When a recession looms, companies often end up taking extreme measures in an attempt to ride it out. Cutting budgets – even staff – to bare bones, or going all in to take advantage of a market where their competitors are cutting back. But when it comes to spending on your people, now is exactly the time to stay the course. In fact, steadily investing in developing your employees can set your company up not just to survive, but to thrive following hard economic times.
After 17 percent of organizations close their doors during a recession, 80 percent of those still standing struggle to recover afterward. And only about 9% of organizations outperform after a recession. To be a part of that 9 percent, it’s critical to do more than just engage and retain employees as budget cuts, hiring freezes, and new strategies make achieving day-to-day goals more difficult. To create stability and grow the necessary innovation to adapt to a changing market, companies need to support employees’ growth in leadership, collaboration, and technical skills.
Create Stability Through A Development Culture
Training, coaching, and professional development often end up in the “extra” category as leaders think about what they need to survive a downturn. When it’s time to cut budgets, these extras are among the first to go. But with them goes an organization’s ability to support their people as they face the new challenges that come with reduced budgets, and even more critically, with reduced staff. The downturns companies try to avoid by cutting these programs become even more high-stakes when employees are left without the tools to face them.
According to Gallup, “the most effective way to retain talent is to develop it.” Nearly 70 percent of employees would stay with their organization if there was an effort to help them develop new skills. High-development cultures help managers evolve to meet company needs and establish communication systems that push best practices forward company-wide. So even when there’s uncertainty outside, everyone inside the company is on the same page working toward shared goals.
Investing In People Is An Investment In Efficiency
Economic downturns are often seen as opportunities to trim excess spending that needed attention already. But when cost reductions take place during times of crisis, it’s easy to make rash decisions that go too far. Reductions are about more than just having the right number of people in place, but also the right combination of skills to keep things running smoothly. Drastic changes require new ways of doing things, and when budgets are tight, those tasks must be done as efficiently as possible. That’s when investing in talent to uplevel skills and bring teams together around new objectives brings returns.
Grow The Skills To Innovate Through Change
Companies that invest in research and development during a recession are proven to continue to grow. But successfully innovating during extreme market changes and with the greatest efficiency possible requires different skills than when the market is booming and companies are flush with cash. And is harder when employees are uncertain about the stability of their job. Not only does investing in your people ensure their skills are up to date, but it also helps to reassure, engage and retain employees to help see innovation through to implementation.
If your company is making changes to prepare or deal with the early negative effects of the current economic climate, you might be tempted to cut everything that doesn’t have a direct impact on revenue. But recessions impact humans, not just the bottom line. How they perform, not how the numbers look on paper, will be the real indicator of your organization’s ability to stay strong. Prepare your people for difficult economic times by making sure they’re prepared to do the work that will move your business forward to the other side.
