With the Risk of Recession, Now is the Time to Double Down on Talent
Invest now or risk spending more in the long run.
By Audrey McGuckin, CEO, WOTW -
Talks of a looming recession continue. Although Reuters recently reported, employers in the U.S. “hired far more workers than expected in June and continued to raise wages at a steady clip,” I hear from clients that they are worried about a potential recession and the impacts that could have on their businesses. As someone with thirty years of HR and leadership experience, I can tell you that the best thing you can do to recession-proof your business is to double-down on your talent NOW. Here’s why.
From a financial perspective, the numbers alone tell a strong story that retaining talent is the most important thing you can do to save money:
- If you have to replace an employee, the wrong hire can cost you between 30% to 500% of the position’s salary. Also, according to Gallup, 17.2% of the workforce is actively disengaged, and a disengaged employee costs 34% of their compensation. So, if the median salary is $90,000 your annually spending is $30,600 per disengaged employee. The answer to this is NOT replacing employees (hiring/replacing = added cost) but to find ways to engage the percentage of your workforce who are unengaged. In other words, think about long term costs when making your staffing decisions.
- Companies with above-average diversity produce a greater proportion of revenue from innovation (45% of total) than from companies with below average diversity (26%).” (Forbes) Maintain your employees and that diversity you’ve worked so hard to build over the past decade.
- The current gap between the number of jobs and available workers was 5.5M in April, meaning there are about two jobs for every unemployed worker. Finding employees remains tight and will continue to remain tight for a while. Why would you lose valuable resources and spend time and money to replace them when the labor market remains tight?
- In Mercer's 2022 Global Talent Trends Study, they reported that “highly energized employees are more likely to work for a company that delivers on total well-being, has tackled organizational complexity, and has an inclusive culture.” They also reported that in 2022, 81% of employees feel that they are at risk for burnout (compared to 63% in pre-pandemic 2019). In other words, employees are overworking and retaining those workers requires offering them well-being and leadership skills.
This is why I coach leaders to focus on taking care of their people. It’s expensive to replace talent and replacing employees hits your bottom line. If a recession is looming, a hit to the bottom line will not be a good thing for your business
Given that, what are some ways you can retain talent right now?
- Engage employees, especially women leaders - In a 2021 Workplace Insights poll, Gallup found that disengaged workers were at the highest risk of leaving and that “it takes more than a 20% pay raise to lure most employees away from a manager who engages them.” You have to engage your employees to retain them. And when it comes to diversity, research has shown that diverse teams are better positioned to unlock innovation and drive market growth. Now is the time to double down on your gender equity programs. Now is the time to build up your women leaders. Spend a little bit on engagement and the payback will be huge.
- Teach employees new skills - You have great employees and you know the high cost to replace them. If you want to retain talent and increase their engagement, enroll them in programs that up-level their skills. Improve their leadership abilities. Support their growth. After all, an employee who feels supported is more likely to stay. You can start with WOTW Navigator, a year-long training for women leaders.
- If you’re a CEO, take the helm of your development programs and initiatives. Most CEOs will assign an HR lead to do this work and guess what? When the CEO doesn’t make it one of their core priorities, it becomes less important and not strategic, especially during downturns. Active involvement from the CEO is crucial. You must participate in all of it. Your executive team needs to be involved as well. It’s hard courageous work, but it’s the grit of leadership. Start by coming from a place of curiosity about what might be holding your organization back rather than a place of judgment. Conduct empathy interviews and take those answers to heart. Think about what you need to change. Be curious as to why people feel that way rather than being defensive. Start with openness and readiness to change. Then lead the charge. More on that can be found here.
- Identify your top systems problems. There are problems that hold companies back. At Women On Their Way, we help leaders identify and fix 14 corporate system levers that could be broken. Levers like sponsorships, pride of ownership, mindsets, vague feedback, etc. (I list many of them in this blog post). You can hire us. We’re experts in this, and we can help you easily identify your problems. Shore up your support BEFORE you have to make tough decisions.
- Hold your leaders accountable. What kind of feedback are you seeing from leaders? Take pulse checks, conduct skip-level interviews where you go down two levels to see if the leader’s behavior has changed, and conduct 360 leadership feedback. And again, you must continue to communicate expectations to management that as a CEO, this is a priority. Again, get this in place before a recession hits.
Now is the time to invest. Don’t wait until it’s too late. We have worked with 365 organizations in thirteen countries and we can help you get ready.
Reach out to us today and schedule a time to discuss your options. Email us at [email protected]