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What To Do In A Recession? Prioritize Workforce Transformation

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While talks of a recession are dominating many boardroom conversations, widespread consensus on the labor market is positive for now as July employment data shows the U.S. adding more than a half million jobs. Similarly, in large markets such as the U.K., unemployment remains low. Even so, there is agreement that the current pace of growth is unlikely to continue due to a number of economic and geopolitical challenges.

Whether a recession materializes and how deep it might grow remains to be seen, but companies can plan for any contingency by transforming their workforce to be effective in different scenarios. Every human capital leader is now faced with the challenge of ensuring appropriate resources are available during periods of growth and retraction, but today’s economic uncertainty is unusually confusing. Those tasked with managing people resources will need to get comfortable with uncertainty for the next couple of quarters and beyond.

So how can HR leaders ensure their workforce is ready for what’s ahead?

Make operational agility a top priority

Organizational agility should be a top priority since it’s unclear whether companies will need to shrink their workforce, add new skills or do both. Human capital executives must be ready for sudden shifts in customer demand, market conditions and business strategies. The ability to quickly deploy talent to where they are needed and redeploy from where they are not is key to operational efficiency and performance.

A recent PwC survey of business leaders showed 63% have changed or are changing processes to address labor shortages, up from 56% in an earlier survey released in January of this year. Even with some companies announcing a reduction in force, the survey also found that 83% are focused on their growth strategy rather than the recession (cited by 30%). And to activate those strategies, having the right talent and organizational agility will be key to execution in the months ahead.

Securing this agility requires that employers engage in an exercise that may seem counterintuitive during a period of contraction: workforce transformation. Redesigning work and overhauling talent strategies is a considerable task, one that even in the best of times is arduous. This job requires investing in people, processes and technology. Most of all, it requires removing ingrained thinking that has anchored organizations to the same outdated talent models for decades.

The current environment may be an especially opportune time because such an effort enables the business to not only buffer against a recession but also prepares it for eventual growth. Workforce transformation drives long-term value for a business and instills confidence in leaders that HR is capable of providing the right resources for any economic scenario.

But what exactly is included in the latest workforce transformation movement? The pandemic has helped many organizations refocus on chronic pain points such as the skills gap and skills mismatch, talent scarcity, workforce readiness and others. The efforts of many companies during the past two years, however, have been reactionary and piecemeal. A really transformational approach involves redesigning jobs and work, adopting a total life cycle approach to talent and driving workforce agility.

Redefining work

One trend that accelerated during the pandemic is how companies carried out work. Remote jobs, internal talent marketplaces, and flexible hours were key to sustaining and improving productivity and worker satisfaction. Corporate leaders recognize that it isn’t necessary to go back to pre-pandemic practices and are embracing new ways of working. But this is an ongoing process, and companies need to continue to think about and question how they can further use this momentum to elevate performance.

What is the optimal work arrangement for a particular job? Which roles should be located locally, nationally or globally to be filled by the best candidates? How can skills be deployed across functions to achieve the best output? By taking a closer look at the ways work gets done and implementing improvements, companies are much better prepared for any contingency.

These were some of the questions a leading life sciences company working with Randstad asked. The multinational business decided over the next few years 60% of its workforce would be made up of contingent talent — a move supported by reassessing how work and resourcing will be conducted. Doing so, the company reasoned, would lead to cost efficiency gains and organizational agility.

The talent life cycle

A holistic approach to talent is critical to any transformation effort. People becoming more enlightened during the past two years didn’t just lead to the Great Resignation, but a whole realignment of workforce expectations. To become an employer of choice, companies increasingly are homing in on the talent experience, which is the most effective way for businesses to engage and inspire their employees. From the first touch point a job candidate has with an employer and throughout their tenure with the company, every step should be well managed with a people-first emphasis.

Adopting a life cycle approach is important to workforce engagement and the employer’s capabilities. From when talent enters an organization to when they off-board or redeploy, a journey that continuously supports skills development ensures that the workforce is always ready for the evolving requirements of their roles or to take on new assignments. Randstad’s global research on worker sentiments has continually found that people want to grow with their companies, so coaching and skilling are critical needs employers must tend to. In fact, Randstad Workmonitor research found that an overwhelming majority (88%) of working adults say they would engage in learning and development programs if given the opportunity. Nearly as many (84%) would speak with a career coach if they had access to one.

Workforce agility

All of these efforts, of course, lead to greater agility. Making work more flexible and having the right skill set for any business demand ensures companies are better positioned to execute, no matter where they are in the economic cycle. Even during a downturn, companies shouldn’t stop investing in the future — including investing in people who can help their businesses outperform competitors.

Beyond the challenges of managing during a recession, companies across so many industries are undergoing transformation, triggered in part by the pandemic and the subsequent acceleration in digitalization. These organizations have no choice but to sustain investments in human capital or risk the momentum they have already built. By preparing their workforce through upskilling, redeployment and coaching, and by redefining work, businesses can fulfill their strategic mandate more rapidly and efficiently.

Economic cycles come and go, but the need for talent is never ending. Companies that understand this will continue to invest in their workforce, even during recessionary times so they can continue to win market share even when revenues are down.

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