How Employers Should Prepare to Address a Potential Recession
The last few years have been anything but predictable for employers.
The roller coaster ride starting during the rise of COVID-19 has meant volatile swings in supply and demand for talent fueled by the Great Resignation, talent shortages, and low unemployment. Adding surging inflation and rising interest rates to the list only increases the potential for a recession.
These simultaneous conditions demonstrate the difficulties businesses face when forecasting. As the lessons of the recent past have shown us, expect the unexpected and plan accordingly.
Below are ways that organizations should prepare for an economic downturn and how to best weather any future storms.
Prioritize and strategize talent resources
The term “task saturation” means there is so much to do that nothing gets accomplished. This can happen when numerous problems are happening at once, especially if they are new or novel issues like inflation rising faster than in the past 40 years while there is also a shrinking labor pool. Diluting the effectiveness of your workforce by attempting to solve all problems at once isn’t the answer; trying to do everything is how to do nothing.
The solution for task saturation is to focus. First, organizations need to define and prioritize the issues. They should then set priorities based on what should be addressed first; keeping in mind effort vs. impact. They should then strategize to free up the necessary talent and financial resources to tackle those priorities before moving on to the next high-impact item on the list, especially important if challenged with reducing headcount or delaying new hires.
If margins and sales start slipping, staying focused on the main priorities is even more critical. Start with the most pressing and move on to the next.
Enhance productivity through upskilling and leveraging outside talent
Worker productivity is always important, but especially when the cost per output increases due to a recession. This is where improving workforce output through training, upskilling, and performance reviews, comes into action. The rapidly changing digital world requires ongoing training for all employees, especially top performers who need access to the latest skills, knowledge, and tools.
Productivity can also be enhanced by bringing in outside resources, such as consultants and experts, to elevate a current workforce’s productivity and/or bridge gaps in knowledge. “Borrowing” external talent, such as highly technical IT talent, helps address current skills gaps, and incorporating “borrowing” into an overall workforce strategy, allows employers to respond quickly to emerging skills gaps as conditions change–preventing any drops in productivity.
Retain top performers
Hiring has become more difficult in today’s highly competitive labor market, so a way to ease this burden is to prevent your top performers from leaving in the first place. Strengthening culture and staying competitive with wages are two areas to focus on to improve retention rates.
Company culture plays a vital role in an employee’s decision to stay or look elsewhere. Leaders must be able to live the company’s core values throughout the employee experience. Organizations should invest in soft-skills training for front-line managers, equipping them with the tools to manage, lead, and grow their teams. Making employees feel valued, empowered, and appreciated along with improving communication and transparency are all ways to strengthen culture.
The reality of inflation combined with a tight labor market means that wages need to be competitive to keep pace. Employers should consider bonuses, raises, and other incentives to stay competitive and help retain staff; thereby reducing the cost of attrition, namely the search, hiring, and onboarding process. If financial incentives are not an option, companies should consider other tactics, such as flexible work schedules, additional PTO, coaching, etc.
Incorporate flexible staffing solutions
The wild swings of the COVID era show that staffing needs can change suddenly and unexpectedly, putting enormous stress on HR and the entire organization. Contingent staffing options like contract, contract-to-hire, freelance, and temp or seasonal roles can provide the flexible staffing solutions organizations need to stay agile.
This is where Addison Group can help with staffing solutions that support workforce flexibility in both the short and long term. Our expertise in specialized verticals enables us to better understand market dynamics as well as your business needs, so we can quickly and thoroughly find you highly qualified talent that fits your unique company culture.