Whether we like it or not, businesses around the world are facing mass layoffs as the global economy continues to experience a downturn. 

There are different factors negatively impacting the global economy. High inflation due to the global financial crisis has increased the costs of living even though wage growth has slowed down. The Ukraine crisis has also caused food scarcity and oil shocks around the world.  Even the Great Resignation across the globe has resulted in radical transformations in current working conditions. 

All of these combined have greatly affected both established companies as well as emerging startups from different industries, such as tech, retail and real estate. Mass layoffs have swept through renowned companies in the United States, such as:

• Amazon - The e-commerce giant is planning to cut 10,000 corporate and tech roles, after discontinuing multiple projects this year to cut costs.
• Meta - Previously known as Facebook, Meta is cutting more than 11,000 employees across multiple divisions, reducing 13% of its entire workforce.
• Shopify - As a commerce platform that powers the tech for businesses and entrepreneurs to run their online stores, Shopify was hoping to leverage the pandemic-era e-commerce boom, which unfortunately halted due to the global financial crisis. Shopify removed roughly 1,000 employees from the company, equivalent to 10% of its global workforce.
• Twitter - After sacking 50% of Twitter’s workforce, Elon Musk has made an ultimatum to remaining employees to sign up for “long hours at high intensity” or leave, a mandate that he has enforced in Tesla. Hundreds of employees are estimated to have left through mass resignation after this ultimatum.

Now more than ever, it’s crucial for you to have a unified workplace to ensure your organisation keeps running smoothly without comprising quality in the face of the global economic downturn. 

How should your business deal with an economic downturn?

Talent is at the centre of organisational success for any company. Leadership teams within a business need to invest in their talent management strategies in ensuring the company’s long-term agility and flexibility. 

Talent management strategies will allow the entire organisation to respond quickly and effectively to different conditions and economic climates while maintaining the quality of the company’s output. Talent management strategies can prevent the loss of top performers while allowing your organisation to allocate resources to more urgent business areas.

Utilising a remote work model and building a positive work culture are also key to withstanding bad business cycles.  A remote work model can allow you to save on operational costs while retaining your top talent, while a strong work culture will ensure that you sustain a good work environment regardless of current conditions. 

3 talent management strategies to implement when dealing with an economic downturn

While there are many effective talent management strategies you can use (and have probably already implemented), we’ve shortlisted three that are highly relevant to the current situation. These tips can help you retain quality and strength within your organisation, ensuring that your company brand remains intact.

1. Invest in your high-performing employees

When a company is encountering turbulent conditions, it’s important to focus on your star players and give them a reason to stay. Because they’re high-performers — smart, innovative and hard-working — they’re the employees with the most options. So it’s natural for them to start looking for other opportunities if they sense that the company is going through difficult times. 

These are steps you can take to ensure that you retain your top performers as you implement changes during challenging times:

• Be transparent and communicative about the current situation - It’s important to give much information and data as you can to help your top performers understand how the economic downturn is impacting your organisation and the measures you’re taking to counteract it. Keeping them in the loop will show them how much you value them and their contributions to the company’s success.
• Involve your top talents in strategic planning - Getting your star players to participate in the strategic planning of any major changes can increase employee engagement and give you new insight into improving organisational operations and processes.
• Tune into your employees’ concerns and address them - After relaying important updates and information about the current situation, it’s important to check in with your employees and address any concerns they may have. 
• Pretest the changes to be implemented - If possible, you can do a “test run” of the changes you want to make with your star performers. This can prevent implementation problems in the future while providing your high-performing staff to be directly involved in the process.

2. Establish succession planning 

Succession planning ensures that a company continues to run smoothly in case employees leave (or in a worst-case scenario if reducing the headcount will help the organisation cope with the current economic conditions). You can create multiple succession plans for one position, depending on the potential scenarios you prepare for. Succession planning ensures that the transition period is efficient and productive while minimising disruptions as you change employees. 

Here are steps you can implement in developing an effective succession plan for important positions within the company:

• Create “end-game” goals - Having a vision for the future will enable you to identify the goals you need to achieve as well as the type of leaders you want to cultivate within your organisation.
• Develop a clear career trajectory - Planning a career trajectory for potential successors in your organisation will give you and your employees a timeline. It will also give your employees a clear idea of how they will continuously grow professionally within your organisation.
• Establish a clear developmental program - This will equip employees with the knowledge and skills to successfully accomplish their tasks and responsibilities within their new roles.

3. Implement a hybrid work model or remote working solution

A hybrid or remote work model can significantly minimise overhead costs for a company, allowing the organisation to prioritise employee retention amidst an economic downturn. According to a study by Global Workplace Analytics, employers can save an estimated average of US$11,000 for every half-time telecommuter or remote worker. The report further explains that the primary savings of remote work has resulted in increased productivity, lowered real estate costs and better disaster preparedness.

The Great Resignation has shown us how effective remote and hybrid working solutions can be in preventing the loss of talent. Utilising a remote work solution also opens the opportunity for outsourcing top talent from anywhere in the world at more affordable costs, allowing you to save on business operations during this global economic downturn. Partnering with a credible Employer of Record (EOR) can allow companies to develop the right infrastructure and create a clear outsourcing process. This ensures that you keep your organisational culture intact and retain the best talent for your staff as you transition to a remote work environment. 

Of course, this can be a huge change for employees that are used to on-site work environments. You can implement staff retention strategies centred around thriving in a remote work setup to help your team transition to the change. Providing online talent and career development programs can incentivise your staff to work remotely. Scheduling regular team outings and one-on-one check-ins outside of work hours can help your staff feel motivated, happy and productive.

Talent management strategies are crucial in preparing you and your team for difficult situations, especially when external factors directly affect your company. By developing relevant talent management strategies in your organisation, you can maintain a strong employer brand and keep your operations running effectively.

As an Employer of Record, we believe that people are at the heart of any company’s success. Contact us and we will support you in managing the talent in your organisation and help you overcome bad business cycles.