

Messer and Company
Globo Force

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