A crisis can destabilize your organization, whether it be brought about by internal or external variables.

From economic slumps, to natural disasters, to in-company turmoil, difficult times can threaten your business and employees—76% of business leaders say that their most serious disruption had a medium-to-high impact on operations. 

Since these come with many risks, stress, anxiety, and uncertainty within your workforce become unavoidable. Human resources (HR), however, can act as your stabilizing force. To show you how this can be achieved, we’ll dive into the role of HR in crisis management.

How do you define a crisis?

To start, a crisis can take on various forms, and each one comes with unique, corresponding challenges. To understand them, we’ll dive into the most common ones:

Economic downturns

These can be triggered by recessions or inflationary pressures. To keep everyone afloat through periods of financial instability, companies may reassess budgets, restructure teams, or provide employees with monetary aid. Some could even resort to layoffs, pay cuts, or hiring freezes.

Global health emergencies

Worldwide medical scares cripple not only organizations, but entire industries and countries. The COVID-19 pandemic is a prime example. Quarantines and lockdowns forced people to stay home, while layoffs, lost livelihoods, and emotional distress became widespread.

With many companies facing steep declines, it transformed how businesses operate, pushing them to:

  • Adopt remote work
  • Adjust health policies
  • Provide employees support

Natural disasters

Calamities like hurricanes, earthquakes, and wildfires jeopardize your organization and employees. These can result in temporary halts to business activities, as you must protect your people and assets. Such cases require disaster preparedness and post-crisis recovery efforts.

Internal organizational challenges

Internal turmoil can occur due to mismanagement, workplace scandals, or leadership transitions that result in organizational changes. These can erode employee trust, morale, as well as your organization’s reputation.

Geopolitical events

Political instability, civil unrest, or even war, impacts supply chains, business operations, and employee safety. When caught in volatile environments, your organization must account for cultural sensitivities and enact protection policies and contingency plans.

Technological disruptions

Information technology (IT) acts as a pillar of modern business, as it covers automation, communication, data management, and critical processes that let companies function.

Cyberattacks, data breaches, or IT failures can compromise your operations and sensitive internal information. Such situations can be prevented through cybersecurity training, risk mitigation strategies, and rapid response protocols.

How a crisis affects employees

These unwanted predicaments, meanwhile, can have your employees experiencing:

Stress, anxiety, absenteeism, dips in productivity

The fear of job loss, health risks, and financial instability impacts employee welfare. Research from the National Library of Medicine found economic stress to be a substantial threat to worker well-being and performance, resulting in:

  • Absenteeism becoming a coping strategy
  • Downward trends in productivity
  • Company innovation also taking a hit

Disengagement

A crisis puts livelihoods at risk. A lack of company direction alongside job insecurity, meanwhile, damages employee engagement.

Work-life balance and health struggles

Workloads become unpredictable during a crisis. Adopting remote setups may not be enough as well, since employees have to worry about personal responsibilities.

This compounding stress can lead to health issues, as the American Psychological Association found 3 out of 5 workers reporting these negative effects of work-related stress:

  • Fatigue
  • Trouble focusing
  • A lack of motivation
  • Emotional exhaustion
  • Mental health problems

Financial hardships

Companies may resort to salary reductions, layoffs, and hiring freezes to stay afloat during times of economic instability. Juggling these alongside rising costs of living creates unbearable financial strains on employees.

The role of HR during times of crisis

Given the harmful consequences a crisis can have on employees, HR’s part can be broken down into the following responsibilities:

  • Ensuring business continuity: HR must work closely with leadership to develop and execute plans that secure employee well-being and keep the organization running.
  • Clear and consistent communication: Transparency is key to alleviating worker anxiety and uncertainty, as well as conveying how you’ll respond.
  • Offering wellness resources: HR facilitates access to the programs or assistance needed to address employees’ physical, mental, and financial challenges.
  • Enacting flexible policies: HR ensures the availability of work arrangements that support unpredictable circumstances, irregular workloads, and personal responsibilities.
  • Strengthening leadership: Crisis leadership can guide teams and organizations through difficult times. HR is essential to developing individuals with such a quality.
  • Maintaining positive outlooks: HR sustains supportive and transparent work environments that prevent employees from succumbing to negativity.

HR strategies for crisis management

It’s obvious that HR plays a central role in effective crisis management. To help them fulfill it, here are some strategies that can act pillars for your interventions:

Establish communication channels and protocols

Natural disasters can disrupt communication lines, while global health emergencies can force everyone to stay home. These terrible situations breed job insecurity, fear, and anxiety as well.

Whatever the case, consistent and transparent internal communication lets you alleviate employee worries. So, create procedures that ensure workers receive critical information at all times, then utilize multiple channels, including:

  • Email
  • SMS
  • Intranet platforms
  • Social media

Conduct regular check-ins

Open dialogue is a two-way street, so allow personnel to discuss their challenges. Their input will be extremely useful for rolling out the appropriate response plans.

To do this, regularly facilitate one-on-one and group meetings or conduct quick surveys to identify concerns, needs, and assess well-being.

Allow flexible work arrangements

Employees can’t be expected to perform during dire situations, as handling these alongside work and personal challenges throws off their work-life balance. Such circumstances can even result in burnout. To ensure your personnel can handle the obstacles associated with any crisis:

  • Offer remote or hybrid setups, as these offer more time for personal commitments.
  • Let employees take on adjustable schedules and workloads when necessary.
  • Make sure paid leave policies accommodate emergencies.

Provide mental health support

According to the World Health Organization (WHO), employment benefits mental health, as job security provides income while the sense of social support at work offers emotional stability.

