How to plan for a talent bear market

The talent market is hot, and the June 1st US Labor Market report confirms that we still have over 11 million open jobs. This means that employees remain empowered to request more from current and prospective employers. But as with other markets — what goes up, often comes down. With the possibility that economic growth will slow or decline squarely on the horizon, companies are engaged in scenario planning for a period of slower growth. Part of this planning should include a strategy for a talent bear market.

While this article will not focus on theoretically defining a bear market for talent, we know the indicators: a pattern of reduction in open jobs, higher unemployment and — for hiring managers — an easier time finding and negotiating with top candidates.

Warren Buffett famously stated that at Berkshire Hathaway, “we simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.” A faltering talent market presents an opportunity for companies to be greedy by investing ahead of the next bull market so they are positioned to win the next war on talent.

To help ensure your company is primed to go, here are three ways to prep for (and execute against) a bear market talent strategy.

1. Invest in value

With an overheated talent market, employers are harder pressed to be strategic. The level of urgency in bringing aboard new talent provides less time to do due diligence, leading to buyer’s remorse when a “hot prospect” turns out not to have the promised skills an employer is expecting. And as it relates to retaining talent, a focus on rapidly deploying new benefits and rewards can feel like whack-a-mole — with decisions taken quickly in order to react to competitor moves and countermoves. Sometimes these decisions add tremendous value, but often they miss the fact that compensation and benefits are only one piece of a broader mosaic of an employee’s desired experience at work.

Strategy is about making choices, and two rise to the top:

1. Identify the employee segments that are most critical to sustaining competitive advantage and driving growth on the other side of an economic downturn. While corporate and management talent is a typical area of focus in hot talent markets, this is a time for other parts of the company to shine. For companies with complex supply chains, that means shoring up those end-to-end capabilities with top talent. For companies that work closely with customers or consumers, the front-line team should be supported and bolstered during the downturn. It’s also an opportunity to make sure that junior teams are filled with the best and brightest.
2. Identify big, differentiated bets that create long-term value for employees. In other words, stop chasing competitors and think about ways to create an enduringly valuable employee experience in your own organizations. This is a much harder proposition because it means thinking through how to motivate and appreciate employees, offering work that involves creative problem-solving and creating a culture where individuals are able to grow and contribute. Take it one step at a time, with the first step of inaugurating a cross-functional team across the business and with HR to gather a more holistic view of the strength of the employee experience. This can be done through rich qualitative and quantitative data collection, followed by identifying employee pain points and potential solutions.

By targeting the talent that is most valuable for your business in the long-term and shoring up their experience, growth will be so much easier to execute on in the future.

2. Prioritize diversity

Diversity breeds innovation and success — and many companies have fallen behind in today’s labor market. But companies that haven’t yet implemented a robust diversity, equity and inclusion (DE&I) strategy have an opportunity to do so in a bear market. It means investing in the structural elements that support both hiring and retention of diverse employees.

Start by asking:

• Are we clear on how diversity will help advance our company’s long-term vision and mission? For example, what kinds of diversity, and in which functions and roles, will propel us given the customers we serve and the markets in which we operate? Being intentional about the fit between the business and diversity targets builds authenticity and intentionality into DE&I efforts.
• Are diverse candidates set up for success once they are brought in? Many companies are successful at hiring diverse talent. And when they do, they lose them within 1–2 years because they haven’t cultivated the structures and networks that support professional development and mobility.
• Are we building inclusion into our culture in non-superficial ways? DE&I training programs, business resource groups (BRGs) and forums for enabling open and honest dialogue are all great tools for driving inclusion. They can become hit-or-miss tactics unless they are tied closely with an overall culture strategy. For example, if the broader culture strategy is focused on supporting innovation, how can DE&I programming ladder up? Perhaps with DE&I training programs focused on teaching innovation through the lens of inclusion or with BRGs that are tasked with helping to identify new innovations for customers as part of their charter.

Focusing on DE&I is not only a long term play — it can produce immediate results. From advancing overall employee satisfaction and retaining the top talent leaders can’t afford to lose.

3. Take risks

It may seem counter-intuitive to add risk in a bear market, but some risks are easier and more fruitful when companies are able to catch their breath. For one, it’s the perfect time to pilot new ways of approaching the employee experience and culture.

Here are a few examples:

• Is there a job rotation program that could add tremendous value to employees and the company, but might be too disruptive when employees are stretched thin? A downturn is the perfect time to experiment with new models, including the creation of a more technology-forward “market” for lateral roles.
• Is there a cultural blind spot facing the organization that could reduce its competitiveness in years to come? For many companies, that blind spot is a culture of consensus and blurry decision rights. The bear market is the perfect time to take a stand, clarify the rules of the road and work with your employees to develop and launch a new ways of working playbook for the organization.
• Are your employees burned out by meeting overload? Create policies and practices to reduce meeting burden — from advanced agendas and pre-reads to caps on attendance. Some may not work exactly as planned at first, but your employees (and bottom line) will thank you in the long run.

One way to get started is to set up a Culture & Experience Innovation task force. Empower this team with a senior sponsor committed to action and set up a team charter focused on developing and executing on pilots. And don’t just set objectives for number of wins — tack on a “failure objective” to make sure that people are pushing the envelope and learning along the way.

Some leaders fear bear markets, but they offer unique opportunities to invest in what’s truly valuable. To take calculated risks and lay the groundwork for long-term success. Now is the time to take those lessons learned from successful investors and business leaders and apply them to your most valuable asset: your people.