A little over a year ago, many organizations were struggling to deal with labour shortages. Now most of these companies are reporting hiring freezes until the economy improves. In December 2008, average salary increases for Canadian employees were reported at an average of 2.9%. This figure has decreased more than 1% over the past six months and many Canadian organizations are expected to freeze salary increases by the summer if markets do not improve. Employees may begin to feel frustrated and undervalued, because they are no longer being rewarded for their work performance through monetary compensation.

Now, more than ever, it is necessary to turn to employee relations programs to stimulate and encourage employees. Through HR programs, companies can keep their employees engaged, motivated and productive. Many programs may have to be reviewed and scaled back to remain operational within tight budget constraints, but should not be abandoned to appease cutbacks.

COOs and CFOs would not abandon sound operational or financial practices to save a dollar. So why is it that HR practices are generally the first to go? Employees should be an organization’s most valued asset. If HR practices are discontinued, organizations run the risk of losing their valued and highly skilled employees to competitors. This can guarantee further operational and financial decline for any organization. Quality production will decline, customers may be lost and your organization will be in a frantic scramble to fill the vacated positions. Most likely, recruitment best practices will be abandoned and less qualified candidates will be accepted for the roles to quickly fill the need. It is a slippery slope to let these programs and practices slide that will result in a long, hard, up-hill battle to return to former HR programs when the economy recovers.

Organizations that choose to sever their HR programs rather than adjust will undoubtedly face much more difficult hardships within this “bust” economy.