At times of recession and economic downturn, the sales revenue and profit of an organization will decline, causing companies to strategize for crisis management which usually includes cost reduction and optimization. With that, the first thing that might happen would be freeze is hiring. Even when attritions happen, managers might decide not to backfill the position, causing the departments to be understaffed. When departments are understaffed, it might cause a decrease in productivity and performance level of the employees, resulting in lack of motivation and morale. To a certain extent, the organization might even decide on drastic measures to restructure the organization and carry out workforce reduction activities, which becomes one of the biggest challenges managers would experience at times of crisis.
To manage such situations caused by recession or economic downturn, the management first need to assess and understand the true impact of the downturn on the business. Because before you start planning, you need to know where you’re at in terms of your business health. This can be done also by identifying any unprofitable products or services, and even your customers, because in times of recession, available capital and consumer spending can both decline. With that, when initiatives for cost reduction is being taken due to financial challenges faced by the organization, employees get laid-off, where it further lower the employees’ morale and productivity. Managers have to find the balance between giving adequate support to the employees while continue to push on performance and work on the change management. Although layoffs are unfortunately the last resort taken by the management to ease the financial struggle, managers need to make sure that communications are being done effectively and get the employee assistance program out to the employees to help them manage their struggle.
Finally, while working on crisis and performance management, and making sure to provide adequate support the employees at these time, for long-term’s sake, it is important to pay attention to new opportunities and plan ahead.
