The Upside To A Down Economy - People
By Angela Tai
I’m not an expert in crisis management but I have learned that in times of distress, it’s easy to make myopic decisions. In an uncertain economy, companies have shown to rely on layoffs as the proverbial silver bullet to salvage their business, but this comes with a heavy price. Far too often, organizations don’t consider the consequences of falling behind the eight ball once the economy turns a corner (and it always does). If companies are unable to ramp hiring fast enough, they may miss out on good talent which can directly damage their product, their brand and financial well-being.
As a small business owner, who lived through the 2008 recession, I know the challenges of a down market. It can be frightening when cash flow dwindles and work slows to a halt. One of the things that I caution all hiring managers about is making cost decisions for the short term. I’ve seen firsthand when companies didn’t get personnel decisions right and suffered the fallout of these cuts even years later.
Additionally, volatility can present the perfect opportunity to show your trusted, high performing people that you have their back and will do your best to take care of them when challenges arise. The bond between employees and employers is very much like any relationship, employees don’t forget (nor forgive) their employers’ loyalty in times of difficulties. Once the economy recovers, those that feel spurned often will be inclined to evaluate their options if they’ve lost faith in who they work for along the way - and rightfully so.
Secondly, the investment slogan, “buy low, trade high” applies to hiring. As analysts look for the perfect re-entry point in a soft economy, businesses should approach hiring the same way and take advantage of an employer’s market. Obtaining good talent (even those who have been let go due to no fault of their own) will prepare firms for the future. An article published by Harvard Business Review mimics the same sentiment stating that “those who manage the economic effects of this crisis in a clear and compassionate way create more value for their companies and will come out of this pandemic stronger than ever before.”
I get it, easier said than done, especially for startups, but there are ways to approach this with the help of small business loans, VC and/or holding companies. More importantly, planning ahead of a recession and maintaining a rainy-day fund to afford hiring when others aren’t is an employer's greatest competitive edge.
What I’ve observed is that uncertainties create fear. If someone had prophetically told us that the Coronavirus (and the impending recession it brings) will last exactly 12 months, we can plan for it. While not thrilled, we know for most of us we’ll survive. Unfortunately life doesn’t work that way, and we can’t predict the future, but history tells us that we will make a comeback - eventually. It might take 6 months, 12 months, or 18 months, but “normalcy” will return. What will, however, be indelible in people’s mind is how we, and organizations, conduct ourselves during crises.
