|Managing the workforce during an economic downturn is a significant challenge that organisations should prepare for (Photo: Unsplash) |
As the world saw the threat from COVID-19 slowly diminish, the outlook for the post-pandemic era was initially optimistic with a dramatic recovery boosting both economies and quality of life around the globe.
Nonetheless, the global inflationary pressure triggered by the global supply chain issues that resulted from the Russia-Ukraine conflict and the zero-COVID policy in China heightened federal interest rates, leading to concerns over a major recession in the near future.
The decisions from tech giants such as Meta (Facebook) and Twitter to lay off tens of thousands of employees signal that the economic downturn is around the corner.
|As the world saw the threat from COVID-19 slowly diminish, the outlook for the post-pandemic era was initially optimistic with a dramatic recovery boosting both economies and quality of life around the globe. |
As economies and businesses are getting ready for the recessionary cycle, Vietnam is already feeling the heat as evidenced by the negative impact on over 600,000 jobs due to declining export orders over the last few weeks.
Evelyn Kwek, managing director of Great Place to Work ASEAN/ANZ, believes that since Vietnam has become industrialised and increasingly reliant on the export sector, the global recessionary signals are a concern for Vietnamese businesses.
“The rise in interest rates could impact global investment appetites alongside the inflationary pressures that are creeping into the economy,” she added.
As the fear of layoff grows, it is a considerable challenge for human resource (HR) practitioners to juggle their business's survival with employee morale during a downturn.
|(From left to right) Evelyn Kwek, managing director of Great Place to Work ASEAN/ANZ, and Ha Minh Chau, senior consultant at Great Place to Work (Photo: Great Place to Work) |
RMIT Vietnam’s associate lecturer Pham Thanh Hang pointed out that previous studies suggest that even if employees withstand the layoff season, they might suffer from anxiety, depression, and a loss of trust in the organisation, which would significantly lower their productivity.
“As a common practice, organisations focus on cost-cutting and bear the negative impact on employee well-being and engagement,” she said.
However, it doesn't have to be that way. Kwek revealed that Great Place to Work research based on US data posits that when companies focus on their people and company culture during a downturn, their organisations will not just survive but also thrive by creating more value in their stocks and people.
“Do not undo all the good work and trust you gained with your workforce in good times where a lot of investments and efforts have been put in to attract, retain, and sustain talent,” underscored Kwek.
So, how can HR still thrive during an economic downturn and add more value?
“Trust and well-being must be the outcomes,” Great Place to Work’s senior consultant Ha Minh Chau stressed.
She added that trust comes from different dimensions within the organisation, including colleagues, work, and management, while well-being is built on emotional support, financial health, and meaningful connections.
Chau said when the layoff communication is appropriate and ethical, laid-off employees still support the decision, which shapes a positive organisational culture among the remaining employees during the layoff season.
|(From left to right) RMIT University’s lecturers in Human Resource Management and Entrepreneurship Pham Thanh Hang, Jung Woo Han, and Gavin Nicholson (Photo: RMIT) |
Jung Woo Han, interim senior programme manager for Human Resource Management and Entrepreneurship at RMIT Vietnam, cited the layoffs of 900 employees through a Zoom meeting at Better.com and 3,700 via overnight emails at Twitter as examples of how HR decisions might tarnish trust within organisations and teams.
He said the follow-up allegation of Twitter turning their meeting rooms into bedrooms so that employees can spend longer hours at work is another example of how HR management can be accused of damaging employees' mental and physical health.
“Hence, it would be worth considering a temporary pullback in terms of financial performance to maintain employee well-being as this can be a seed for future blossoms,” Han noted.
Meanwhile, Gavin Nicholson flagged that senior HR officers should plan early for possible scenarios based on the available resources to minimise potential risks, increasing the likelihood of a successful transition and transformation during the economic downturn.
Not surprisingly, a study from Oxford University suggests a happy employee performs better by 13 per cent, suggesting investing in trust and well-being would pay off during the coming downturn.
Nicholson continued, “In every crisis lie opportunities. It's time to rethink the coming recession as an opportunity for people to flourish within their organisations.”
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