Over the last year, economic uncertainty has dominated the headlines. Lingering inflation, layoffs and a tight labor market have added to recessionary fears. The growing AI frenzy has also created uncertainty about what the future of work will truly look like. What jobs will continue to be held by human talent and what will become automated by AI? While the latest reports from the Bureau of Labor Statistics and Statistics Canada demonstrate a cooling job market, there are still hopes of an economic “soft landing,” or a recession that hits not in 2023 but in 2024 instead. The lingering uncertainty is what’s giving business leaders pause. What’s coming, what do we try to tackle today and what do we make plans for in the future?
Unfortunately, there is no economic playbook for this situation. No two recessions are the same — even without adding in factors like a global pandemic, supply chain disruptions, technological advances and foundational shifts to the world of work — which makes learning to navigate today’s uncertainty both critically important and incredibly challenging.
For organizations looking to thrive in the days ahead, there are three core tenets of recessionary leadership to keep in mind.
Flexibility fuels resiliency. Change is inevitable. It’s rarely a question of if industries will shift, but when and how. Rather than avoid change, leaders need to build flexibility into the core of their organizations — especially in staffing. As some sectors contract, others expand. New roles and responsibilities emerge, and shifts happen quickly. How organizations adapt and flex to meet this challenge will determine their resiliency, and this agility will fuel growth — in any economic climate.
Efficiency and innovation are key. Human productivity can only be improved to a certain degree, so embracing new and emerging technology is essential. Periods of economic uncertainty often force innovation, and the best leaders prepare for this. While there are tough decisions to be made around reducing costs, there are also opportunities for streamlining and optimizing current operations.
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The tech industry offers an interesting case study on the benefits of balancing innovation with efficiency. At first glance, the tech layoffs seemed like an economic warning bell. However, many companies overhired during the pandemic — and recent tech layoffs represent only a fraction of the jobs added since 2020. Demand for tech talent still remains incredibly high, signaling that these layoffs are more of a restructuring than a reduction.
While it’s easy to see the benefits of efficiency in hindsight, research published in Harvard Business Review concluded that organizations that balance organizational efficiency and innovation don’t just boost employee morale and productivity, they’re also 37% more likely to survive (and thrive) after a recession.
Bottom line, keep innovating and don’t let uncertainty deter you from prioritizing this as a business imperative.
Pay attention to people. In a challenging environment, great talent is hard to find and harder to retain. The same strategies that worked to find, attract and manage top talent during uptime may not apply during an economic downturn — and often backfire. What is used to help motivate employees can become demotivating, and even the best intentions can fall flat. Instead of pushing people harder, it can be beneficial to focus on nurturing, upskilling and engaging employees instead.
Whether an organization hopes to stay competitive, drive innovation or conquer new markets, great people drive great organizations. Not only is this why highly skilled talent will always be in demand, but — done right — it’s also why the staffing industry and its leaders will continue to shape the world of work, regardless of the economy, for years to come.