Client Resource Center

In 2021 the Great Resignation raised the stakes of the talent war for employers. Today, the landscape is changing yet again. Nearly two-thirds of employers and three-quarters of employees surveyed in one recent study said they believe a recession is coming soon.¹ At the same time, 45 percent of workers who participated in another survey said that “difficulties with finding a new job” is one of the “worst aspects of a recession.”² 

No two recessions are alike, however. Unlike the housing collapse of 2008–2011, when employees tended to stay with their employers even if they were unhappy, today’s job market is still very strong, with just under two job openings per unemployed person.³ It’s still very much an employee-driven market—and fear of a recession likely won’t be enough to make unhappy employees stay. In fact, they seem to be doing the opposite: eight in ten surveyed workers reported looking for a new job in anticipation of an upcoming market shift.⁴

With this in mind, what should HR be doing to ensure robust retention today and in the near future? 

Care about Why Employees Stay

In dark times, a steady paycheck may be enough to keep workers around. But when the sun comes back out, a job that merely pays the bills won’t keep people on board. They’ll be looking for work that provides not only stability but a rewarding experience that matches their personal growth with increased opportunity. 

Helping employees feel heard, providing professional development, optimizing compensation and benefits, and caring about mental health all contribute to creating an environment that will keep employees loyal in both good times and bad. To prevent turnover, HR should make employees feel secure in spite of the changing world around them and optimistic about what lies ahead. 

Bring Employees Along for Big Business Decisions

A recession can lead to fear and uncertainty among employees: fear of the lack of job security, fear of lost income, fear of struggling to find work to support their families. But companies should never assume that this fear will make employees stay. If someone feels that their current employer is unprepared for a recession, they’ll look for a more reliable job in advance of possible layoffs. And if they feel unheard and unsupported, they’ll look at employers that demonstrate a culture of communication.  

Fear and uncertainty can be alienating, but steady, consistent feedback can help reduce apprehension and make employees feel more secure. By prioritizing transparency and honest communication, an organization can ensure that it’s developing a culture of retention and employee engagement. But feedback improves engagement only when there’s clarity on both sides of the employer-employee agreement: employees must know that their managers hear them, and everyone must know how the company’s decisions lead to accomplishing shared goals. 

Listen and act on feedback. Creating this culture of transparency requires listening to employees and giving them a voice. Start by surveying employees and getting feedback on what they like about their jobs and what they think could be improved. Uncovering the potential problems that may drive employees to start looking for other jobs is the first step toward addressing them. 

Share the big picture and the “why.” Of course, adjusting policies to solve every complaint would likely involve too many tradeoffs in progress toward the company’s overall goals (especially when complaints oppose each other). When leaders can’t easily resolve an issue, they need to help their teams see the big picture and understand the “why” behind those decisions by clearly tying current and long-term plans back to business initiatives and showing how they align with company goals. 

Communicate follow-up plans. Employee surveys are a great start. But it’s essential to avoid the perception that leaders ignore the employee feedback those surveys provide. Employees must see that their feedback is heard, the leadership’s clear response—yes, no, or not now—to it, and an explanation of that response. When employees feel that the company cares enough not only to listen but also to take their problems seriously, they are more likely to want to stay. 

Create a culture of feedback. Convincing employees that the company can support them in the long term isn’t a one-time task but requires building momentum by creating a culture of feedback. This includes structured feedback in regularly scheduled employee meetings such as performance reviews, check-ins, or one-on-one meetings. Managers should also be trained on how to provide unstructured feedback in real time outside of a review cycle so the lines of communication always feel open. Regular feedback keeps employees involved and continually improving, more engaged in their jobs, and more likely to want to stay and put in their best work. 

Support Leadership Training and Career Development

With an uncertain market on the horizon, employers will be looking for ways to reduce expenses. Some line items that generally fall under HR’s purview, such as leadership and career development, are often the first to take a hit. But with poor leadership often cited as one of the main reasons why people leave jobs, cuts in those areas can make it more difficult to retain employees. This is particularly true during a recession, when stress and uncertainty increase the need for good leadership. Therefore companies must ensure that their leaders are equipped to help employees feel valued while also being able to have hard conversations about the business. 

In fact, many HR leaders say companies should “increase, rather than cut, learning and development and coaching.”⁵ Having empathetic, well-trained leaders is critical for helping employees feel valued and engaged with the company and can make or break its culture-building efforts. Plus, in the event that layoffs do need to happen or if new roles can’t be filled immediately because of economic uncertainty, remaining employees “must be reskilled, trained, reincentivized, and better equipped to succeed in the face of longer work hours, uncertainty, and limited resources.”⁶ Beginning the process now helps future-proof an organization’s workforce while accounting for natural turnover and a fluctuating job market.

Offer Compensation Beyond Just Salary

Along with efforts to build a healthy workplace culture, compensation also plays a prominent role in employees’ decision to stay. Compensation was a top driver for employees in the Great Resignation, with “nearly a third of workers who left their jobs during the pandemic . . . making over 30 percent more in their new roles.”⁷ Although most employees would love it if their companies increased wages by 30 percent across the board, it may not be feasible (or in their power) for those organizations to do so. So what can they do to retain employees who want more money? 

The good news is that HR leaders can get creative. Compensation doesn’t have to be solely about salary, and putting a transparent plan in place for employees to understand their compensation and what to expect for the future will go a long way in helping them decide to stay. 

If employees feel they’re not compensated in line with market rates, the likelihood of them leaving is much higher. But not every company is equipped to race to the peak of employee compensation rates. Likewise, organizations also want to ensure equitable compensation for everyone, not just for those filling new roles. Therefore savvy companies are looking at other ways they can compensate their employees without having unsustainable salaries at the forefront. 

Fortunately, because many employees are motivated by more than the numbers on their paychecks, a creative compensation strategy includes items that don’t have to be permanently baked into budgets. Some possibilities for compensation elements outside of salaries include performance bonuses, flexible work schedules, mental health benefits, and extra vacation days. This strategy enables companies to provide rewards to help retain top talent without putting their compensation on unstable footing when the market bounces back. 

Building for Any Future

The employment landscape is always changing, but no matter where it goes, being the best option is always better than being the only option. A recession might keep employees from leaving, but relying on the state of the economy isn’t a retention strategy. Whether a company is weathering a recession or dealing with a tight job market (or both at the same time), creating a place where employees want to stay (rather than have to stay) will be the best investment it can make in its future. With a proactive and employee-centric plan, organizations can foster the kind of loyalty that will survive any economic storm.