Recession-Proof Your Change Management and Leadership | Deloitte US has been saved
Authored by Colleen Cheesman, Lee Merovitz, and Shwetha Chandrashekhar.
A New Kind of Recession?
After the unexpected financial boom of the past two years, global economic growth has started retracting1. In response to the looming economic slow-down and continued surge in inflation, organizations are shifting from what was a hiring frenzy to hiring freezes, layoffs, and decreased talent spend.2 Unlike previous recessions, taking a reactive approach could tarnish the talent experience and is not the way to weather this recession.
Today’s workforce holds a new set of expectations. The social, financial, and political impacts of COVID-19 have drastically altered the labor market, and today’s recession is different. Employees have options when it comes to employment choices, and talent is harder to attract and retain than ever before. To win in this talent landscape, organizations must provide a top-tier employee experience, even when decreasing spend. Global CEOs recognize this: 71+% predict that talent shortages will be their #1 business challenge over the next 12 months.3
Amidst these heightened talent challenges, transformation spend is set to skyrocket to over $3.4 trillion by 2026.4 In 2023 alone, 60% of executives anticipate increasing transformation spend despite the economic environment.5 In this “perfect storm” of a receding economy, organizations are laser-focused on transforming to remain differentiated and competitive in the market—while desperately needing an employee experience that attracts and retains talent. In this environment, intentional, effective, and user-friendly change management can be a game-changer.
This blog provides a perspective on three areas of focus to drive business adoption with a deliberate emphasis on talent experience in today’s economically squeezed and transformation-heavy environment:
Focus Area 1: Change Management to Shape Organizational Culture
Culture is rooted in sustained behavior patterns that are supported by an organization’s shared experiences, values, and beliefs. Culture transforms individual employees into a collective, cohesive whole and is continually reinforced over time as an organization makes business decisions, confronts challenges, and implements new processes.
What can organizations do to bolster culture in a way that enables change? Leaders planning to future-proof culture can proactively identify “organizational levers”—activities within the organization that support certain behaviors and ways of working—to address and adjust based on the current strategic climate. Deloitte’s Culture Web methodology offers a breakdown of macro-level levers that shape individual and group behavior:
During periods of uncertainty, these organizational levers can be used to combat the ambiguity and disengagement many employees experience while driving clarity of purpose and value6. Two examples of how to leverage these macro-levers to shape culture include:
- What: Stories, Symbols, Rituals, and Routines. Are desirable behaviors identified, documented, and communicated?
It is critical to explicitly document and regularly assess what “good” looks like. For example, the “first 5 minutes” of every meeting should be focused on sharing examples of how the culture is being lived or where it needs improvement by asking team members to share their purpose and what value they want to drive today. This approach establishes guardrails for day-to-day expectations and a shared understanding of success creating clarity, and enabling transparency7.
- How: Measurement and Reward. How is performance measured and rewarded?
Incentives, both financial and non-monetary, play an important role in an organization’s culture and ability to evolve through transformation. Strategically deploying incentives can boost employee morale, drive higher productivity, and ensure employees gain fulfillment within their day-to-day roles8. Recognition-based incentives, in particular, allow organizations to celebrate employees who embody cultural and strategic values through team-building, rewards, or performance-based accolades.
Focus Area 2: Developing Transformation Leadership Acumen
Leading through change has never been easy. In the current landscape of stalled economic growth and heightened talent expectations, coupled with organizations undertaking large, complex, and global transformations, effective leaders must embody agility and resilience, and need to possess exceptional “transformation leadership acumen.”
Transformation leadership acumen refers to an individual’s capability to navigate and lead through the complexity of a transformation. Leaders must have the strategic vision to set the direction and maintain focus, the discipline to drive accountability, and the ability to make hard decisions to forge ahead on the journey to the future state. Leaders can build transformation leadership acumen across three dimensions:
- What is changing — The Direction:
- A clear vision of the future state, acknowledging the challenge economic uncertainty poses in the context of a transformation,
- Articulation of the strategic alignment of the transformation project to business objectives,
- An understanding of the benefits at the organizational and individual levels,
- Clarity on why the change is necessary for the organization now—across technology, process, or people,
- Defined success metrics/key performance indicators for the interim and future state.
- How to change — The Execution:
- Setting the strategy and governance to drive effective project management and accountability for the transformation, including program design and management, to enable structure and momentum for day-to-day activities focused on the future state vision,
- Focusing on targeted, data-driven change management to enable an enhanced employee experience where people feel informed, prepared, and supported through the transformation in a way that is thoughtful and relevant,
- Understanding and managing impacts on ways of working, organization design, talent strategies, and workforce planning to ensure talent needs are met in the interim and future state,
- Vendor procurement and management to ensure sufficient expertise is onboarded for the transformation.
