HR at risk as UK faces recession fears

Fears of an imminent recession mean HR professionals could be in for a torrid time of squeezed training budgets and recruitment freezes.

A report by the British Chambers of Commerce last week warned that the UK was at serious risk of recession. Its analysis of 5,000 firms found that many in the manufacturing and services sectors had negative cashflow, and that employment expectations had stooped to a record low.

In the past week alone, several high-profile firms announced job cuts, with a gloomy CBI report in June predicting that 200,000 would go by the end of 2009.

But even where HR professionals are not being told to swing the axe, they are having to deal with reduced resources.

Gareth Williams, HR director at publishing group Taylor & Francis, is just one practitioner who expects his organisation's training spend to suffer.

"We start budgeting for next year in September, and I suspect that training budgets will be scrutinised, directly as a result of the feared recession," he told Personnel Today.

Taylor & Francis currently employs 650 people and has a training-budget of £300,000 per annum. While the firm is set to hire another 20 staff this year, the skills budget could be slashed.

"Recruitment has not been affected at all [by the economic slowdown], but if we do head towards a recession, it will have a knock-on effect. While we expect to continue offering a high training spend per capita, I might be asked to knock a few zeros off the training budget," Williams said.

The head of HR at hotels group Thistle agreed that tough market conditions were forcing companies to reign in spending.

Christian Armstrong said: "We are looking at ways to control resourcing through examining replacement of vacancies and whether we can cover roles by other means."

However, leadership development training would continue to ensure that customer satisfaction and quality was not compromised, Armstrong said.

"Indeed, we have recently introduced some new roles to our structure that allow us to build for the future and strengthen our market position," he said.

Fleur Bothwick, diversity director at consultancy Ernst & Young, said employers should be wary of reacting to short-term economic conditions.

"With any change management programme you need to focus on the medium-to-long-term, rather than react to the short-term, so that you don't lose momentum," she said.