More than 90% of US CEOs believe a recession is coming in the next 12 months, according to a recent KPMG survey. With payroll generally the biggest expense on a business’s books, some are eyeing hiring freezes or layoffs to meet the moment.
Mark Zuckerberg warned investors during a Q3 earnings call that Meta might be “slightly smaller” by the end of next year, Microsoft laid off nearly 1,000 employees last month, and Snap announced a 20% workforce reduction in August.
But for others, investing in employees might just be the smartest way to become recession proof, and some workplace leaders are exploring the best ways to retain and reshuffle teams in a leaner economy.
Thoughtful companies “know that they need their really great people when times are uncertain to face all the challenges that their business is about to face,” said Michael Bush, CEO at Great Place to Work, an HR consulting and research firm that works with companies to improve organizational culture.
Bush told HR Brew that companies that are “obsessed” with their employees understand that workers are crucial to achieving business goals. For them, making sure top talent stays and stays engaged is the name of the game.
Let employees know you’re with them. At HR tech company UKG—which acquired Great Place to Work in 2021—that means transparently reacting to the headlines.
“I can’t ignore what’s happening in the broader world because employees want us to translate, ‘What does this mean for me?’” said Pat Wadors, UKG’s CPO. “We’re looking to increase our merit pool. I want people to feel cared for in [an] inflationary time. We’re striving to encourage our employees to be more aware of our benefits.”
Wadors said that UKG is combining its “disparate allowances” into one reimbursement benefit program, launching in January. Employees will be able to choose how the company can best financially support them, whether that’s with commuting, childcare, or paying for dog walkers.
“If you put choice in front of the employee, and they have to [choose] what they want to get reimbursed for, meeting them where they are in their life with their family and however they define their family, they feel that satisfaction,” she said.
Retain and develop your workforce. The HR team at multinational electric and energy company Schneider Electric are recession-proofing by doubling down on employee development with an internal AI-driven platform called Open Talent Market (OTM).
“It’s a career development platform, so it certainly helps the people strategy part,” said Jessica Staggs, senior manager of global talent at Schneider Electric, of the OTM, which launched in 2020. “But it absolutely helps us achieve our business outcomes because the types of roles that we’re filling and the projects that are being created are those where we do need extra help.”
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Employees can upload their résumés, skills, and experiences, as well as areas they’d like to explore to the platform, which uses AI to connect them to internal job opportunities, part-time, “experience-based” projects, and mentors. In 2023, it will feature a tool to help employees’ grow their skills.
In addition to engaging, challenging, and providing employees with opportunities to grow within the company, “It really is a way for us to use AI and digital technology and be able to figure out where some of those skills and experiences might be that we don’t realize,” said Michele Egan, OTM’s digital transformation lead.
For proof of its success as a retention tool, look no further than Egan herself.
“I found my current position through OTM. I was always in marketing and business process things, and I would never have expected to move into HR,” she said. “It definitely was something that helped me stay at the company. Because I was, at that point, just really ready for a change and was looking externally as well.”
What if you have to cut? If retention isn’t on the table, make sure cuts or freezes are purposeful. Take time to improve internal processes for employee performance management and reassess recruitment for when the tap is turned back on, recommended Bush.
“Laying off to hit a budget is never the wise decision,” Wadors said. “Organizations, if they want to retain and leverage great talent, should only use job reduction [and] job elimination for design purposes, not to achieve a budget.”
Wadors said HR teams cannot “guarantee employment forevermore,” but advised that if they do need to explore payroll reduction, they should communicate what’s going on with full transparency to employees.
“It’s more trusted. [If it’s] ablack box, we assume negativity,” she said.—AD
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Correction: 11/01/22: This article has been updated since it was first published to clarify a quote from Pat Wadors.