During an economic downturn most organizations look at ways to tighten budgets and reduce spending. Unfortunately, layoffs are too often used as a first layer cost-cutting measure. While the severity of a downturn as well as the industry an organization inhabits can make downsizing inevitable, this article explores three scenarios in which an alternative approach may be applied.
Studies have shown that top performing companies have a habit of regarding talent as a major asset and invest in people through a focus on work-life balance, diversity initiatives, and learning and development. Further, these organizations tend to see a correlated increase in productivity and higher revenue versus their competitors.
Considering the average cost to onboard a U.S. employee is around $4,000 and up to eight months to complete integration, focusing on preserving and fortifying talent (even during an economic downturn) can be a smart strategy for long-term survival. While mass layoffs have manifested as an unfortunate reality due to COVID-19, there are companies opting to invest in upskilling their workforce to build up in-house knowledge and maximize performance.
Below, we take a look at three scenarios an organization may find itself in during an economic crisis, and suggest a talent strategy for each situation.
A Booming Organization
While a great swath of the economy has been negatively affected by the current pandemic, there are certain industries that are doing well and have even experienced an increase in demand. These include organizations in online retail, health and fitness, eLearning, and medicine just to name a few.
Specific concern for these companies: Booming companies have more latitude to capture greater market share from weaker competitors and bolster brand recognition among their target customers. They are in a positive position to not only institute advantageous strategies for the present, but to engage in growth strategies for the future.
Talent strategy: Booming companies should take advantage of their current success by investing in workforce retention measures. Implementing talent upskilling activities like continuing education, reverse mentoring, and soft skills development has a positive economic impact on both the organization and its employees’ careers. Strategic hiring for high-impact positions now is also a smart option to prepare for future growth.
A Bolstering Organization
This represents organizations in a middle-ground scenario. While they are still viable, they have experienced a definite reduction in revenue and their strategy forward must be centered on balancing costs with taking actions that position them to drive recovery.
Specific concern for these companies: Doing less with more. It’s important that these organizations remain relevant to their customer base, retain key talent vital to profitability, and exercise agility to adapt to a “new normal”.
Talent strategy: Bolstering companies need to be pragmatic. They don’t have a lot of capital to expend on a talent strategy, so they have to keep workforce upskilling activities internal. During uncertain times, employees need to see that they have job security and that they are valued by the organization they work for. The most economic way to do this is by tapping existing talent within the organization to implement workplace mentoring. The priority will be on creating an internal organization that’s fluid, adaptable, transparent and world-class, and then marketing this culture to attract the kind of talent that will thrive in that environment.
A Bracing Organization
Organizations in this scenario have experienced a drastic loss in revenue and are fighting for survival. This could include companies in travel and entertainment as an example.
Specific concern for these companies: Prioritizing increasing sales, minimizing non-essential costs, and resuming normal sales activity as soon as possible.
Talent strategy: An organization in this position is very likely to be engaged in reducing its workforce. It’s vital that downsizing be handled strategically so as not to cut high-value talent which will be critical to the organization’s future recovery. Furlough can be applied as an employee retention strategy, during which an organization can assist with upskilling. When the company is strong enough, employees can then return with even more value to contribute.
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Want a more in-depth look at the three types of organizations and how to implement the perfect talent strategy for your specific type? Our latest eBook The New Future of Work deep dives into this topic and much more.
