Recession or not, leaders still need to do better
“Experts” are currently divided on whether the US economy is sliding into recession. In one important respect, it doesn’t matter: even in a recession, companies must do everything possible to retain their best employees.
A recession may give employers an excuse to tighten their belts and let some underperforming employees go, but it doesn’t give them an excuse to pull back the work improvements they put in place in response to the Big Quit/Great Resignation. .
The improvements became necessary when the Covid-19 pandemic caused many employees to reevaluate their personal and professional priorities. Millions started jumping ship for better work or no work. Faced with this great resignation, companies have turned to improving work, looking for ways to attract talent, increase employee satisfaction and strengthen retention.
Today, with the economy slowing and a possible recession looming on the horizon, some wonder if employers can put the brakes on and stop worrying so much about job satisfaction issues, such as travel and flexibility, which employees are concerned about. They ask, “Is the boss back in the driver’s seat?”
The answer is: Not if the boss is thinking about the medium to long term future of his organization, rather than tomorrow. Here are three reasons:
1. If we have a recession, it will probably be moderate.
As BCG chief economist Philipp Carlsson-Szlezak wrote in the Harvard Business Review in June, while the likelihood and timing of a recession is debatable, if a recession hits “there are good reasons to expect it to be moderate because the most damaging types of recession are less likely today. Banks are well capitalized, profitable and unlikely to generate structural overhang in a downturn. This leaves the prospect that demand could return quickly and that labor markets remain tight, which would keep a recession moderate. And labor markets are tight, with the unemployment rate at just 3.7% at the end of August, according to the Bureau of Labor Statistics (BLS). With the Fed “pushing rates so high so fast,” Carlsson-Szlezak thinks a recession may be hard to avoid, but the current strength in the economy makes him think that’s likely to be an event in 2023, not this year. .
2. There are still too few workers pursuing too many jobs.
While the US economy has slowed, the “turnover” in the labor market has not changed, as millions of workers voluntarily quit their jobs every month. As the BLS reported on August 30 in its monthly Job Openings and Labor Turnover Summary (JOLTS) report, some 4.2 million American workers, or about 2.7% of the total labor force, left their jobs in July. A month earlier, the numbers were virtually the same. With more than 11.2 million job openings across the country, nearly double the number of people looking for work (about 6 million), many employers remain at a standstill, too few of workers pursuing too many jobs.
3. High performing organizations always need high performing talent.
Various articles and studies, some of which can be found here, here, and here, have attempted to calculate the value of high performers versus average employees. Estimates of “value added” vary widely (some might say wildly) from 25% to many multiples of that. However you calculate it, the bottom line should be clear: even in a recessionary world, organizations will need to create work environments that deliver what top performers and top candidates want and need. .
And we know what it is:
Traditional office workers want better pay, flexibility in where and when they work (i.e. many want to work remotely and on their own schedules, at least some of the time), and they want opportunities to develop closer relationships with their peers, and
“Officeless” talents (those working in factories, warehouses, construction, retail, transportation, hospitality, etc.) want more flexible work hours, better work-life balance and private life, clearer opportunities for advancement and better pay.
So, as administration officials, Congress and the Fed ponder how to calm inflation and talk of the recession continues, employers would be wise not to take their foot off the pedal “must -do-work-better-now”. Although it may sound like a cliché, people are always the key to the success of any organization. Do not lose sight of this fact.