Are you recession ready? How would you know? What are the key indicators of “ready?” If you research past recessions, you will find commentary on taking offensive and defensive actions. The prevailing data indicates that a combination of the two leads to greater success. “According to our research, companies that master the delicate balance between cutting costs to survive today and investing to grow tomorrow do well after a recession,” was stated in Roaring Out of Recession by Ranjay Gulati, Nitin Nohria, and Franz Wohlgezogen in 2010. (by Ranjay Gulati, 2010). Since the Roaring Out of Recession article, there have been several prominent studies. All lead to a consideration of debt/cash position, how decisions are made, how the workforce is managed, and the adoption of technology.

I will assume anyone leading a successful business and keeping their head out of the sand, understands the need to reduce debt and increase cash on hand. I also suspect leveraging technology is wrapped up in every strategic plan and considered fundamental to reducing costs, once the initial infrastructure is in place. You will need to research elsewhere for tactics to improve these two considerations; this article will look at decision making and people management. Specifically, we will look at how recession planning benefits from developing retention and resilience strategies by leveraging your most important leadership skill – communication.

Walter Frick’s, HBR article, How to Survive a Recession and Thrive Afterward draws on the data from studies done at Harvard Business School, MIT’s Sloan School of Management and NYU’s Stern School of Business. (Frick, 2019). His bottom line is that preparation was the differentiator for companies that survived well and those that suffered greatly. Now is the time for you to prepare to retain the right employees and develop resilience in everyone.

“The Great Resignation” precipitated more attention to retention than any time in the past decade. Since my early days as a leader, very little has changed about what causes employees to leave their jobs. The new exception may be the ability to work remotely. The main drivers to satisfaction remain the same. The Society for Human Resources Management cites them as:

1. Respectful treatment of all employees at all levels.
2. Compensation/pay.
3. Trust between employees and senior management.
4. Job security.
5. Opportunities to use their skills and abilities at work.

Numbers two and four may prove harder to plan for and will require consistent and transparent communication as a recession unfolds. The other three, respect, trust, and leveraging strengths should be an ongoing priority for all people leaders. Now is a great time to check your alignment in these three areas. How well do you demonstrate your trust and confidence in employee capabilities by allowing them to make decisions? The data that Frick gathered highlighted that, “The uncertainty of a recession necessitates experimentation, which requires that decisions be made throughout the organization.” This approach serves leaders in many ways. Typically, those closer to the work know more about obstacles to success and when empowered properly can find creative solutions. Testing this hypothesis enriches numbers one, three and five on the list above.

Don’t assume layoffs are inevitable. Know that they are expensive in both morale, unemployment, and the eventual process of hiring and training. Consider furloughs and reduced hours. Companies large and small have benefited from this approach, including Honeywell which pivoted its approach between the market crash of 2000 and the recession of 2008. As retention strategies have been fine-tuned in the past two years, the market for top talent has become more competitive.

Who will you retain and how you will retain them doesn’t need to keep you up at night, it needs to be a well-informed plan. Here are key questions to ask yourself and your senior leadership:

1. Do all communications tie to company values?
2. Do I/we routinely call out individual contributions that represent our values?
3. Do I/we consistently provide feedback that is learning focused?
4. Do /we promote a culture of inclusion with our words, actions, and decisions?
5. Am I/are we aware of individual strengths and confident that work is assigned to leverage them?
6. Do I trust my peers and my team?
7. Does my team trust me? (What is my evidence of this?)
8. Do I/do we keep our word and follow up on what I/we say we will do?
9. Do I/we communicate transparently and in a timely manner?
10. Does everyone on my team know their career path and potential opportunities for growth?
11. Do I speak to each employee at least quarterly about how they are tracking to their annual goals?
12. Do I/we allow decisions to be made at the source of knowledge and action?
13. Does everyone feel empowered to operate at their fullest potential?
14. Do I hold routine 1:1 meetings with my team that are structured and cover more than project/work updates? (Such as personal achievements/interests, opportunities for recognition, discussion on what concerns them, what is working well…?)
15. Do I/we create a safe, non-judgmental space for the exchange of ideas?
16. Do I actively coach direct reports to develop in any areas of opportunity we have agreed upon?
17. Do I recognize and reward discretionary behavior (above and beyond) whenever it occurs?
18. Do I cascade all appropriate information to my team that I receive from those above me?
19. Am I consistent in clarifying expectations?
20. Do I hold every team member equally accountable to agreed upon expectations?

