Making Your Company Recession-Proof: Leveraging Training and Onboarding

The current situation

Economic down-turns aren’t as rare as they used to be, since the 60’s there has been one per decade: 1975, 1982, 1991, and 2009. But due to a global pandemic in 2020 and the Russia-Ukraine war leading to a worldwide energy crisis, the economy is yet again on the verge of a recession. 

Bloomberg Economics has gone on record to say there’s a 75% chance a recession will occur by the end of 2023. 

And to add tear-flavoured icing on top of the misery cake, each recession we find ourselves in leads to a deeper job deficit than the previous one.

…So it’s no surprise companies worldwide are dealing with worsening skill gaps. 

It’s also no surprise that people have turned to other ways of working - and no I don’t mean working from home - the Gig economy, full of temporary, contract, on-call and freelance work is more prevalent than you may realise. One in three adults say they do some kind of nonstandard gig work to get by.

What’s on the minds of employees? 

Apart from the background noise consisting of ‘oh god, not again’ there are two lanes of thought, and it depends on the speed of economic fallout as to which lane becomes the most travelled. And as you’ll read, both give a great insight into how companies should act during the next recession.

Stay put and slog it out 

This has been the one and only path in past recessions. The fear of the unknown, coupled with hiring freezes and job cuts leads people to stay within their current role. Moreover, job losses during the Great Recession of 2008 were not only huge, but employers did not begin to add jobs until 2010. A much longer job deficit than seen in past recessions. 

“During the Great Recession of 2008, most companies set a freeze on permanent hiring, with some of the hardest hit also forced to lay off staff. Employers remained cautious even after things started to improve – there was a significant pivot towards temporary staffing and short–term contracts as a way of augmenting staff where needed.” – Jennifer Martin, Operations Manager at Mindscope

Similarly, many people are still recovering from the effects of Covid, where, according to the Pew Research Center; unemployment rose higher in three months than it did in two years of the previous recession. 

It’s fair to say that those working during either of those times, don’t want to suffer a two-year (or more) struggle.

Find better opportunities before the recession hits

As an employer you may raise your eyebrow at this. But it’s true. We may have gotten out of the Great Recession, but we’re very much still within the Great Resignation. 

In July 2022 it was reported that ⅓ of workers are looking for a new role; 31% actively looking, 28% looking to leave in the next 6 months, and only 38% wanting to stay. It seems that since 2022 began, the ball is in the workers’ court as the job market is still thriving and employers are still desperately trying to fill skill gaps.

Right now, we simply don’t know what will happen, whether people will continue to search for new opportunities, or if a new recession leads to the end of the Great Resignation. But it will depend on the supply and demand of jobs.  

What’s on the minds of employers?

For this we need to look at industries that closely follow economic trends, such as the tech industry.

According to Stripe CEO Patrick Collison, due to rising inflation, fears of a looming recession, higher interest rates and energy shocks, a slew of the largest social media companies have made deep cuts into their workforce. Meta cut 11,000 jobs; 13% of its workforce, while Twitter cuts its workforce in half with 3,700 jobs lost. 

The end of the Covid boom

Another underlying reason for these cuts is a wide-spread misunderstanding on how long the pandemic-driven e-commerce boom would last; as Shopify CEO Tobi Lutke acknowledged in a memo to staff. 

Many industries who profited from the pandemic due to e-related products and services now find themselves applying the brakes to their spending and realising they are now in the after-shock of the e-commerce boom. This includes social media, ride-sharing apps, eLearning, and online payment companies.

However, this could be the 2nd dot com bubble about to burst - although scary, may not be completely indicative of what’s to come for non-tech sectors.

What can be on the chopping board?

When looking at company actions taken during past recessions, the first cost to be cut is training. Not just cutting training for new employees but to stop investing in current employees. However, just because it seems easy, doesn’t mean it’s the correct move.

Economist Chris Farrell says the overall lack of investment in developing employees may be partially responsible for the complaints by many companies that there is a shortage of qualified workers.

Building a recession-proof training strategy

If you were impatiently scrolling for the answers, stop now!

