You’ve heard it a million times, but it still rings true: Your people are your organization’s greatest asset. That’s why, in a recession, one of your business’s main focuses must be retaining them.
Unfortunately, when the economic outlook takes a downturn, leadership often gets tight-lipped about the state of the business and plans for the future. It’s easy to understand why. Recessions can lead to teams falling short of KPIs and having to make hard choices.
But secrecy has a negative impact on people. It creates insecurity, reduces morale, and lowers productivity. When you keep your people in the dark, they can get tense and paranoid and may even resign—and the cost of turnover isn’t something you can afford, especially at a time like this.
Transparency is the key to avoiding situations like this. Open communication is the only way to preserve trust and motivation when people are worried about their job security. Even if the news isn’t great, your people will respect you for being honest and feel motivated to give even more to the business.
But transparency has to come from the top in organizations to be effective. As an HR leader, encouraging the C-suite to say more, not less, can be tough in times like these, but it’s not impossible. Here are some suggestions that can help.
What transparency looks like
“Transparency” can sometimes get a bit buzzwordy, with some organizations declaring it a value without anything to show for it. So what do we actually mean when we talk about being transparent?
Transparency means being authentic with your people and connecting with them on a personal level and on a regular basis. This extends from the new hire all the way up to the most veteran executive, all of whom thrive when they understand how their roles and contributions fit into the larger picture.
Transparency requires keeping every team member in the know, even about mistakes or failures. This honesty goes a long way to nurture trust, loyalty, and engagement—and keeps rumors at bay.
Getting C-suite buy-in
To get the C-suite to buy into organizational transparency, you have to speak their language. Here’s what they need to hear.
Transparency is good for the bottom line
The modern consumer is discerning and ravenous for authenticity. According to Entrepreneur, “[c]ustomers today are hyper-skeptical of the brands and companies they buy from, and this analysis can make or break a company’s profitability.”
The same goes for employees. Just like customers are loyal to businesses that keep their promises about a service or product, your workforce is more likely to stick around if they know they can depend on you to tell the truth and deliver positive and negative news honestly and in a timely manner.
Not only that, but transparency policies can also encourage people to speak up more. This helps bring awareness to issues that may remain unaddressed and enables businesses to identify and resolve problems before they cause financial losses (or negatively affect the company culture).
Transparency saves money
A company culture of openness and honesty helps boost retention. When you trust your people with information, they become more loyal and less likely to leave their jobs. This leads to savings on recruitment and onboarding efforts.
For example, let’s say your company is falling short of expectations this quarter, and you have to find places to cut down on your budget. Instead of staying silent about it, you can be open with your people and let them know you’ve decided to drop some perks and institute a hiring freeze to avoid layoffs. This will help reduce anxiety and rumors and build trust among your team.
The data supports it
According to Harvard Business Review, the companies that stagnated most after the Great Recession of the early 2000s were the ones that failed to plan ahead and reacted defensively rather than follow contingency plans. To increase your chances of thriving during economic downturns and taking off when the economy swings back up, it’s important to focus on data-based decision-making. This is where HR tech can help.
HR tech is an essential tool for analyzing your internal people data. A next-gen HRIS or HCM can help you automate many of your people processes, gather data on KPIs, goals, and compensation benchmarks, and run pulse surveys. You can then invest more time in programs that matter, like analyzing the data on what your people want, need, and expect from the business. And, of course, the data is there to provide accurate and unbiased insights to help you take action and increase retention.
RECOMMENDED FOR FURTHER READING
- 5 questions your people will ask during recessions and how managers can answer them
- To give, or not to give? Navigating the 2023 merit pay dilemma.
- How HiBob uses trust, transparency, and teamwork to empower and retain our people
Putting it into practice
Recessions can cause panic and fearful decision-making, leading organizations to forget about the company culture they’ve so carefully built. But you don’t want to find yourself on the other side of the recession in a few years, realizing you’ve broken your people’s trust. Now is as important a time as ever to insist on organizational transparency.
Double down and continue to give updates about how the company is doing. Check in with how your people are feeling. Encourage your CEO and other C-levels to speak to people directly in all-hands meetings or otherwise. Include them—and people throughout the entire organizational structure—in the communication loop. Use HR tech to help you collect people data, then share it with your teams to get feedback about how to take action.
When in doubt, err on the side of overcommunication. Why edit your investor presentation before emailing it out to the company? Consider sharing these materials, too. Even the CEO of Berkshire Hathaway sends his Shareholder Letter to the board and all employees at the end of every year.
Transparency: There’s no better ROI
Your people are talented. That’s why you hired them. An investment in your workforce is an investment in your business and one of the best ways to keep it recession-proof. By keeping people in the loop about whatever may be going on, you retain their trust and employment.
Transparency is a zero-cash, high-return investment in your company. Sounds like a no-brainer, doesn’t it?