5 top tips to recession-proof your company
Recession is a word that guarantees to send shivers down the spine of business owners. With interest rates skyrocketing and higher inflation causing a cost-of-living crisis, it may be inevitable.
It shouldn’t be a case of holding your nerve until the worst is over and green shoots start to reappear. There are steps you can take to navigate the turbulence, keep you out of panic mode and get your business ready to face anything.
So, here are five clever ways to recession-proof your business...
1. Communication is key
While it might be tempting to remain tight-lipped on the challenges a recession may bring your way, your team know what’s going on – it's everywhere.
And so, they will appreciate any effort you put into keeping the lines of communication clear and open. This could look like scheduling regular get-togethers to update everyone on performance together. Here, you can lay out how you will tackle the upcoming challenges.
Set up an employee forum so your teams can have a say, ask questions that are on their minds and even make some cost-saving suggestions. Sometimes the greatest ideas come from places you’d least expect.
Additionally, if you do need to introduce cost-cutting measures that affect your people, like a pay freeze, explain to them why you’ve come to this decision and that you’ll keep it under review. Honest conversations help stop resentment in its tracks.
2. Boost morale with small – but important – gestures
It’s easy to lose sight of the bigger picture when you’re battling an economic downturn. Keeping your business afloat is, naturally your number-one priority.
However, don’t forget that this is happening to your staff too. Struggling against rising food and energy prices can really take its toll on stress levels and mental health.
To keep team morale up, offer an Employee Assistance Programme (EAP). This gives your employees access to 24/7, confidential support from trained counsellors on anything from relationship struggles to financial issues. An investment in them is an investment in your business.
You might also be able to offer some additional days off or more flexible working hours, without too much expense. Little gestures can go a long way in acknowledging that work/life balance has never been more important.
3. Upskill your staff
Long term, people want to see an investment in their growth and development from their employer. Your business is only ever as strong as your team – and during a recession what you need is a strong team. So, keeping your people’s skills fresh with bespoke, interactive training is a great way to not only invest in them and prove your commitment to their development but make sure they’re up to speed and performing in line with your needs.
4. Put your process under the microscope
When it comes to providing a great service or product, continuity is king. But in difficult times, it’s always a good idea to look at your internal processes and procedures and see if anything could do with a switch-up. The only way you can solidly futureproof your business is by strengthening what’s already going well and making changes to anything that’s not serving your business the way it should be.
Those alterations could include keeping office bills as low as possible by increasing working from home days and reducing HR costs by boosting employee retention. Additionally, making a section of your business even stronger to withstand the storm and keeping on top of all internal processes such as lateness and dealing with them head-on. Finally, ensure that best practices are followed such as Performance Reviews every 6 months and Return to Work meetings after sickness.
5. Sensitively weight up staff levels vs demand
No one likes to think about redundancy. But if you need to cut costs – especially if demand is low – then it can make sense to consider making changes to your workforce. In May – July, Citation received 2,800 calls from employers seeking redundancy advice and from August to October, this figure rose 7% to 3,000.
There’s one big BUT here, though. Always make sure you’re considering the alternatives to redundancy before you start redundancy procedures. There’s a chance that, depending on your situation, redundancy could leave you in a worse position in the long run – for example, being short-staffed post-recession when demand picks back up again.
Situation dependent, you could consider restructuring, layoffs, changes to terms and conditions and voluntary changes.
Tribunal claims tend to raise during economic turmoil
If recessions weren't already hard enough on your business, claims tend to go up during a period as such.
It’s easy – especially if you’re a small business owner – to assume that an employee will never, ever bring an employment tribunal claim against you. After all, you probably know all your employees personally – perhaps even for years – and maybe you see them socially outside of work, or know their family, or have helped them through tough times. And you may be right. But, sadly, there’s always the risk of facing a claim – and they can come from unexpected places.
So, you need to be prepared. To avoid lost productivity, damage to your reputation, stress, and anxiety, and, of course, the financial loss of a successful claim, there are a few things you need to consider:
Think back to the last employee issue in your company and how it was handled
Be aware of the processes and policies for employees leaving the business, making a formal grievance and how to prevent the financial impact on your business
Ensure recruitment policies are up to date and comply with Employment Law legislation
Know who you would turn to if an employee took you to a tribunal and how you would manage it
Gill McAteer, director of employment law at Citation, said: “A recession poses lots of uncertainty both for employers and employees. Rather than waiting for it to hit, take proactive steps to be ahead of the curve and recession-proof your business. Also, as we know there are more tribunal claims than usual during this period so be aware of the ways that you can stay on top of and prevent potential claims.”
Visit Citation for a free guide on how to recession-proof your business.