Preserve* your training

Previously I listed the two possible paths that employees are looking to take either now or in the next six months. Either remaining or leaving to find new opportunities. If you want your company to be recession-proof, here’s how preserving your training, or perhaps boosting your training efforts will help.

Lane 1: Your employees are looking to leave

Currently one of the top three reasons for leaving a company is ‘career advancement’ at 33%. Workers are feeling stuck, unappreciated and crave upskilling. To cut training now may well be the ‘final straw’ to those you consider lynchpins (or to those you may not realise are lynchpins) in your company. During times of economic uncertainty and downturn, you will want talent to remain, to limit skill gaps and have the ability to keep employees motivated and updated on quick company changes that often happen during recessions.

During times of economic downturn you’ll also want to steer clear of ‘brain drain’, the financial costs of skilled workers leaving the company. It’s important to remember that retaining current employees is a lot more cost-effective than training new employees. 

Lane 2: Your employees will stay 

You may think the most loyal and invested employees will stay with you regardless of a temporary training cut. But that doesn’t mean your company won’t feel the effects of that decision.

Houdmont, Kerr, and Addley (2012) found that the Great Recession was associated with net increases in work demands, role ambiguity, coworker interpersonal conflict, and with net decreases in job control, coworker support, and participation in change at work. This ongoing level of uncertainty has knock-on effects on mental health and physical health as seen in the chart below.

Not only can this lead to results like low performance but also long-term employee burnout; a situation that came to a head even before the pandemic.

This paired with seeing the fate of others within the economy, their industry or even their company will add to stressor levels and lead to a low level of ‘Affective organisational commitment’; a work attitude representing “an employee’s emotional attachment to, identification with, and involvement in the organisation” (Meyer & Allen, 1991) in layman's terms, the employee won’t leave yet, but they won’t be happy.

Circumvent this negative outcome by preserving training. Show you value your workers, show them they have a better future with you and possible changes in the company during a recession will be trained for. A study by Shoss, Jiang, and Probst (2018) similarly suggests that training to increase employee resilience may reduce the negative impact of job insecurity. Likewise, employer-sponsored training to enhance work skills may attenuate the association between employment insecurity and adverse outcomes.

Make your training smart

* You may have noticed the asterisks beside ‘preserve’ in the title above. The reason for this is to reflect upon your current training. With instability, fewer workers, more stressors, you want training that is cost-effective, smart, works without much input and gives you ROL (return on learning). 

You can achieve this with adaptive learning. This training relies on AI and machine learning to personalise learning paths for employees. Personalising training can improve learning engagement by 76%, leads to fewer training failures (leading to saving 49% of costs) and 46% more retention in the skills needed within your company. 

Keeping employees engaged in learning leads to quicker adoption of new skills and more motivation to improve output and quality. 

Quick and effective training also pays off with new employees, so if you need to hire quickly and effectively (especially during a recession) adaptive learning can be your best tool.

The 3rd lane taken by your future employees: Onboarding

Historically, companies that have continued to hire during a recession have been able to take advantage of the market. If you can, make it a priority to look for new hires during a possible recession — you may find the best talent is suddenly available. For example, a great deal of highly-skilled people were cut from tech companies. These workers are also highly skilled in technology, the top skill most employers are looking to fill - especially since so many companies heavily invested in technology during the pandemic (even to a point where many of their employees didn’t know how to use the tech). If you’re looking to hire skilled workers and you want to survive the recession, it’s time to snap up these people.

Hiring during a recession

If you take the initiative to hire during a recession then you’ll want to onboard this new talent quickly and effectively. Not only will this save money, but they’ll be more motivated to produce quality work, stay employed with you longer, and use the skills they learned while onboarding straight away.

Another point to consider is how you onboard. Research from Accenture’s Future of Work Study 2021 shows that 83% of workers prefer a hybrid model and greater flexibility. 

To achieve effective eLearning, especially during onboarding you’ll want an Action-based Learning pedagogy. Action-based means ‘learning by doing’ this can help new employees retain 90% of the information they consume and turn knowledge into applied skills - resulting in them being able to produce results for the company faster. 

