Trend #7: Revisiting People Strategies in Times of Economic Uncertainty

2023 4th Quarter Update

Undoubtedly, the last couple of years has challenged workers economically. Given the stress of economic uncertainty, how can organizations best support their employees as they face inflation, unexpected layoffs, and fears of a recession?

First, a brief economic outlook on the last quarter of 2023: Despite weaker global housing markets, slowed bank lending, and an industrial sector close to recession, persistent strength in household demand for services seem to continue to prop up local labor markets. But with persistent inflation and a higher cost of capital for business and financing for consumers, organizations may continue to face slower global growth now, and in the years to come. So, in this remaining economic uncertainty, and for this last quarterly review on work trends for 2023, how can organizations ultimately revisit people strategies in economic uncertainty to best support their employees?

Mental Power

First, amid economic turmoil and rampant layoffs, many employees have fears over their job security. This uncertainty can generate stress, anxiety, and even lead to burnout. Organizations and managers have a key role to play here, as neurologist Dr. Julia DiGangi reminds us in her new book Energy Rising: First, by reminding employees that they are trusted for their strengths and abilities, by helping them maintain or enhance a good self-esteem and a sense of control over their work, and by creating a supportive environment where employees feel they can express their feelings. As Wharton organizational psychologist Adam Grant told CNBC Make It recently, “I think we’ve finally landed in a world where managers are learning that part of a skill set in your job is to care about your people.” Indeed, with less self-doubt, rumination, or fear about their work, employees can regain mental space and well-being. This approach should be the norm, yet it is even more important in uncertain times.

Skill Development

Secondly, in times of financial challenges, it is easy for organizations to make cuts in learning and development since the return on investment may not always be immediate. However, prioritizing upskilling/reskilling, as well as defining and communicating current skill requirements in a changing workplace will help employees be better equipped to solve current and emerging challenges. The past few years have shown that employees will leave companies if their employer does not clearly articulate the skills required for their role and is invested in getting them there. So, an investment starting with a skill strategy in the age of AI, and continuous skill development is key. Because it will not only help answer the shifting demand of customers and drive better growth, but also largely contribute to retain talent, ultimately reducing fruitless funds spent on expensive recruitment.

Vision and Values

Finally, an often-omitted approach organizations should also consider to best support their employees in times of uncertainty is to reinforce the very reason they exist, their raison d’être. Times of uncertainty favor the bold, and now is a great time for organizations to reaffirm and enrich their corporate culture and how they value their employees. How often are employees reminded of the meaning of their work, the difference they make, and the values they can cultivate along the way? If managers remind each employee of their uniquely powerful contribution, the progress they are making, and take time to celebrate these achievements, the workplace will most certainly remain a place for human flourishing

2023 3rd Quarter Update

Undoubtedly, the last couple of years has challenged workers economically. Given the stress of economic uncertainty, how can organizations best support their employees as they face inflation, unexpected layoffs, and fears of a recession?

 In the third quarter of 2023, resilient consumer spendings, moderated inflation and reduced immediate risk in banking have fueled some upturns for the global economic outlook. These improvements remain fragile, however, with China’s slower-than-expected economic recovery, rather persistent inflation, high interest rates and geopolitical uncertainties still impacting the global growth outlook.

 In this context, and as more companies roll out return-to-office (RTO) policies, Hailey Mensik highlights in this article that many employees are experiencing heightened anxiety around going back to work in person, primarily driven by a fear of losing their new routines of working from home, and losing control over how they organize their work. She highlights several concrete actions organizations can take to alleviate some of that anxiety for their employees: recognizing that this transition will take time, providing transparency early on about the plan for in-office days, announcing some in-office days as days for collaboration and meetings virtually. More importantly, organizations need to articulate why they are inviting employees back to the office with a compelling value proposition that will literally motivate their employees to go to the office.

 If the world, and the world of work, are to remain a turbulent place, perhaps organizations can help their employees get better prepared to deal with uncertainty by developing learning agility? This is the direction Veronica Schmidt Harvey and Kenneth P. De Meuse promote in this interview about their publication The Age of Agility. Can this “survival of the agile” trend be what organizations ought to promote to help employees grow the capability to know what to do in uncertainty, or is this more a primarily leader-centered construct that might resonate less with the more immediate and practical economic challenges that many employees wrestle with?

So, in our immediate context, and to help alleviate the stress of current economic uncertainty that many employees feel, organizations ought to first and foremost help their employees live and work well. In a conversation with Paulette Ashlin and Dr John Kello, Karen Mangia highlights some very practical steps employers can take to promote the well-being of their employees, among which assessing wellness as part of their organizational surveys, promoting their existing wellness services, introducing metrics to help leaders continuously support this agenda, as well as equipping leaders to create an emotionally safe environment that minimize anxiety and stress. As Chief People Officer of Avanade, Caroline Fanning has also put “employee care” at one of her highest priorities and she shares what has worked for her company in this very inspiring article. As she concludes “by continuing to focus on the well-being of our people now, we'll be ready to take full advantage of new opportunities in the future.” It seems like the focus on wellness is here to stay.

