3 Things That GREAT vs. AVERAGE Employers Do in Times of Economic Uncertainty

What do top venture capital firms, Warren Buffet and the best employers have in common? They act in accordance with a common philosophy–  “dive in while others are fearful”.

Let’s take a closer look at how that philosophy manifests for each…

In a recent article by Cresset Partners, the investment advisor looked at commonalities between the greatest venture capital fund vintages (when a VC fund starts investing) of all time. The common theme was that they have always followed recessionary environments. “This phenomenon was present after the dot-com bust, but was even more significant after the Great Recession in 2007”, the article states.

While a few drivers of this trend have been identified, the most universal one is that major upsets in the economy often create unique innovation opportunities– for new product ideas that win revenue and more intentional employer practices that win people. Basically, while most are saving, the best VC firms are investing, and as a result, seeing drastically higher yields on those investments because there are less like-minded pioneers in the ring.

Similarly, two of Warren Buffet’s top ten pieces of financial advice is to “keep cash reserves on hand for down times” and to “invest in yourself” (or more broadly, invest in people). His rationale? “Anything you invest in yourself, you get back tenfold. And unlike other assets and investments, nobody can tax it away; they can’t steal it from you.”

Regardless of personal opinion about Warren Buffet, I think we can all agree that he has earned the reputation of being one of the world’s most famous and wealthy value investors. His track record of investing in high value assets while others pulled back certainly paid off many times over. Likewise, we believe his tendency to continue investing, especially in people, during uncertain times is valuable advice for corporate executives and entrepreneurial leaders alike during today’s perpetual candidate-driven labor market.

That brings us to our primary interest group– the world’s BEST employers. How are they (or should they) be acting during this time of tumultuous labor markets and somewhat volatile economic trends?

You’ve likely seen the evolving news cycle which likes to narrowly label reported patterns in the collective employer-employee relationship. In the last 6 months alone, we’ve gone from “Quiet Quitting” (employees choosing to continue working on their terms) to the “Great Resignation” (employees choosing to leave altogether) to “Mass Layoffs” (employers forcing employees to leave) dominating the headlines. It’s easy to get caught up in the polarizing details of any frequently read buzzword and to instinctually follow the same fear-ridden road of the masses.

But if you truly believe that A+ talent will generate exponentially higher company growth, we encourage you to shift from instinctually following the masses to intentionally transforming this unique window of opportunity into a talent windfall.

After working with and witnessing dozens of companies navigate the Herculean challenge of attracting, hiring and retaining great talent since the COVID-19 pandemic upended the labor market in 2020, we can confidently say that diving into Human Capital investments when others are being fearful can generate the same outcomes that venture capital firms have seen against their investments during similar times.

When the labor market becomes challenged, startups and high-growth companies alike have the opportunity to hire excellent engineers, executives and other skilled worker profiles that have been laid off. But they still need to position themselves as a desirable place to work and come to the table with an attractive offer.  We’ve seen some companies miss vital opportunities and others reap the benefits of their competitors’ shortsighted blunders.

Here are 3 ways to make sure you’re in the winning category:

  1. Use this “down time” to build an incredible talent attraction, hiring & engagement system that can be switched on overnight when the market turns. Understanding key insights about your workforce, analyzing your talent competitors, building a distinctive value proposition and an associated go-to-market strategy, mapping your ideal talent journey and applying a consistent brand identity to every touchpoint within it is not rocket science. But it also doesn’t happen overnight. Take our free Talent Magnet Score™ Assessment to see how close you are to having that system in place. We can help bridge any gaps quickly, so you have the ability to efficiently attract, hire and retain A+ talent when demands arise.

  2. Be willing to change or replace old practices that are no longer working. For some reason, the field of HR has traditionally been slower to evolve and transform than most. We see this in lagging HR tech applications, unattractive employee benefits & rewards policies and outdated corporate and communication strategies. Yes, much of what HR practitioners work on is fairly complex and can take a while to implement. But it doesn’t mean that leaders should still be tied to it if they aren’t working. If your recruitment communications are falling flat, change them. If your flexible working policy is being rejected, update it. If employees disdain your performance management system, understand why and evolve it. If a mass exodus is occurring in one area of the business, identify the root cause and resolve it. Agility equals success when it comes to managing something as complex as a collection of human beings.  

  3. Approach the employer-employe relationship as a committed relationship; not an impulsive fling. The best employers (company decision makers) don’t reactively cut helpful employee benefits, divorce entire teams and run to the hills crying poverty just because a round of layoffs is strategically necessary for the company’s next quarter goals. The World’s Best Employers listhigh-value has been formed from visionary employers like Delta and Samsung, or smaller pioneers like Abnormal Security who embrace a much broader lens to its people practices. They have proven that only supported workers make exceptional companies and that continuing to prioritize and invest in people during the good times and bad is necessary to achieve its mission and profit goals in the long run.

I’ll close with one of my favorite quotes from Mr. Buffett… “Someone’s sitting in the shade today because someone planted a tree a long time ago.” If you’re ready to start growing an A+ workforce while everyone else retreats, let’s talk.