13 December 2022

From Resignation to Recession: Riding the Economic See-Saw

The last few years have not been kind to employers.  Government‑initiated closures at the onset of the pandemic.  The Great Resignation.  A recession that, if it has not yet been felt by all employers, soon will be.  One could forgive businesses for feeling like they are being bullied on the economic playground.  To punch back at adversity, employers need to be aggressive enough to tackle barriers to employee satisfaction while also nimbly dodging possible financial haymakers on the horizon.  In order to accomplish that seemingly herculean task, employers should keep the following in mind:

1. Identify Sources of Employee Resignation.

Oceans of digital ink have been spilled about what started the Great Resignation.  Whether caused by the pandemic or a perception of greener grass in a hot labor market, the reality is that workers quit and are still quitting—or are “quiet quitting” by doing the bare minimum.  Reasons workers have quit include toxic work environment, perceived lack of recognition and compensation, and an unbalanced work life.  The list goes on.  In order to keep current employees, and recruit and retain good talent, these are the areas employers must address.  Easier said than done.  Still, consider implementing at least some of the measures highlighted below.

2. Avoid Over‑Committing to Fixed Costs on Wages and Salary.

Yes, the easy way to solve a problem with perceived lack of compensation is to simply increase wages or salaries.  But overcorrecting can be a financial disaster if it means your capital is tied up in fixed, recurring payments to employees.  Should a recession cause your revenue to dry up, cuts to employee compensation will likely hurt employee morale—even if your workers understand the business necessity.  Pay increases should not be off the table entirely, but they should be modest, carefully considered, and used in conjunction with other measures.

3. Consider One-Time Payments and Fixed Costs on Total Compensation.

Fixed costs aren’t always avoidable.  But it is far less perilous to offer, for example, weekly or monthly lunches than it is to simply increase salary.  If one is taken away, you will have grumbling; if the other, potential resignations.  The wise employer, then, is the one who expends resources to bring employee benefits that will be effective in the short‑term, while still maintaining an ability to hedge against long‑term headwinds.  Celebrate employee milestones.  Promote social activities and connections between colleagues.  These are effective tools for morale.

Additionally, payments of cash can be effective and worthwhile, if done carefully.  Signing bonuses, referral bonus, and merit pay, for example, are all excellent means to entice workers, reward employees for good work, and keep employees incentivized to improve your workplace.  That’s win‑win.

4. Be Attentive to Employee Needs.

The pandemic caused a widespread move to remote or hybrid work arrangements.  For some industries, that simply isn’t possible on a permanent basis.  But if it is feasible for your business model, be willing to allow employees to work remotely at least some of the time.  Of course, that isn’t the only way to show employees that you want to invest in them and ensure they feel valued.  Offer career mapping.  Give ongoing opportunities for training and development.  Implement different workday structures (e.g., 4‑day workweeks, 9/80 arrangements, etc.).  Employers should think outside the box to create attractive perk packages that will develop talent.  Fortunately, cultivating a healthy culture of motivated employees can often be done without breaking the bank.  Morale‑boosting measures provide a great opportunity to get significant bang for your buck.

5. Solicit Feedback.

Constructive (and not‑so‑constructive) criticism is painful, but giving employees a voice in employer operations is an outstanding way to improve morale.  Hold town hall style meetings.  Survey your workforce anonymously.  Hold exit interviews.  You may be surprised what you hear.  And, to be sure, sometimes you will have to grapple with extraordinarily tough decisions.  For example, your efforts may uncover that a supervisor is creating a toxic work environment.  Perhaps the way to address that is not costly—a candid conversation.  Or, maybe the situation is unsalvageable and a severance arrangement will need to be negotiated, and a replacement found.  But better to have the information and be forced to address it than to bury one’s head in the sand and wonder why employees continue to leave.

In soliciting feedback and addressing problems, employers will be well‑positioned to know what skills and characteristics screeners and interviewers need to target.

As the economy naturally ebbs and flows, the prudent employer will constantly review and revise the compensation and benefits it provides to employees.  In so doing, it will stay ahead of crises before they can significantly hurt business.  Of course, employers should always consult with their advisors to spot potential issues and ensure that good ideas are executed—with expert efficiency.


Contact the author Adam Walker.