Is Your Company Prepared for A Recession?
With rising inflation, climbing interest rates, stock market volatility, and generalized economic uncertainty, many experts caution that a potential recession could be brewing on the horizon. While some optimistic forecasters continue to predict a “soft landing” for the US economy, prudent business leaders recognize the wisdom in proactive preparation. Hope is not a strategy.
When an economic downturn hits, it often brings painful cost-cutting measures like layoffs and budget reductions, stalling corporate growth and diminishing employee engagement. However, the companies that weather the storm most effectively are those that use the lead time to thoroughly assess potential vulnerabilities across all facets of their organization. They take preemptive steps to fortify their foundations and minimize the impact in key areas.
"At LHH, we recognize that recessions bring both challenges and opportunities for organizations. By taking proactive steps to assess and address potential vulnerabilities, companies can minimize downturn impacts and capitalize on chances to transform their business,” said Greg Simpson, Global SVP, Career Transition & Mobility Practice at LHH.
Assessing your recession readiness across four key areas will allow you to transform your workforce, retain top talent, lead effectively, and support future growth.
Transform Your Workforce
Forward-thinking leaders are already taking a hard look at how their workforce may need to transform in the face of recession. This involves scenario planning to realistically gauge how workforce numbers, roles, and skill requirements could evolve.
It means having targeted programs in place—like career transition support, retirement incentives, and voluntary separation packages—that can facilitate necessary adjustments in the talent mix.
Maintaining a strong employer brand with transparent communications, upskilling investments, and compassion for impacted employees is critical too.
Retain Critical Talent
Similarly, retaining critical top talent requires identifying the key drivers of retention for your organization’s star performers.
Exit interviews and engagement surveys can provide insight into whether pay, benefits, perks, work-life balance, career growth opportunities, or other factors are most important to your employees. This knowledge allows you to respond with appropriate incentives and supports.
Facilitating more regular career development discussions enables employees to take the reins of their own growth paths. And offering internal mobility programs and stretch assignments gives high potentials advancement options despite hiring freezes.
Lead Through Change
Effective leadership throughout a period of economic contraction is another imperative. Assessing your current leaders’ change management, resilience, agility, communications and decisive thinking abilities allows you to address any gaps through coaching and training before the storms hit.
Having a robust pipeline of “role-ready” up-and-coming leaders allows you to nimbly fill gaps if turnover does occur. Maintaining diversity, equity and inclusion progress means keeping these priorities top-of-mind in succession planning and selective hiring decisions.
Support Future Growth
Finally, even in lean recessionary periods, companies can support future growth by focusing on innovation. This starts by identifying your organization’s future talent and skill needs, then crafting multipronged strategies to develop, attract and retain this human capital.
Hiring top candidates selectively but strategically during a downturn allows you to secure premium skills at discounted rates. And considering temporary or contract workers preserves flexibility in uncertain times.
While economists may disagree on the odds of a recession materializing, advanced preparation is wise. With robust foundations across all facets of your organization, you will retain the agility to conquer whatever conditions the future holds.