Add up your “Yes” responses.

16-20 = You are poised to retain the talent that enables your organization to thrive.

11-16 = It’s not too late, but you better pick up the pace to retain key talent.

10 or below = You likely deserve to lose the talent that keeps your organization afloat. Seek leadership training today.

J. Marquez’s findings as outlined in Ready for Recession support of my assertion that the strength of your communication will determine your readiness for the impending changes to the business climate. Marquez’s study, “underlines the value of good employee communications as part of [this] retention strategy.” The data also suggests that “firms maintain their investment in training to maintain employee loyalty.” (Marquez, 2008)

Rarely does this happen. Quite the opposite occurs. Leadership development is typically one of the first line items to be cut which undermines any recession plan. Navigating challenging times hinges on continually developing your team.

Therefore, resilience is integral to recession planning. Resilience speaks to both resource management and human responses to challenges. Human resilience is generally understood as how an individual, or group of individuals, creates or perceives a positive outcome when faced with adversity. Understanding coping mechanisms, mental health issues, belonging strategies have all been elevated to the consciousness of leaders in the last two years. Benjamin Rosen et al, present compelling evidence for the value of Resilience Coaching in Resilience Coaching for Healthcare Workers: Experiences Of Receiving Collegial Support During The COVID-19 Pandemic. (Benjamin Rosen, 2022). Some larger organizations have hired Chief Resilience Officers, HR departments have bolstered employee assistance programs, the number of certified coaches has grown exponentially worldwide, these are all indicators that attention to strengthening human resilience is here to stay. What can you do at your organization?

 

The Resilience Coaching for Healthcare Workers study mentioned above proposes these outcomes for coaching resilience: foster connections, facilitate workplace learning about maintaining wellbeing, and provide access to additional mental health support. I add learning to reframe to this list. Dozens of my clients have improved their resilience through consistent reframing exercises, a form of internal communication. Reframing includes reflecting upon what you can change and focusing on the positives and learning opportunities that exist.

As a leader you can build reframing into your communications, whether you are sending an organization-wide email about an upcoming change or having a routine one-on-one meeting with a direct report. You can offer your thoughts on potential positive outcomes and/or provide prompts for your readers to contemplate. For example, “Our hiring freeze will enable us to take a closer look at resource allocation and the need to upskill certain individuals. What are your thoughts on who might benefit in your department from learning new skills or contributing to another area?”

The three key components of reframing are as follows with some sample questions to prompt thought.

1. Contemplating the Positives

• What is something good that will/has come of this?
• How will/does this change/situation align with my values?
• What might be different now that I can celebrate?
• What are the benefits to me/others?

2. Exploring the Learning

• What do I stand to learn from this change/situation?

• What is this change/situation telling me about myself?
• How will this enable me/others to grow?

3. Allowing the Positives and Learning to Inform Your Response

• Based on what I have discovered, how will I react or respond?

• How aligned is my response to my intention and my values?
• How will I allow curiosity and awareness inform my response?

Communication encompasses what you say and how you say it, as well as what you hear and how you interpret it. Each day that leader communicates transparently and in alignment with the company values moves them closer to building a recession plan that honors the impact of their greatest resource, the individuals who contribute to keeping your business afloat. Retaining talent means retaining diversity of thought, upholding decentralized decision making, and building a foundation that will enable you to hold steady as the winds of change howl.

Your personal resilience may be the best indicator of your ability to lead others through challenges. “Put your own oxygen mask on first before helping others.” Once you have practices in place to support your wellbeing, and a commitment to exceptional communication, you will excel at planning for a recession. As important as your focus on financials is how you prepare for retention and resilience. As Marshall Goldsmith’s book reminds us, “What got you here—to the success and accomplishments you have achieved up until now—is not going to get you there.” What will you do differently tomorrow? How will you communicate at a level that strengthens your organizations capacity for retention and resilience to create a recession plan that will serve any business turbulence?

 

References

Benjamin Rosen, M. P. (2022). Resilience coaching for healthcare workers: Experiences of receiving collegial support during the COVID-19 pandemic. General Hospital Psychiatry, 83-87.

Ranjay Gulati, N. N. (2010). Roaring Out of Recession. Harvard Business Review, 36-42.

Frick, W. (2019). How to Survive a Recession and Thrive Afterward. Harvard Business Review.

Marquez, J. (2008). Ready for Recession. Human Resource Management International Digest.