More than half (55%) of HR departments have seen, or expect to have, their budgets cut as rising costs impact organisations.
Research from HR software company Personio suggests that HR teams are most at risk of budget cuts, with 52% of HR managers surveyed suggesting that their department often sees its budget slashed the most compared with other teams.
Fifty-six per cent said their organisation does not place enough value on its HR function, and 61% expect budget cuts to negatively affect employees’ motivation and productivity.
HR teams also appeared underprepared for the impending economic downturn: just 24% of the 500 HR managers surveyed felt they could help their business remain resilient during tough times.
Personio advised organisations to avoid sudden budget cuts to HR departments and making short-term decisions that could damage employee morale, productivity and the competitiveness of their businesses.
HR budget cuts
Chief people officer Ross Seychell said: “HR should be even more of a priority now, not less. Successful businesses put their people and culture as central to critical business operations, one that will 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.”
Personio also surveyed 1,000 employees and found that efforts to improve the employee experience during the pandemic have paid off for most employers. Nearly three-quarters rated their company culture as ‘good’ and 69% felt they had a good work-life balance.
However, half of UK HR managers said their senior leadership team does not prioritise employees.
Asked about the most important factors in navigating an economic downturn, HR managers cited a good company culture (38%), a sustainable people strategy (37%) and efficient processes (37%) as the top three.