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How Companies Should Manage Talent in a Recession

Manage Talent

How Companies Should Manage Talent in a Recession

August 19, 2022

Jacqueline Barton

Manage Talent

How often do we hear the phrase “but this time it’s different?” Business leaders, Wall Street executives, and economists always look to the past to try to determine what the future holds. And more often than not, history does repeat itself. This time, however, things may truly be different.

Over the last fifty years, a company’s automatic response when things got a bit rocky was to turn to layoffs to downsize and cut costs. We are already seeing a return to this practice by JP Morgan, Netflix, and Tesla, to name a few. But is this truly the most strategic course of action?

Why it May Be Different This Time

This downturn, however, follows an unprecedented employment scenario. Two years into the COVID-19 pandemic, the economy has not yet fully recovered all the jobs lost during that time. With more than 11 million open jobs in the U.S., the result is nearly two jobs for every unemployed person. While this doesn’t suggest that each person is a perfect match for the open jobs, it does reflect the desperate need for workers.

Experienced managers and executives know that a recession will pass. At the same time, over the last two years, businesses have learned how hard it is to find, attract, hire, and retain workers in this environment. Therefore, in this unusual situation of still being in the midst of hiring difficulties, any reaction to the downturn must be carefully evaluated. It could indeed be argued that, instead of reducing the workforce right now, it is prudent for companies to do everything they can to hold on to their employees.

Workers Are Different Too

The pandemic has caused people to take a hard look at their lives and, in many cases, make rather dramatic changes to how they live and work. They have a much stronger desire for a better balance between work and life. They also expect the company they work for to adhere to specific values and principles. If a company makes massive job cuts via a one-sided Zoom call, it will evoke anger and frustration, leading to a social media backlash against the company.

An organization that immediately reduces their workforce or does so in a thoughtless and uncaring manner may never be able to fully repair the damage to their reputation. As a result, it will be even more difficult to find and retain talent in the future. They could very well become the opposite of an employer of choice.

Are There Other Options?

Rushing to let go of employees doesn’t have to be the immediate answer when times get tough. There are numerous other options:

  • Offer temporary furloughs with an invitation to return once things improve.
  • Reduce salaries of top management or C-Suite executives first.
  • Reduce work hours.
  • Establish a four-day work week.
  • Offer sabbaticals.
  • Create work-sharing programs.
  • Establish hiring freezes.
  • Cross-train employees to take on multiple tasks.
  • Adopt remote or hybrid roles.

But if You Must

When the difficult decision to execute a layoff is made, employers who provide support and care for those impacted and those who remain will be regarded as preferred employers. But how? Here are some suggestions:

  • Be empathetic. Empathy in its most potent form will be a combination of verbal expression and tangible action. The message should be “you are not alone” and “here’s how we can help you.”
  • Stay professional. While exhibiting empathy, remain calm and collected.
  • Partner with a professional staffing service. If you do not already have a partnership with a staffing provider, establishing one should be a priority. Staffing firms have deep expertise in working with their clients on staffing issues, including outplacement activities.
  • Promote assistance from the local unemployment agency. Know the assistance your local unemployment agency offers and have that information available for departing employees. Provide tips on how to proceed and get the most out of the offering.
  • Share your network. All organizations have an established network of contacts within other organizations. These connections could be invaluable in helping the affected employees identify other potential job opportunities.
  • Always remember they are human beings. Recognizing that the employees who lose their jobs are human, with all the flaws and emotions that come with that, is the foundation of showing sincere compassion.

In the end, workforce reductions are a business decision based on economic circumstances. If you must make that decision, do so in the most responsible manner possible. Exhibit empathy and provide resources or options as you are able and handle everything in a professional yet compassionate manner. The results will be twofold: 1) employees that are cared for and given as much assistance as possible for future success; and 2) a positive reputation for your organization as a choice employer. 

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