But some of the functions attached to sales – advertising and marketing, for example, might see their budgets cut.

Neither can a company survive without people, but the headcount almost always comes under scrutiny when business takes a dive. This usually means redundancies that not only damage morale, but divert human resources staff away from their focus of building a company’s talent base.

Job cuts, however, are usually only the start. Often finance chiefs will be seeking economies elsewhere in areas such as recruitment and training. Managers will be under pressure to leave some vacancies unfilled. Other areas of HR spending may also be affected. Employee satisfaction surveys, assistance programmes and human capital measuring could all be scrapped in budget cuts.

It’s difficult for chief executives to appreciate the long term consequences of such interventions when they have been charged with ensuring the survival of the enterprise.

Measuring, in particular, gains strength through long term analysis and comparability. How can a company know whether its management has improved year-on-year if it cannot compare employee satisfaction survey responses over time?

A reduction in training will make its impact felt in falling quality, poor decision making and future inertia. In the same way, a freeze on entry level recruitment will deprive the business of a specific age cohort moving through the ranks, leaving shortfalls in key positions sometimes years in to the future.

Some may argue that those positions could be filled from outside. But to do so is to risk changing the culture of the organisation on which it has depended for its past success. Perhaps the culture needs to change so such injections of fresh blood may turn out to be a bonus, but should any business present itself as a hostage to fortune in this way?

If HR expects and is expected to place itself at the heart of strategy it must be making a business case now for the continuity of its most important functions.

There may be room for cuts, particularly if HR heads have been prone to adopting the latest fashion picked up at a conference or from the last management consultants they engaged.

Human resources processes should be reviewed constantly but they should be scrutinised particularly strongly at the first sign of a downturn. A review should supplant any temptation to respond with a knee jerk reaction.

If there is no choice but to respond to declining sales with cuts in production, HR heads must be at the heart of such discussions, raising longer term concerns that may not have been appreciated by colleagues. Can staff be redeployed on prospective business projects? Would there be support for collective pay cuts, trading pay for jobs or short time working? Could some training functions be better undertaken by existing employees rather than outsourced training companies?

Staff whose jobs are in jeopardy will sense and appreciate the work of those who are capable of empathy with their plight. They will welcome, also, the best endeavours of HR to keep them abreast of changing circumstances. Good communications is vital when taking decisions affecting people’s futures. One of the worst aspects of some redundancies in the past has been staff hearing the bad news through the media.

If HR can do one thing in a downturn, ahead of any other function, it is to keep one eye on the future. One day there will be an upturn. A company’s fitness to meet the demands of that upturn will be measured on the fitness of its employees.

Managing In A Downturn – Part 3 is a post from Advanced Business Solutions - Supplier of accounting software, business intelligence and document managment