Another Recession? Leading Through Today's Economy

By Korn Ferry

In a recent panel discussion, Korn Ferry experts gathered to discuss how leaders can navigate through today’s shifting (and contradictory) business world.

The 2022 business outlook is full of contradiction and uncertainty. In our recent roundtable discussion, Korn Ferry’s leading senior client partners discussed how leaders can best navigate these choppy waters, whether we enter a great recession or not.

At the moment we’re living through an interesting timeline. Some economists are warning of a looming great recession in 2022, but companies are still adding jobs. Raises are above normal levels, but hiring freezes are also on the agenda. And then there are the employees themselves, who were quitting at will a year ago. Now many are rushing to find work.

Clearly, we are dealing with a host of paradoxes. No wonder corporate leaders are feeling the pressure—especially with the possibility of an economic recession similar to the 2008 recession on the horizon. So, what’s the best course of action?

We recently gathered some of Korn Ferry’s leading senior client partners to talk about what’s going on and what they’re advising their clients to do to weather the storm. The panelists included: Dennis Baltzley, Global Solution Leader in our Leadership practice; Alan Guarino, Vice Chairman of Korn Ferry’s CEO and Board Services; Wayne Mealey, Vice President – Client Services; Sheila O’Grady, Korn Ferry’s Senior Client Partner in the Consumer practice; Ron Porter, Senior Client Partner at our Global Human Resources Center of Excellence; and moderator and Korn Ferry CMO, Jill Wiltfong. Below we discuss some of the key takeaways that came from this session.

Current State of the Economy: The Big Picture

We kicked things off by getting a macro view of what’s happening right now. Today’s business leaders are dealing with issues they’ve never had to handle before. So, what are these new challenges?

Given the immense social and political upheaval of recent times, societal issues are now front and center in business. As Baltzley observed, organizations simply can’t afford to get on the wrong side of an issue: consumers will notice. At the same time, businesses can’t just play it safe, sit it out, and avoid taking action. Leaders must effect change in their businesses to stay on the right side of history and their customers.

Meanwhile, we’re working in a low-trust world, in which people are highly suspicious of banks, government, big pharma and big tech. People don’t trust corporations with their data, but they still enjoy a personalized customer experience (which needs that data to work), resulting in tension.

In the consumer and retail space, O’Grady is seeing two approaches to handling this uncertainty. One group of companies is sticking strong to their strategy despite all of the current economic turmoil. They’re playing the long game, investing in their business now so they can get ahead for the future. The second group is more conservative: they’re slowing down their growth, investing only in the core essentials and making cuts across teams.

And of course, the pace of change continues to be blistering. As Porter put it: “Things are quicker than they’ve ever been. But things are never going to be slower than they are today”. Strategies will need to change quickly, even if they’re successful, with organizations rapidly morphing structures to keep up with the dynamic change in the marketplace. Disruptive change is a constant, which means the demand for top talent is eternal.

Company Purpose Matters

The idea of a company’s mission, or purpose, became hugely prevalent during the pandemic, and it continues to be an essential driving force for organizations. As Baltzley observed: “Purpose is an anchor in a sea of uncertainty. We might take it for granted, when actually, it’s a huge pillar.”

For employees, a strong mission can keep morale high, inspiring them to deliver that extra effort and keeping them engaged, focused and motivated over the long term. And it’s a benchmark against which potential candidates can be judged. They might be able to do the job, but do they fit the mission?

However, it’s not enough just to have your mission written down somewhere. How you convey it is absolutely key. You have to communicate it—cascade the message downwards—so that everyone, from the C-suite to the front line, is clear on what the mission means for them. Military organizations understand this and get it right, but few other businesses do.

In order to be powerful in the midst of all this chaos, your company’s purpose needs to be transparent, authentic and come from the heart. You’ve got to walk the talk, with strategy aligned to purpose. Employees will quickly see through empty words.

