Nonprofit HR’s Blog

If you have been following the financial headlines lately then you know a growing number of economists anticipate an economic recession in the U.S. within the next two years. Rather than reacting to the news, human resources and talent management leaders have an opportunity to help their mission-focused organizations proactively plan for the potential of decreased funding sources, donor dollars and resulting tighter budgets. This article highlights several ways that you can begin an internal discussion with your organization’s team on recession-readiness.

1.Utilize Relevant Metrics in the Planning Process

As planning takes place, grounding decision-making in data most relevant to the successful operation of your organization is critical. The ability to reference key metrics decreases subjectivity throughout the planning process. If your organization has yet to regularly analyze metrics aligned with organizational priorities, now is the time to begin!  

Suggested data to analyze includes:

• outcomes measurement results by individual program/project and/or team/department;
• role relatedness of individual positions to current and emerging strategic priorities; and
• compensation against performance evaluation rating, utilization percentage and market competitiveness.

2. Evaluate Opportunities to Scale Back & Avoid Impacting Your People

Spend time this quarter evaluating all “non-personnel” budget items to determine opportunities to reduce, outsource, and/or eliminate unnecessary expenses. Conducting this review ahead of time  buys your organization time to determine which expenses can be reduced and/or outsourced without a substantial impact to organizational operations. Should additional cost-cutting measures be required in the future, this proactive step allows senior leadership to communicate to staff that all measures to reduce expenses were exhausted prior to impacting jobs. Be sure to lean on your networks for best practices in how to communicate this type of message.

3.Evaluate Options for Creative Staffing Structures

In advance of considering position eliminations, stakeholders should explore creative staffing options that reduce costs without fully eliminating positions.  

Examples include:

• schedule reductions (for example: hours reduced to 30 per week)
• job sharing
• instituting a furlough
• reductions to salary of and/or bonus payments to senior leadership (as a first step before having to impact compensation and/or positions at alternate levels of the organization)

If proceeding with one of the aforementioned actions, it is critical to seek HR guidance to ensure your organization: (1) remains compliant with regulations related to the Fair Labor Standards Act (FLSA) and state-level wage notification requirements; and/or (2) plans for the impact to wage deductions and garnishments during any periods of required unpaid leave.

4.Document Existing Performance Issues

Real-time documentation of performance concerns is a performance management best practice. The need for impeccable documentation; however, is underscored when an organization anticipates the potential for position eliminations.  During planning meetings, stakeholders should be directed to review an accurate and up-to-date evaluation of job responsibilities and performance.

5.Proactively Provide Open and Transparent Communication to All Staff

The possibility of recessionary times has become a regular topic in the news. This topic understandably creates feelings of uncertainty and a lack of control among staff, which can undermine staff engagement. Therefore, it’s important to implement transparent communication to all staff. Unified messaging (from senior leadership and management/direct supervisors) to staff is non-negotiable in times of change. Now is the time to develop a communication plan that informs staff of proactive planning measures and provides opportunities for staff to provide suggestions and input for cost-cutting planning. It is also important to notify staff of a regular cycle for when updates will be provided and to commit to an open-door policy should staff have individual questions or concerns.   

by Lori Kipnis
Senior Advisor, Strategy & Advisory
Nonprofit HR
lkipnis@nonprofithr.com