Optimizing talent during a recession
Optimizing talent during a recession
A recession is an economic downturn that lasts several months to a year. A recession begins when a country’s gross domestic product (GDP) starts to shrink. This can occur due to a sudden drop in consumer spending, a decline in foreign demand for a country’s goods or services, or an elimination of wealth (such as a housing market crash). Most often, recessions are caused by a combination of these and other factors.
Recessions are the most creative periods in a nation’s economic cycle. In a recession, organizations, especially startups, focus on the innovation of products and services. Large organizations want to reduce their use of resources and avoid overproduction and overcapacity. Organizations spend their time on expenses and balance sheets in a recession. Most of that focus is targeted at the most expensive line item on their financial balance sheets: people costs.
Talent management is a necessary and inevitable part of any business. A recession is the most severe test of survival; it purges the market of companies unable to weather the storm. In a recession, the weak companies disappear, while the strong ones become more robust. It’s also when new startups emerge in the marketplace, capitalizing on their lean footprint and ability to adapt quickly.
It depends on the industry, but industries such as food, energy and technology tend to fare well in recessions. Startups in these areas look to innovate existing products and services and sometimes even create new ones.
But why do all these startups emerge during a recession?
Organizations retain talent to sustain their business operations and release talent that grows an organization as they focus on shrinking their bottom line. Due to the decline in revenue, organizations cut projects and programs designed to add value and retain their existing customer base.
Most service delivery organizations fail to understand that although the demand for their services may have decreased, their customers haven’t stopped growing and maturing. Consumers of services always look for more effective solutions that allow them to do more with fewer resources.
Innovation doesn’t stop during a recession; it just changes hands. When organizations focus on being efficient with staff resources, they become less effective in growth for staff resources. Optimizing their talent pool for growth will prevent them from losing market share during a recession.
How organizations choose to optimize their talent creates an opportunity for people to change the course of their life. During a recession season, talented people who don’t have a space to grow; get together to continue their ideas. They build and deliver on a vision because once a seed is planted in their minds, all they need are the right conditions to grow. They form a new startup as these founders are all united in their desire to impact their community.
These founders have a few things to their advantage during these times. Large organizations have chosen to scale back on innovation; a market flooded with talent and investors looking to expand their portfolios.
Whoever optimizes their talent during a recession grows. Which one are you?
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