 2023 2nd Quarter Update

Undoubtedly, the last couple of years has challenged workers economically. Given the stress of economic uncertainty, how can organizations best support their employees as they face inflation, unexpected layoffs, and fears of a recession?

In the second quarter of 2023, rising interest rates have started to impact the economy, with manufacturing activity trending downwards, especially in Europe and Asia, while services have continued to rebound, as households seem to continue to rebalance their spending habits back to pre-pandemic modes. Despite the bankruptcy of three significant regional banks in the US, there does not seem to be a systemic risk in the banking system, as was the case during the global financial crisis. Tech layoffs (199.889 so far in 2023 per Layoffs.fyi) are trending down for now after a peak in January.

In the case of layoffs, organizations can continue to support their employees, by reconnecting and rebuilding trust. In a very practical article based on direct experience from employees who were laid off from a Silicon Valley company, Dr. Leann Kang Pereira highlights three steps organizations can take to best support their employees: Planning new work processes for all employees (and not just their leaders) post-layoff with a focus on mission-critical goals, helping those who stay understand their role and value in the new set-up by reiterating the mission and revalidating goals one-on-one, as well as simply being available to answer questions honestly and transparently, instead of morale-building speeches.

Reshaping people strategies and resetting priorities due to multitudes of complexities from market expansions and major geopolitical disruptions is something Tianhui Grosse, CHRO at iDeals, a growing tech company, has had her fair share since 2022. She’s more convinced than ever that “HR needs to be proactive by making deliberate choices on “where to play and how to win”, with the same rigor used in formulating and activating business strategies, and at the same time be nimble and responsive to pace with the fast-moving technology shifts (e.g., AI applications in processes) and employee voices (e.g., support of mental health and wellbeing).”

In the broader context of economic uncertainty, HR expert Jeff Jolton argues in a recent interview that some broader adjustments are going to be required in organizations to support employees if both are to thrive in the future of work. He predicts for example that organizations are going to need to pay closer attention to mental health, with leadership playing a key role in helping detect and mitigate mental health risks or burnout. Organizations will also be tasked to learn from what works to continue to craft work experiences that better support employees’ mental health. In addition, in a rapidly changing environment, and with a slower hiring pace, organizations are going to need to rely more on the development of their current staff and rethink skills management. According to Jolton, this will require “more clarity and thought around what skills will be needed when.” For this to happen, it will be imperative that the articulation of the business and talent strategies happen more in sync. Additionally, to best support employees in the current context of economic uncertainty, a crucial element of a robust people strategy will be the organization’s capacity to assess their talent pool and help their employees grow their capacity to adapt and apply new skills.

 2023 1st Quarter Update

Undoubtedly, the last couple of years has challenged workers economically. Given the stress of economic uncertainty, how can organizations best support their employees as they face inflation, unexpected layoffs, and fears of a recession?

The first quarter of 2023 has been marked by inflation, a sluggish economy, and massive layoffs in the tech sector, including approximately 12,000 Google employees, 11,000 Meta employees (with reportedly more cuts to come), and 2,000 PayPal employees.

So, how can organizations best help employees weather these multiple economic shocks?

In the social media age, Melissa Davies offers some very practical tips on how organizations can communicate and support departing employees and manage the fears of remaining employees.

With stress and uncertainty rising among workers, this article from Psychology Today by Ronald E. Riggio, Ph.D., highlights some of the priorities leaders should focus on to support employees for the moment we’re in: Among these, leaders first need to show genuine care and concern for their employees’ welfare, for example by offering flexible work schedules, work-from-home opportunities, or arrangements to handle family imperatives. Secondly, leaders and HR should not just respond to the context but aim to shape it too, for example, by being proactive in engaging and retaining their best talents, with respect, recognition, and reward.

In a similar vein, and to ensure that the people decisions being taken today help set organizations up for long-term success, Amy C. Edmondson and Mark Mortensen remind us of the importance for HR to help articulate a value proposition that not only addresses the material aspects that might be top of mind for many employees right now, but also includes distinct elements that might be harder for competitors to replicate: Articulate and live a tangible development culture, provide a real sense of community, and a higher purpose that makes people want to get out of bed every morning.

What’s next? In times of economic distress, the traditional response of our economy has been about reducing the costs of tasks, this to immediately make organizations more valuable, not its people. That strategy is likely not going to be revisited for a while. Yet, what if it could? HR can play a key role in progressing a conversation towards an economy that makes people more valuable first. Shouldn’t that be our overarching people strategy in the first place? In their book Disrupting Unemployment, Vint Cerf (co-founder of the Internet) and David Nordfors pave the way for such an opportunity by highlighting how organizations, by helping everyone find a job that matches their skills and optimizes their engagement, could transform dormant human capacity into new wealth: A doubling in world GDP ($75 Trillion) according to their conservative estimate.