Adapting Hiring Strategies

The paradox here is between the ‘great resignation’ and the recent rounds of layoffs that have been sweeping across businesses in multiple sectors. Is this the beginning of the next great recession? What’s actually happening?

On the hiring side of things, there’s a lot of adjustment going on. Businesses have had to pivot from the full-on hiring freeze of two years ago, followed by a post-pandemic overcorrection and hiring across the board.

Mealey talked about how companies are still hiring but in a targeted way: identifying the business-critical roles they need and balancing out natural attrition, without going overboard. They may be cutting on one side and hiring on another in order to flex to changing business needs. And businesses are better at discerning who they need and who will be a better fit for their culture (for example: do they need a transformer or an improver?).

Raises are mostly off the table for the time being, but businesses are investing in key roles (hello, Chief Supply Chain Officers) and competing for diverse talent and hot spots.

Bottom line: top talent is in high demand and always will be. The challenge for organizations is getting the best people in the right roles in a way that’s aligned with strategy.

Is Work-From-Home Working?

If there’s been a silver lining to the pandemic, it’s that we’ve been able to regroup and rethink our ways of working. Guarino is unequivocal: hybrid is here to stay, and it will be the future of work. Why? Candidates all want it (according to Mealey, it’s the number one thing they are asking our recruitment teams about), because it’s a more balanced work environment with less chance of burnout.

Flexible working is good news for businesses too: happy employees are enabled to deliver their best work, at times that suit them best. And you can hire from (almost) anywhere, which gives you a larger and more diverse talent pool to work with, without the challenges of relocation.

Of course, there are some kinks still to be worked out. Getting early-career employees the mentorship and on-the-spot training they need is much harder outside of a traditional office environment, for example.

The challenge of keeping employees engaged remotely

Porter thinks one possible solution is to be more intentional about gatherings. Hybrid working practices will force organizations to be more thoughtful and deliberate about when and how they pull people together, which can only be a good thing.

Another paradox: in a flexible working environment, driving engagement is more important than ever, but it’s much harder to achieve. Quiet quitting has become a new buzzword, denoting workers who use working from home as an opportunity to fade into the background and not put the effort in.

O’Grady is clear: it’s incredibly difficult to get the culture right and keep your team connected in a remote working environment. You have to be an exceptional leader, and most are struggling with it.

What Should Leaders Do Next?

It’s clear there’s a lot going on right now and it’s not surprising that leaders are looking for guidance.

Guarino thinks it’s important to keep a sense of perspective: “This is actually nothing new. Throughout history there have always been paradoxes and contradictions, challenges where it’s not clear what the leader should do. The rules haven’t changed: leaders still need to lead. Which means they need to make decisions – that’s what they get paid to do. Don’t let all the perceived contradiction paralyze you, you’ll be able to figure it out”.

One comforting thought: today’s CEOs have an executive team they can lean on; they don’t have to do it all alone. A collective brain trust will deliver the best thinking; it’s the CEO’s role to make the final call and own the outcome.

Keeping the lines of communication open

For Porter, leadership requires great communication. But that doesn’t just mean talking, it means listening so that your people feel heard. That’s the secret to bringing people with you on your transformation journey.

In the same vein, Mealey talked about how transparency is an important aspect of leadership right now. If there’s mistrust in the workplace, there’s a loss of morale, productivity and innovation – all of which can lead to attrition and everything that goes along with it. Honesty and open dialogue are what’s needed.

Baltzley thinks the future of leadership lies in preparing people for the unknown. That means creating an adaptive capacity within the organization, so that everyone is ready to pivot when needed. For CEOs, that’s a big shift in mindset—from being a reliable executor to becoming more of a “restless explorer”.

Today’s leaders must embrace uncertainty.

Watch the webinar, Leading in a pressure-cooker economy, to dive deeper into our panelists’ viewpoints and suggestions for leaders on how to best navigate and progress despite the pressures of today.