Companies that have cultivated comprehensive HR management practices and strong trade union relationships will best survive the recession following the coronavirus crisis, according to research by Warwick Business School.
The study published in the Journal of Human Resource Management suggests the “invisible, unwritten contracts” managers have with staff have a large impact on workplace performance in difficult economic times.
The researchers analysed the British Workplace Employment Relations Study, which polled businesses in 2004, before the financial crash in 2008, and again in 2011. The team compared how workplaces invested in employment relations – including employee participation, development and teamwork – and looked at how this affected their ability to survive crises.
Dr Hossam Zeitoun, associate professor of strategy and behavioural science at Warwick Business School, said the findings suggested companies with strong HR management and employment practices in place before a crisis were more likely to “pull together to get through the hard times”.
In early August, the UK economy suffered its biggest slump on record as lockdown measures pushed the country officially into a recession. The Office for National Statistics said the economy shrank 20.4 per cent between April and June when compared to the first three months of the year.
More broadly, the World Bank has predicted the pandemic will cause the worst global recession since World War II.
“When external shocks hit the workplace, like a recession, managers are under pressure to cut costs and breach these unspoken contracts by reducing pay, intensifying work or making redundancies,” Zeitoun said. “If this is done unilaterally, it erodes trust, commitment and productivity among the staff who remain.”
Zeitoun explained this effect could be dampened by having comprehensive HR practices and established negotiations with trade unions.