As tougher economic conditions loom, contracting HR budgets could significantly limit UK businesses’ performance and their ability to remain resilient.
That’s according to new research* finds that HR teams are most at risk of budget cuts, with half (52%) of HR managers stating that their HR department often loses out most when budgets are trimmed, and a further 55% already having seen budgets cut, or expecting cuts, in the coming months.
On top of this, despite recent and well-publicised concerns about staff retention, 50% of UK HR managers say their senior leadership team doesn’t prioritise their employees and 56% say the business doesn’t place enough value on the HR function.
With only just under a quarter (24%) of UK HR managers reporting that they feel very prepared to help their business remain resilient in an economic downturn, Personio is advising businesses to avoid sudden HR department budget cuts and short-term decision making that could damage organisational competitiveness, employee morale and productivity, just when businesses need it most.
Ross Seychell, Chief People Officer at Personio, commented: “HR should be even more of a priority now, not less. Successful businesses put their people and culture as central to critical business operations, as a means to protect their company, and their customers in tougher times.
“We’ve just come out of a period when many employers have thrown everything but the kitchen sink at their people in an attempt to hang onto them. If they are not thoughtful before they rush to scale back efforts now, their teams will realise it was never really about making their business a great place to work at all. Businesses need to foster a sustainable, long-term approach to looking after their talent, one that works in both good times and more challenging periods.
“But this more strategic HR role can only be achieved when organisations have the technology, data and systems in place that free HR managers up to focus on their people while providing them with the insights they need to be effective. Budgets may be under threat, but people strategy is an area that absolutely must remain a focus.”
The research, which surveyed 500 HR professionals and 1,000 workers across the UK and Republic of Ireland, finds that as businesses have prioritised the employee experience during the recent pandemic, positive progress has clearly been made by HR teams – with 69% of employees feeling as though they have a good work/life balance, and 73% rating their company culture as good.
Yet the research also highlights the HR functions’ concerns that budget cuts will be detrimental to employee performance, with 61% of HR managers concerned that budget cuts will negatively affect employees’ motivation and productivity – putting HR’s valuable work and progress at risk.
And with HR managers citing a good company culture (38%), a sustainable, long-term approach to people strategy (37%), and efficient processes (37%) as the top three most important factors in navigating an economic downturn, it’s clearly never been more important that HR departments are equipped with the tools and financial support that they need.
*Research from Personio
