Some businesses have already made staff redundant while others are looking at how they can control their payroll expenses in this economy.
But with a skill shortage still at a critical level, Stephanie Christopher, Australasian director of SHL, is urging caution to companies looking to make cuts.
"Keep those employees who are definitely going to meet the talent requirements of the business going forward. If it is necessary to downsize the organisation, make sure you have a really good understanding of what your talent needs are and that you are holding on to the right employees," she says.
"If there's a freeze on recruitment in your organisation and you are left with the pool of talent that you have, then the more you know about them, the easier it is for you to move them around where they can be most productive in an organisation."
To learn the most you can about your talent pool, Christopher recommends personality profiling and psychometric testing to determine someone's likely success in a role.
Now is a good time to review performance and make sure the right people are in the right roles.
"In this economy it's even more important to make sure that you are nurturing your talent and supporting it and growing it in the right direction for where the organisation needs to be right now and also going forward once the economic climate shifts again.
"In previous economic downturns, people have cut training. That's been one of the easy things to take out of the equation but that doesn't help a future skill shortage.
"How much is it going to cost the business if we let good talent disappear?" Christopher asks. "This would be a really good time for an organisation to provide a secure and positive workplace for their employees because they're making them feel valued and they're also developing their skill set while they're there in the organisation."
Now can be a good time to shift any roles where demands have changed and put the most productive employees in key places.
But any changes in roles need to be done from a strategic point of view.
"Leadership is another area which is really important in this type of environment. Organisations need to recognise that steering a business through tough times might require a specific focused type of leadership."
Ron Lingard, New Zealand director of Right Management, says organisations should not have a knee-jerk response and immediately consider cutting staff.
"It's just too hard to junk people and then expect to go to the market and pull them back in, or others for replacements, when inevitably the economic cycle swings up again."
Lingard says most companies are prepared to warehouse their mid to senior level talent during this downturn.
"Even if the organisation is going through a slow period, if sales are down, if economic activity is falling away, most organisations are careful to manage those resources because they are so short.
"There may be some changes to try and ensure we keep getting a cost-effective and efficient outcome. We keep them focused. But that's just about managing the processes and not about outsourcing them."
Lingard suggests warehousing staff can be done in a few ways. Talent can be relocated to an area of the company where there is a lot of activity _ in some cases maybe to another part of the world.
He has also seen manufacturing companies hanging on to their middle to lower levels of management and operational staff who have skills that are in demand.
But he admits warehousing can only work for so long.
"If the economy continues to drop off and we start moving into a sustained period of recession then I think you will find companies who are moving from holding staff to letting them go."
At the moment, many employers are taking a wait-and-see approach. With a shaky economy and a looming national election, the end of the year should provide more certainty.
"I think if we get to the end of the year and the economy is remaining flat, that may well see the New Year in 2009 looking rather gloomy for some," Lingard says.
Whatever the situation, workers need to be kept in the loop and fully engaged.
"Understand that the competition for talent remains as strong as it ever was. [Companies] need to keep committing scarce resources to keep their key people in place.
"Most companies, even in the manufacturing sector, will be loath to lay people off because it's just so hard to rebuild that capacity when the upswing comes."
Some companies are working out compromises with workers by cutting their hours.
Shorter days or shorter weeks might be better than having to find another job.
"I think that [companies] understand that times are tough all round and they just need to manage that. As always, redundancy remains a last resort for most companies," he says.
Simon Telfer, managing director of Stimulus Consulting, agrees that it remains important for businesses to invest in their staff even in a downturn.
"I know that financially, the resources might not be there as much but it's during this period of status quo and stability and the market not rising that you might have the time and be able to put in some development programmes.
Telfer hasn't had clients reducing staff yet but he has seen more highly-skilled people available at standard market rates.
"I think it's an ideal opportunity to access talent that either wouldn't have been available or would have been maybe priced a little bit too high," he says.
Businesses which are looking ahead could use the current economic climate to take on skilled staff at a fairly reasonable rate of remuneration.
"It's those firms that have the maturity to look at a cycle and say, `Well, if everyone's selling, maybe it's a good time to buy'," Telfer says.
"Smart employers try to stay ahead of the business cycle so once the market turns again and everything is going gangbusters, it's almost too late to get the good talent. If you can try and see that coming and hire ahead of that, you're at a huge advantage."
To make the most of the talent within an organisation, Telfer says closely monitoring key performance indicators is something which should be done regardless of the economic climate.
"Businesses should always be reviewing the performance of their staff and it shouldn't require a downturn in the economy to look at either upskilling or increasing capabilities of staff."
But he also says that in these tough times, it's even more important than ever to performance manage people out of a job when they aren't pulling their weight.
"Maybe some of those performance issues become more imperative at the moment because there are other candidates around who could be giving greater value if a place was freed up for them," Telfer says.
Cutting staff who aren't meeting expectations is one thing. But making full-time permanent employees redundant in order for the company to sustain a short-term economic downturn is not the best business practice.
Particularly given that the skill shortage is here to stay and organisations are not able to repopulate their workforce with talented people at the drop of a hat.
However, if there is no alternative but to make some positions redundant, Telfer has some advice to save workers' morale.
"If you're going to cut staff, do it once and do it well rather than death by a thousand cuts," he says.
Contact David Maida at: www.davidmaida.com