Recession Fears Pile Up: Is It Time to Prepare Your Workplace Strategy?Recession Fears Pile Up: Is It Time to Prepare Your Workplace Strategy?
An economic downturn might be the next shockwave that impacts the future of work, but workplace leaders can prepare now for whatever comes next.
June 6, 2022
A couple of months back, with bad economic news in the headlines, I suggested that workplace leaders needed to take the time to seriously consider what a recession might mean for their overall workplace strategy. Since that piece was published, even more indicators have begun to pile up, including layoffs at big and small tech companies, potentially pointing to a greater chance of a recession. So, with the warning signs flashing, what should workplace leaders do to prepare?
The Cost Isn't Just Dollars and Cents
A recession isn't guaranteed, and some economists aren't as convinced that a recession is going to happen. Regardless, workplace leaders in their respected departments can prepare by retooling and rethinking their strategies.
For some insight, communications and collaboration industry analyst Irwin Lazar shared in an article on WorkSpace Connect's sister site No Jitter how IT professionals can prepare and the areas to focus on. Lazar highlighted five areas where IT professionals can prepare for what comes next: spending, investment analysis, supporting hybrid work, responding to IT demands of outsourcing and contractors, and the employee experience.
An economic downturn would pump the brakes on any new spending, and many technology decisions made up until that point will most likely be reevaluated. Workplaces will have additional pressure to reduce redundancy, eliminate unnecessary costs, and optimize spending, he added. To prepare for this, Lazar suggested that workplaces take the time now to measure the cost savings and productivity gains from those technology decisions to show the value that they bring to an organization and why they are needed.
How IT decision-makers purchase products and services change during periods of economic downturn. But it's not just IT departments that'll change, as HR departments will similarly have to change how they operate. HR professionals will not only have to contend with budgetary constraints but how layoffs will impact managers and employees and what that might mean for workplace culture.
Many HR managers will likely have to juggle several responsibilities, as Brian Kropp, Gartner's chief of HR research, shared in an HR Executive article on preparing for a recession. With CFOs looking for areas to cut, HR professionals will need to distinguish between "hard" and "soft" costs, he explained. For instance, cutting expenses in one area might lead to lower productivity, which can become costly in the long term, Kropp added. Additionally, simply reducing the workforce isn't always the best option:
"Yes, you've saved money from reduced headcount, but now you've got all your managers spending more time doing stuff that someone else had been doing. The net cost of all that additional time is actually more expensive than the savings you got by reducing hard costs."
Not only will HR professionals need to look at costs through a different lens than an IT manager, but they'll also have to take the lead on ensuring workplace culture and employee wellbeing is still a workplace focus.
(See related: Strong Workplace Culture: It's Good Business)
Workplaces can still do a lot to boost the employee experience with a tight budget, Laura Hamill, former chief people officer and chief science officer at Limeade, noted in the same HR Executive article. Sometimes, even just asking how an employee is doing can be beneficial, Hamill added. And as Lazar pointed out, workplace leaders can use employee surveys and other employee experience tools (which might have already been purchased) to get a sense of how employees are doing. This also provides an opportunity for HR and IT to collaborate on addressing a workplace issue.
Flexible Working, Employee Experience Will Remain Key
Another question that'll most likely influence workplace strategies in an economic downturn is where we stand with the return-to-office debate, or more precisely, the larger conversation on flexible work. While I argued in a previous WorkSpace Connect article that workplaces might use a recession to bring more employees back into the office, not everyone agrees with that sentiment.
Though workplaces will most likely ease up on new hiring and certain workplace perks, it doesn't necessarily mean that the power will instantly shift back to employers right away, and flexible workplace policies will simply go away, as Richard Wahlquist, president and CEO of the American Staffing Association, suggested in a recent CNBC article. If a recession does happen, employees aren't simply going to "take a job out of fear," and employers will need to realize that "satisfied workers are more loyal and productive than their disgruntled counterparts," Wahlquist said.
Similarly, Wahlquist sees a benefit for workplaces to focus on employee engagement, noting:
"While sign-on bonuses may diminish, employers will continue to aggressively compete for qualified talent. There's no turning back. Economic cycles happen. Workers will continue to benefit from the renewed focus on employee engagement."
So, as workplace leaders prepare for a possible recession and prepare their workplace strategies, many organizations don't need to look as far back as 2007 to get an idea of what will happen; they need to look back to 2020. While the COVID-induced recession might not have been a traditional recession, it proved that workplaces could adjust to change — relatively quickly — and see benefits like boosts in productivity and employee engagement in the process. While economic recessions are often measured in percentages, dollars, and cents, workplace leaders in HR, IT, and real estate/facilities need to focus their efforts on how the improve employee experience and boost workplace culture — especially during troubling times.
