MEDIA & INSIGHTS
How can you leverage an economic downturn in hiring and organizational leadership?
With economic growth in the United States slowing to a predicted 0.7 percent in 2023, and ongoing efforts to curb inflation through monetary policy and belt-tightening leading to large-scale layoffs, clients are asking us, “How does this affect talent and what should we do about it?”
Executive Search has typically been an economic bell-weather, but today’s more nuanced environment is means we are experiencing what The Economist calls da Vinci’s ‘Mona Lisa effect’ in the post-pandemic economy – no matter how many times you look, you are unsure of exactly what is happening.
So, what do we see happening? And what does it mean for our clients?
For M SEARCH, the situation is pretty clear. “Companies are always going to have a need for exceptional executive talent,” says Fernando Vega, Partner, executive search, at M SEARCH. “Unemployment is at a fifty-year low and this is a good time for organizations to look at what they can do strategically to prepare for a downturn without implementing austerity measures.”
This means getting your house in order and looking after the health and well-being of your organization and your people. Organizations are also turning to leadership advisory to ‘audit’ their capabilities and ensure they have the right people and processes in place to pivot as the Mona Lisa’s gaze shifts.
“When you have the right people and practices, you have a sound base to weather all kinds of economic turbulence,” adds Valerie Derome, Partner, leadership advisory, at M SEARCH. “A difficult market will reveal weak leaders, awkward organizational structures and poor procedures that require a strategic rethink around people, practices and processes”.
People need to understand the strategic vision of their leaders, and the insight they bring from experience. In a turbulent market leaders need an ability to keep people motivated and focused, enabling a sense of ‘normality’ about coping with market fluctuation and staying calm. “Experienced leaders know that people get anxious about losing their job, working too many hours or the consequences of instability,” comments Valerie.
Today’s climate is therefore shining a light on governance and corporate responsibility geared to looking after your people, a priority that we see in leadership advisory today.
During the pandemic, interest rates were at an all-time low. In the hyper-growth, digital economy flourishing particularly in South Florida, boards encouraged CEOs and tech leaders to do everything possible to grasp opportunity and gain market share, so when the tide receded they would remain buoyant. But the consequences of an unfettered drive for results were bloated companies and unsustainable balance sheets. Business and people strategy were trampled in the stampede for clicks and subscribers.
What would experience say?
Robust talent practices are key to surviving today’s market turbulence. “Leaders need to pursue a talent management cycle that maintains a constant finger on the pulse, with regular dialogue between people and management, and assessment of performance and potential, supporting people’s growth,” comments Valerie. “The company grows when people grow, so performance, delivery against corporate goals and how leaders model company behavior are all essential components”.
The needle is moving a little here, but not nearly enough. This is partly due to a retreat from hierarchical structures, driven by tech companies. At one extreme hierarchies stifle progress and learning, but at the other ‘totally flat’ extreme there are other consequences, most notably, good ideas with no senior-level sponsorship. “It’s better to speak regularly to your direct report and have a structure for implementing ideas, rather than wonder what happened to suggestions that disappeared into the ether,” advises Valerie.
So, how can you leverage an economic downturn in hiring and organizational leadership?
By creating real discipline around strategy, people and process. First, “this is a great time to be hiring,” asserts Fernando. “There is an impressive, diverse talent pool in the market attuned to uncertainty.” Secondly, whether or not organizations have robust hiring budgets, today’s disrupted markets are prompting a review of people and process. “Whether you are hiring or reviewing, let’s look at the Mona Lisa together and gain a sense of your perspective. A people strategy based on thoughtful governance and corporate responsibility will position you well for future opportunity,” concludes Valerie.
The market may be unpredictable, but for sure, there will be opportunity. Today it’s less about clicks and subscribers and more about people.