Economic downturn: The right time to retain top talent

Economic downturn: The right time to retain top talent
Published: 23 April 2020

As of January 2020, the current economic expansion was the longest-running in US history. That seems like years ago. Now, we find ourselves in the midst of a coronavirus pandemic, an oil crisis, and an inevitable recession. Clearly, it’s time for businesses to start considering how they’ll survive the downturn while ensuring they have the talent in place to capitalize when things start to turn back to the positive.

Historically, many companies respond to a recession by retrenching and scaling back. In some interesting research published in the Harvard Business Review examining different companies’ responses to three different recessions (1980, 1990, 2000), researchers noted that ’firms that cut costs faster and deeper than their rivals don’t necessarily flourish. They have the lowest probability (21%)of pulling ahead of the competition when times get better.’ In contrast, ’progressive’ companies combine defense (e.g. cost reduction through operational efficiencies) with offense (e.g. selective investments to drive new business) to have ’the highest probability (37%) of breaking away from the pack.’

This pandemic and looming recession are certainly not the only threats that companies are facing. Unprecedented levels of change—both in type (e.g. in technology, markets, customers) and speed—can further undermine an organization’s competitiveness, profitability, confidence, and overall stability.

Companies that assess and reshape their organization and workforce not just now, but on an ongoing basis, will not only thrive during the next downturn but will also be more adaptable over the long term.

Robert Satterwhite and Mats-Ola Bydell, who have been consulting with companies to help them assess their talent for over 20 years, provide the following insights.

Based on research as well as experience working with thousands of executives over the last two decades, we believe that organizations must become better prepared for both anticipated and unanticipated shocks, surprises, and setbacks. Much like our assessment of individual leaders, assessing and developing talent based on performance and potential, at a broad organizational level, can be a powerful way to develop and maintain resilience and adaptability in the face of ongoing, often rapid change. We utilize the following approach:  

1. This work is most effective if it is conducted systemically, consistently, and on multiple levels, starting with the senior-most leaders in the organization.Change starts at the top: when senior leadership is visibly engaged (through communication as well as participation), it demonstrates to the rest of the organization the value of and commitment to talent assessment and development.

2. For those below the senior team, companies should objectively evaluate for in-role performance as well as the potential to succeed at the next level. A more streamlined assessment approach can be leveraged as part of broader succession planning efforts.

3. Participants must be actively engaged in the process which ensures that they have bought into the results and subsequent development plans.

4. Results must be viewed in the aggregate to determine where finite resources may be best invested. For example, if leaders tend to be stronger in execution and weaker in strategy, development dollars should be focused at a group level on the latter; individual differences can be addressed through customized PDPs.

5. Learning and development resources should be trained specifically on how to develop leaders and employees to be more resilient and innovative. For example, borrowing scalable and replicable ideation techniques typically found in marketing and other entrepreneurial groups can be used to challenge assumptions as well as identify unique products, services, and solutions.

Investing in talent assessment and development has a significant and demonstrable impact on KPIs, including productivity and revenue generation. According to a Harvard Business Review article, the top 20% of performers account for 80% of organizational output. Moreover, the impact of top performers is magnified as the complexity of the role increases. It’s critical to the long-term success of an organization to ensure the highest potential and output employees remain.

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