- Who is changing — The People:
- Understanding the people impacts of the transformation; effective leaders can identify and evaluate impacted stakeholders and process viability,
- Taking a user-centric approach in identifying personas—and the impacts and changes across each persona—is an essential enabler that allows leaders to meet teams where they are.
Mastering these tactics will position leaders to effectively lead through transformation, emphasizing the importance of business readiness and employee experience even in an uncertain economic climate. Without transformation leadership acumen and without the right leaders positioned to drive change, organizations will struggle to evolve, and transformation objectives will be left underrealized.
Focus Area 3: Strategically Designing and Delivering Training
To enable transformational change in today’s economic landscape, training and upskilling must focus on providing the information needed, when it’s needed, and prioritizing user experience. When training is integrated seamlessly with a new system or ways of working, learners can “learn” and “do” in real time, productivity is preserved, and employees are empowered and confident in taking on the new ways of working. In addition to training, digital adoption platforms (DAP) offer in-app guidance to seamlessly support employees in navigating and engaging with new systems and processes from day 1. Today’s employees expect and even demand intuitive systems and seamless, on‑demand resources. After all, don’t we all?
Investing in the right DAP and creating an integrated learning experience that fosters early adoption and sustained behavior change is key, particularly when training may be one of the only change interventions due to financial pressures.
- Why: Engage Employees Through Strategic, Relevant Training
Maintaining employee engagement is crucial when designing learning modules for transformation. Employees want to feel like their time is well spent on training courses rather than their day-to-day activities.
This scenario is especially true in times of economic uncertainty when the pressure of the bottom line feels stronger for everyone in an organization, and employees want to minimize disruption to their responsibilities. A tailored, cohesive approach to training design allows employees to contextualize their learning and ensure that content modules are relevant to them. Training with a relevant narrative helps employees understand the “why” and the “how” of the change—and why training is important to them individually. Organizations can create engaging training via methods such as interactive modules or exciting videos to further demonstrate the value of reskilling. - How: Delivering Training Content
The issue of successfully deploying training to employees is two-fold.
1. How can they be primed to learn?
2. How can they learn in a way that is not overwhelming?
Guided learning is the most effective method of instruction for most learners, ensuring a manageable cognitive load and more effective knowledge recall9. Cutting down training into “bite-size” microlearning chunks enables employees to feel in charge of their learning journey and able to manage the material.
Digital adoption platforms offer great examples of putting microlearning into practice. They offer a seamless user experience, targeting employees with the most relevant, real-time information based on their interaction with a system. This method enables employees to receive the right information at the right time, automatically tailoring learning experiences to suit their needs and learning in the flow of work.
Key Takeaways: Enhanced Employee Experience is Critical During Today’s Recession
Employee experience is a key differentiator in retaining talent. A continued focus on positively shaping employee experience safeguards organizations in economically uncertain times, both during transformations and business-as-usual.
The tactics to best shape a positive employee experience during an economic downturn are:
- Shaping culture to enable business transformation: Workplace culture is the strongest anchor for people and mindsets in a recession. Companies can shape culture by using stories, symbols, rituals, and routines to identify, document, and communicate desired behaviors, and by measuring and rewarding those behaviors.
- Building transformation leadership acumen: Beyond change championing and messaging, equip leaders with the ability to navigate the transformation and enable its success.
- Designing and delivering real-time and in-app guidance for seamless training: Successful training must include relevant storytelling and leverage delivery methods such as microlearning or DAPs to be relevant to learners.
Organizations that focus on prioritizing employee experience will be better equipped to meet talent shortages—and successfully execute transformational changes to give them a competitive edge.
Endnotes:
1 Q.Ai. “What does a recession mean for the average person?” Forbes. October 16, 2022.
2 Bryan Bushard. 2023 Layoff Tracker. Forbes. April 3, 2023.
3 The Chief Executive Program. Winter 2023 Fortune / Deloitte CEO Survey. 2023.
4 Haissam Abdul Malak. Top 9 Digital Transformation Trends in 2023. April 4, 2023.
5 Investment in digital transformation to climb further in 2023 Consultancy.UK. January 24, 2023.
6 Maria Paula Mijares Torres. Almost 80% of US Workers Fear Losing Their Job in a Recession. Bloomberg. July 7, 2022.
7 For examples see: Barclay’s This is Me campaign or Unilever’s Wellbeing Hub and App
8 Eric Siu. It Really Pays to Have a Rich Company Culture. Entrepreneur. October 21, 2014.
9 Kimberly D. Manning, Jennifer O. Spicer, Lucas Golub, Mikhail Akbashev, & Robin Klein. The micro revolution: effect of Bite-Sized Teaching (BST) on learner engagement and learning in postgraduate medical education. BMC Medical Education. January 21, 2021.
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