This post was originally published on www.forbes.com
Top economists predict a 70% chance of economic downturn in 2023, leading many executives to prepare their companies and employees for a recession. Although most experts believe it will be mild, such economic uncertainty can provoke fear for many in the workforce as it relates to job security and the stability of a company overall. In my 31 years in the construction industry and five years as the president and chief operating officer, I have been through some of the most difficult global recessions and economic slowdowns in recent history. I have seen and experienced the real impacts that recessions have on businesses, employees, their families and communities at large. I greatly value the lessons learned and the outlook gained over the years. To help execute effective leadership during a looming recession, I share these three tips to help others maintain, sustain and cultivate a thriving workforce.
Nearly 60,000 people across the U.S. lost their jobs in large corporate layoffs in January 2023, and many companies are expected to turn to hiring freezes this year. While both resolutions are often what companies must resort to in a hard economic downturn, consider the long-lasting effects of not maintaining or growing a high-performing workforce in your organization. I believe cultivating a strong workforce should continue even during a recession.
While the volume at which a company hires during a recession may change, companies should not stop hiring altogether. Otherwise, recruiters could miss out on top talent. New talent brings about solution-finding opportunities that can help with current challenges as well as fresh ideas to move companies past the recession. New ideas and perspectives can also lead to growth opportunities for existing employees who are ready for a promotion and to take on new responsibilities. The absence of new talent can leave current employees stifled in their own growth, resulting in complacency, lack of inspiration and motivation and overall growth. If a company has no other option than to freeze all hiring, I recommend keeping in contact with top talent and nurturing relationships for when opportunities open down the road.
Additionally, leaders should investigate potential furlough options for employees before resorting to layoffs. During the Covid-19 pandemic, some of my company’s workforce was furloughed with the intent to re-hire them once the economy bounced back. This ended up saving money in the long run because we did not have to recruit and retrain new individuals once we were ready to bring furloughed employees back into the office.
Consistent communication with employees is key to sustaining a productive workforce and maintaining a positive work environment, especially during uncertain times when staff are worried they could be one of the estimated 1.2 million expected to lose their job this year.
I agree with this Gallup study, published in April 2022. “After two years of living with daily uncertainties about our health, economy, and what we want our jobs to look like going forward, it’s important for employers to show up as a stabilizing force employees can count on through thick and thin.”
Elevated efforts to practice transparency through communication during uncertainties can build trust from all levels of a company. Offering opportunities for open dialog is critical to strengthening the employee voice, maintaining or boosting morale and finding solutions together. Consider company-wide town halls, meet and greets or other forums to provide a platform for employees to raise questions and concerns and be transparent with your responses and answers.
An approach I have been taking recently is meeting with employees regularly through open forum town halls to share the current and future state of the company. In preparation for those meetings, I craft future-focused messages to employees so they know the company is not just focused on the here and now but on what is coming down the pipeline for our industry. This year, I shared several recession-proof markets our company is focused on that will be able to withstand an economic downtown should there be one.
Your people are your biggest asset, so it’s imperative to never stop investing in them, despite the circumstances. Make your employees feel valued and secure in their job and offer opportunities for training and professional growth.
Training employees is an investment that leads to staff loyalty and commitment, but when companies must cut costs, professional development training are usually the first items to get slashed. An inadequately trained workforce can affect businesses detrimentally and can contribute to an unsafe work environment, low production rate, high turnover rate and more.
Celebrate the big and small wins with employees and demonstrate expectations of a promising future by promoting exceptional staff who deserve to move up and grow with the company. Even in an economic downtown, I do not believe in holding people back from well-deserved promotions, as this can lead people to look for new opportunities elsewhere.
Predictions on exactly when a slowdown will happen and how much it will affect our well-being are still uncertain, but what is certain is how leaders can behave, engage, lead and communicate during times of economic uncertainty. Think about it: How do you want to lead?