How to navigate tough questions from employees during an economic downturn

As if overcoming the pandemic wasn’t difficult enough, businesses are once again put to the test as a recession looms. While companies across the globe are experiencing financial strain with the economic downturn, employees are also facing increased pressures to cope with the rising cost of living.

Difficult times can lower employee morale and increase burnout rates — and job security can become a highly sensitive issue. Employees are also more likely to raise questions that are often difficult to answer, especially with the economic volatility. During these stressful times, managers are the key to assuring employees.

As organisations navigate ongoing uncertainty and unpredictability, HR leaders have a crucial role in ensuring managers are trained with appropriate tools and resources to keep people confident, satisfied, and productive at work.

By preparing managers to field tough questions with confidence, employees can better understand the current performance of the organisation and build trust. Here’s how to navigate the trickiest topics.

1. “Will there be layoffs? Will my job be cut?”

Honesty and transparency are key in times of uncertainty. HR leaders play a crucial role in ensuring managers are clear and direct with their people, explaining in clear detail how the economic landscape is affecting businesses. Your employees will respect honesty. If conditions are not looking optimistic and the company is considering layoffs, do not keep employees in the dark. Instead, be open with employees and communicate the possibility of layoffs and the current state of the business. There’s nothing worse for employees than having to receive bad news on layoffs without any prior updates that the business is heading south.

Managing layoffs and downsizing is never easy or comfortable, but it’s imperative to handle them with care and compassion from start to finish when it is unavoidable. The reason for the layoff must be communicated openly, clearly and honestly. Offer employees affected by the layoffs severance packages, career counselling services, networking opportunities or outplacements wherever possible.

The effects of layoffs will likely be widespread for both employees and the overall organisation. Still, the impact can be mitigated if managers proactively support and listen to employees and utilise feedback to identify areas for future and immediate improvement.

2.  “Will my pay or promotion be affected by the market conditions?”

When economic conditions are not positive, employees are often worried that it may impact their pay or promotion opportunities. When employees voice these concerns, it is important for managers to be open and be able to evaluate the situation with employees. Having access to tools such as industry salary benchmarking tools will allow managers to be equipped with accurate information to lead the conversation.

It is important for managers to first acknowledge that the economic conditions have impacted the company’s growth and the company is taking steps to ensure pay and promotions are not affected. In the event that organisations have to make tough decisions, such as halting pay increments and promotion opportunities, managers must be trained to convey these to employees with empathy. It is also important to have a variety of options and alternatives that can support employees that are struggling with finances during the period of downturn, without putting further strain on the company’s finances.

HR plays a crucial role in ensuring employees have access to flexible spending accounts or savings arrangements can be incredibly valuable. Adjusting policies such as implementing hybrid work arrangements so that employees can save on travel costs and go a long way in easing the pressure on financially stressed team members.

During these stressful times, HR needs to encourage managers to continue nurturing employees and pay attention to professional development opportunities for their teams. Offering employees internal training, upskilling programs and mentorship programs are some of the ways organisations can motivate employees and demonstrate to employees that the organisation is investing in them even during tough times. When employees benefit from training, it not only helps the company grow but also builds trust and loyalty among employees.

3. “The company has laid people off. What can I do to manage the stress of the increased workload?”

When employees ask questions about increased workload and responsibilities, they are likely to be nervous about the lack of support or feel the strain of extra work within their own role.

Supporting remaining employees after layoffs is key to easing the transition and retaining employees. HR leaders need to help managers build their confidence in delivering empathetic and consistent messaging around layoffs. Having open communication with employees through open forums and town-hall meetings are useful ways to keep the dialogue open and give employees a chance to ask questions.

Organisations need to emphasise the importance of work/life balance and flexibility of schedules and underline the importance of self-care and taking time off. Communicating to employees that support is present can make a real difference to your company culture.

Open communication is key to overcoming economic uncertainty 

When dealing with tough questions, you may have noticed that the main themes in all the advice in this article are empathy, openness and honesty. HR teams can help by fostering a positive workplace where people and managers are free to express their feelings, ask questions, and receive considered answers.

Managers should have regular pulse checks with employees to determine their morale and identify any areas employees are struggling with so that appropriate measures can be taken to provide employees with the best support. By being prepared for the most common questions and being honest about any challenges your business faces, managers can build trust, increase loyalty and employee retention, and help guide the company into calmer seas.

By Damien Andreasen, vice-president, APJ, HiBob