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When there is a supply chain disruption, rising energy costs, natural calamities, or geopolitical risks that lead to economic uncertainty, your first instinct as a business is to look inward. You, as a founder, would turn to your leadership for advice to help steer you through the crisis. If that fails, you will turn to your finance teams for direction, when you believe minimizing costs or better budgeting can save the day for you. You might even consider bringing your vendor management, operations, and procurement teams to the table. But did anyone think about bringing HR to the table? Can HR save the day?
Absolutely, and the answer is a big yes, because your people are your greatest assets, especially those with years of experience under their belt. They might have been a part of such a scenario in the past and might help you better understand how to respond to it, and the people who connect you with them, that’s HR! HR can also help you understand where the business stands in terms of compliance and general goodwill that it has received over the years. Here are 5 things you can do to battle economic uncertainty and 5 reasons you must go to HR during such crises.
5 Ways HR Can Take the Lead in Times of Economic Uncertainty
1. Being Transparent: Being Open and Clear with Customers and Teams
When the times are difficult, they affect not just your business but other businesses too. Pretending there is no storm is not going to get you to safe harbor. But protecting your ship and your crew by navigating the right course can. You need to be honest with your teams and your customers. Be specific about the value you provide for both employees and customers and highlight this constantly and consistently. They deserve the truth, whatever it may be, because a truth is worth more than a million white lies. When you tell your customers and teams why you are failing, they will stand by your side.
How HR Can Help
And who better than HR to tell your employees that? HR can co-ordinate your efforts at being more transparent by communicating your policies and encouraging both employees and customers to give feedback on what is relevant to them. They will also train employees on compliance and other workplace policies and maintain the documentation for everything.
2. Spend Management: Tracking Expenses and Identifying Where Costs Can Be Cut
The first step is the often advised one for small and medium businesses, but not one considered as being of a high priority. An ERP solution can help save your business a lot of money and ensure that you take the right steps in crisis management when you need to. Accounting software alone may not be the best fit for your business. You may also need to eliminate the unnecessary costs in procurement and logistics.
How HR Can Help
HR can help familiarize the employees in your company and enable the different teams from operations to accounting to sales and marketing to use the ERP more effectively. They can also recommend other software that can boost operational efficiencies based on what has worked for other companies. HR can also arrange mentorship sessions with industry experts for specific teams like procurement and operations, both of which play a critical role in expense management.
3. Diversifying Revenue Streams: Reducing Reliance on a Single Revenue Source
By expanding the number of products and services offered and by entering new markets with their offerings, it is possible for businesses not to rely on a single source of revenue. Subscription models and other value-added services also help. But approach such diversification with caution.
According to Harvard Business Review, “Before diversifying, managers must think not about what their company does but about what it does better than its competitors.” And further, it says, “You must have all the necessary strategic assets and not a few of them.” This makes sense reminiscing what happened to Coke in the 1980s when it wanted to enter the wine business. It had branding and marketing expertise, knew what the customers wanted, and had even the right distribution channels. But it lacked the most important thing of all, knowledge of the wine business and how it works. So, it failed.
How HR Can Help
Layoffs are not the answer when you need to diversify. Hiring a new employee costs several times more than retaining a trusted and good one. HR can help with retraining, better management and reassignment of employees who have shown the will to learn and improve. HR can also help with the launch of a new product by recruiting people who are known to have managed this change more effectively in the past.
4. Develop a Contingency Plan: Prepare for the Worst
A contingency plan is a backup plan outlining the actions that need to be taken in response to a specific event that has already occurred. Contingency plans are designed to address unexpected events impacting a project’s timeline and quality and increasing the budget. It begins with identifying specific events, devising strategies that will help tide through them, assigning the right stakeholders, and specifying protocols for communication.
How HR Can Help
HR can help with a contingency plan by safeguarding employee well-being during the implementation of the plan, optimizing the allocation of resources both employees and resources to employees, and identifying new ways of working. HR can also help establish the communication lines between the various stakeholders. These are just some of the ways HR can help in contingency planning during an economic crisis.
5. Embracing Technology: Automate Operations and Improve Efficiency
Technology can help you automate many of the operational processes and improve efficiency, saving time. Examples of this are attendance tracking software to improve attendance tracking and gain valuable insights, RPA that helps reduce repetitive tasks, increasing productivity, and chatbots that give insights throughout an application or on a portal, simplifying information to enable the integration of new technologies.
How HR Can Help
HR can help by putting safeguards in place for the technology by consulting with the technology teams and taking their suggestions, establishing a point of contact for any queries regarding how to use it, and creating training programs for the new technology. HR is also involved, most importantly, in understanding if the technology is translating into greater productivity and benefiting the organization, recommending in time if it must continue to be in use.
Closing Words
If economic uncertainty is the new shark on the horizon, do not feel threatened by it. And you do not need to be if you are equipped to safeguard yourself against it. HR prepares your business for the worst, just as it prepares it for the best on a celebration for a festival. The good news is you hold your set of cards. The dealer may not be on your side, but you have a player at the table always ready to help you. In the face of economic uncertainty, HR is your business’ trusted sidekick.