Enhancing action based learning

To use this pedagogy requires a SaaS that offers adaptive learning, micro-actions and retention capabilities. This will serve to remind new hires (and existing employees) about training automatically and require less set-up and fewer integrations (than if you were to choose multiple SaaS’). 

The steps to hire during a recession

While Enhanced Action Based learning is the SaaS you want to use to save money and train faster, there are steps to take during a recession to ensure your onboarding is swift and effective. 

1. Conduct a skills gap analysis

A skills gap analysis should be used to identify the skills your workforce needs but doesn’t have yet. This can show what your hiring priorities are, create opportunities for training and development, and allows you to prepare the course material.

A skills gap report also provides deeper insight into the talent that already exists within your company and considers the skills your company will need in the future. Perhaps existing employees can be upskilled to fill those skill gaps.

2. Check-in with passive candidates

Are there industry experts you’d love to have on your team, but are working for other companies? As I covered previously, these experts could be in the job market, either due to company cuts or seeking other opportunities with more security and/or higher salary. Harvard Business Review suggests asking your leadership team to list professionals with whom they would love to work. Then, rank this shortlist in terms of attractiveness and skill gaps to your company and begin your outreach.

3. Find tools to make screening easy

During difficult economic times you’ll have more demand than usual for an open role. This can quickly overwhelm recruiters. Prepare for this by adding resources that allow you to hire at scale.

4. Recruit remotely

Especially since the pandemic, remote working has become a normal part of work culture and few are willing to give up this freedom. If you believe resources may be limited due to a recession then think about hiring remotely. This is more affordable, it costs less to hire them and you often tap into a broader pool of skills and diversity.

Onboarding during a recession

1. Don’t delay onboarding

A worrying trend among companies is to pause onboarding, especially when companies are unsure of the future. This not only shows a lack of care for the new employees but shows a company that makes decisions without much consideration. In some cases this action can cause media backlash, which happened to Tech firm Wipro when they delayed onboarding for almost a full year: “I had been given an offer letter way back in October 2021. It has almost been a year now, I am still waiting for Wipro to onboard me.”

2. Make content easily accessible

Having access to your onboarding material not only helps those who are hired remotely (which is becoming more common, especially as a recession looms) but all workers. New hires are often inundated with so much information that recalling it is impossible. Give all employees easy access to onboarding materials to refresh memory and generate a consensus of action. An LMS/LXP library is a great place to start, not just so employees can access documentation, but they can retake courses, download material and you can see analytics on its use, successes and possible improvements.

3. Deliver bite-sized content

Shorter, bite-size content is a more effective way for employees to learn. It reduces cognitive overload, it allows for quick refreshers when needed and it’s not as daunting for the person to consume. Better yet, bitesize content lends itself to mixed media such as video, audio, quizzes and micro-actions; all part of Enhanced Action Based Learning.

Especially when your employees have to work to short deadlines, act quickly and deal with more pressure caused by recessions, being able to refresh memories with quick training content is more helpful to the company.

4. Reinforce learning

As mentioned above, Action Based Learning is the pedagogy best suited to how we actually learn and turn knowledge into skills. A large part of this pedagogy is practising what has recently been learned with repetitive reminders and small tasks known as ‘micro-actions’. As you can see, this active environment helps the average person retain 55% more information.

1. Don’t underestimate your employees

It’s often thought that people don’t want to learn. That they want to get it ‘out of the way’ as quickly as possible. However, this is only true for training that misses the mark. When you have personalised training that offers real-world use cases accessible from anywhere, you’ll see that training is something that people want.

59% say it improves their overall job performance, 51% believe it gives them more self-confidence, 41% claim it helps their time-management skills and 33% cite it as a factor in earning them a pay bump.

Especially during a recession, anything people can do to upskill, become more qualified and beat the competition is appreciated. And when you as a company take that initiative and help your employees (new and existing) achieve this, you’ll have a more motivated and loyal workforce that will help you weather any storm. 

If you want to start the process of becoming recession-proof then you’ll need the resources detailed in this article; Adaptive Learning, Enhanced Action Based Learning, an LMS/LXP and micro-actions. Luckily I know just the place and you can get a tour of the platform today. Start your journey here, with myskillcamp.

‍