The opposite, meanwhile, applies once livelihoods are at stake. To mitigate the detrimental effects it can have on workers’ mental states:  

  • Offer employee assistance programs (EAPs), such as consultations and counseling.
  • Provide stress management training.
  • Foster resilience through peer support groups.

Leverage technology

Various HR tools can support and streamline your crisis management efforts. A human resource management system (HRMS), for instance, bolsters various HR various functions, including access to critical resources and benefits.

Collaboration and communication tools are essential to maintaining productivity, giving updates, and assisting employees as well. Think of how mental health consultations and regular check-ins can be conducted virtually.

The importance of planning

Appropriate responses are key to fruitful crisis management, but these require proper preparation. By taking these steps, you can achieve stellar results:

Tailor your response plans

Each crisis scenario poses a unique set of challenges. Economic downturns, for instance, force budget cuts, layoffs, and hiring freezes. Natural disasters, meanwhile, may endanger lives, jobs, and assets.

Due to this, every predicament calls for matching protocols. For example, when an earthquake suddenly strikes, HR must:

  • Provide your workforce with emergency contacts (e.g. rescue services, healthcare providers)
  • Facilitate access to necessities (e.g. food, water, shelter)
  • Disseminate regular news and updates

Establishing a designated crisis response team can prevent confusion as well, so assign specific roles to certain leaders and staff members.

Train your managers

We briefly touched on how crisis leadership helps employees and organizations navigate trying times, but this requires proficient personnel.

Emotional intelligence (EI) training, however, enables an empathetic approach to crisis response. It equips managers with active listening skills and an awareness of others, letting them communicate, address concerns, and deliver support with clarity and sympathy.

EI arms leaders with conflict management competencies as well, which come in handy as a crisis can give rise to tense situations.

Conduct scenario testing

Simulations are excellent for practicing response strategies in real-world applications. Incorporating data and analytics allows you to identify potential gaps as well.  

You can even conduct more advanced training scenarios by collaborating with external crisis management experts. With their input, you can craft more robust response plans.

Long-term benefits of effective crisis management

Thorough crisis planning and the right courses of action can result in the following upsides:

Improved employee trust and loyalty

A crisis introduces chaos, stress, and anxiety into employees’ day-to-day lives. The right initiatives, however, can provide some stability despite tumultuous circumstances.

By securing your workers’ well-being and work-life balance, you strengthen their faith in your company as well—33% of those with a healthy work-life balance say they plan to stay in their current jobs. Making this a part of your reputation benefits employer branding as well.

Enhanced resilience

Comprehensive crisis preparations and response initiatives let you maintain an agile organization, as people are fitted to quickly adapt to possible disruptions.

A study by Deloitte found that having a crisis plan in place considerably mitigates the impact of a crisis, especially when leaders are involved:

  • 21% of companies whose board participates in crisis management say crisis occurrences have dropped over the last 10 years.
  • 47% of ill-equipped organizations report a financial hit due to a crisis. For those with a plan, the figure drops to 31%.

Positive workplace culture

As we mentioned, job insecurity, stress, and anxiety results in disengagement—this can also give rise to workplace toxicity. Crisis management built on transparency and support, however, results in a culture that maintains better levels of engagement and morale.

Increased productivity

Flexibility and employee support maintains productivity in the middle of adversity. A survey by Effectory during the COVID-19 pandemic, in fact, found 28% of employees who were satisfied with their organization’s crisis response to report good performance.

Companies that did crisis management well

By now, you should have a better understanding of effective crisis management. To give you a clearer picture of how it’s done, we’ll dive into some concrete examples. 

Airbnb’s COVID-19 response (2020)

When the COVID-19 pandemic hit, Airbnb faced a dramatic drop in bookings, forcing the company to lay off 25% of its workforce, reduce expenditures and salaries, and suspend the building of company facilities.

HR actions taken:

  1. Honest communication: CEO and founder Brian Chesky sent a letter (also published on the company blog) to employees that openly stated the difficult decisions and clarified severance packages.
  2. Generous severance packages: The employees Airbnb let go received 14 weeks of pay, plus additional weeks based on tenure.
  3. Job transition support: Airbnb created an Alumni Talent Directory, a public-facing website, to help departing employees find new jobs.
  4. Extended healthcare benefits: The company continued healthcare coverage for its affected employees in the United States (US) for 12 months.

Starbucks racial bias training (2018)

After a racial profiling incident that led to the arrest of two men waiting for a business meeting in its Philadelphia store, Starbucks faced significant public backlash and a spike in concerns about racism, as well as the company’s views on inclusivity.

HR actions taken:

  1. Open acknowledgement of the problem: Starbucks Chairman Howard Schultz swiftly issued a public apology, speaking on how the company should be better.
  2. Company-wide training: Starbucks closed 8,000 stores for a day to conduct racial sensitivity training for 175,000 employees.
  3. Updated policies: The company revised its guidelines, ensuring inclusivity and fairer customer treatment.
  4. Dialogue sessions: Starbucks encouraged employees to share their experiences and discuss ways to foster diversity, equity, and inclusion (DEI).
  5. DEI commitment: The company invested in long-term DEI initiatives.

Wrapping up—HR provides stability during a crisis, ensuring organizational continuity

HR plays an indispensable role in crisis management: fostering stability, trust, and resilience among employees, as well as ensuring your company’s continuity. To guide your workforce and assist leadership through uncertainties, they ensure:

  • Consistent and transparent communication
  • Proactive response planning
  • Employee-centric strategies
  • Adequate training

By prioritizing these aspects, HR not only protects your workers, but also nurtures long-term loyalty, adaptability, and resilience. This allows your organization to withstand and recover from any difficult challenge.