With a potential recession looming on the horizon, businesses in nearly every sector are feeling the pressure. Employers are worried about how they can continue to generate revenue during an economic downturn. Meanwhile, employees are fearful of losing their jobs and concerned about the impact that a reduction in headcount will have on their workload during a period often synonymous with mass layoffs.

Low employee motivation and poor morale often lead to poor business performance. Employees who are disengaged and feel like they have one foot out the door won’t be doing their best work. And even those that are not laid off are still at increased risk of leaving on their own.

As leaders, we must carefully balance what is best for the future success of the business with doing what is best for our current employees and other stakeholders. No one is happy about an economic downturn; the best way to soften the blow is to be prepared.

A top priority for most leaders during an economic downturn is “streamlining business operations” or “looking for efficiencies.” Let’s call it what it is – making cuts. Whether that looks like a reduction in budgets or a reduction in headcount, we are trying to do more with less. And while it may not be possible to avoid these reductions entirely, effective leaders must keep a steady hand, think strategically, and act proactively rather than reactively. To that end, let’s look at three critical areas of focus for making your business more recession-proof.

Good Marketing Is a Growth Engine, Not a Cost Center

Whether your company is reducing budgets, headcount, or both, it’s imperative to consider the short- and long-term effects of those cuts. Decisions made to stabilize your business in the short term may have far-reaching consequences when market conditions improve. One area of your business that should remain off the chopping block is marketing. In fact, maintaining or even increasing your marketing spending is one of the best ways to set up for future growth. Nielsen data shows that marketing accounts for 10%-35% of a brand’s equity. What’s more, companies that invested in their marketing efforts during the 2008 – ’09 recession experienced an average growth in market share of 1.3% after the recession.

Take a step back and evaluate your current marketing strategy and process in the current environment. During a recession, customers are more value conscious. After you’ve determined where to invest your marketing dollars, it’s important to refine the voice of your business and create a better value proposition for your customers. Consider implementing more targeted marketing to reach new audiences who may be looking for products or services like yours. By focusing your marketing efforts on reaching buyers who are in an active buying cycle, you are more likely to maximize ROI for your marketing budget. It’s also important to continue marketing to the top of the funnel and seize opportunities to cement your place as a valued resource.  Even though buyers are less likely to convert during a recession, advancing your thought leadership and increasing your share of voice ensures that your business will be top of mind when they are ready to buy.

Focus on Building Stronger Customer Relationships

Economic downturns bring uncertainty and customers look to brands for reassurance that things are not as bad as they seem. To build stronger customer relationships, communication should be priority number one. Be transparent about what’s happening with your company and take time to understand the issues your customers are facing. Data can tell you a lot, but real conversations are still an absolute must. Maintaining open, ongoing dialogue will help you reinforce your commitment to working with customers and providing value.

Customer loyalty is an important asset for any company during a recession. And marketing to existing customers is easier and more effective than bringing in new clients. Use email campaigns to send out customer appreciation, surveys, updates, rewards and new content. And while showing your customers that you care about them is vital, it’s also important to provide value, not just “warm and fuzzies.” Make sure any content you send to customers is relevant to their needs and always be transparent about how any changes you make will affect or improve your customers’ experience.

If your business has a strong mission or business purpose, remind your customers about the part they are playing in advancing that mission. At the end of the day, everyone wants to feel good about where their money is going, especially in leaner times. By continuing to market to and communicate with your customers, you’re demonstrating stability, giving them confidence that your company will weather the storm.

Having the Best People Means Helping People Do Their Best

There are key factors to consider before making any reductions to employee headcount. Businesses don’t run on their own and people are essential to the creation of value. Headcount, compensation costs, representation across diverse categories and the makeup of specific talent segments, especially those essential to the operation of the business, are just as vital to balance as revenue and budget.

In the wake of the Great Resignation, many businesses couldn’t get talent in the door fast enough. Layoffs at Twitter and Meta have been dominating headlines, but the need for such large-scale reductions is not likely to be a reality for most companies. While an economic downturn will likely result in hiring slowdowns or freezes, reducing headcount should be a last resort.

Savvy leaders will find where the gaps are in their business and evaluate their existing talent pool to see if they have the resources needed to fill those gaps. Now is a suitable time to strengthen your leadership pipeline and explore opportunities for internal mobility. As the leader of a company with a strong culture of internal mobility and hiring from within, I can personally attest to the positive impact this has on morale. Providing employees with tools and opportunities to succeed within the business makes it much more likely that they will be invested in the success of the business.

And even if bringing in new talent is off the table, that doesn’t mean you can’t add greater support to your existing teams. In a changing economy, selective outsourcing is a way to add resources while keeping your business expenses adaptable to market conditions. It provides scalability while ensuring that you have all the resources needed to support critical projects and initiatives.

At the end of the day, your team needs to be focused on revenue. If you can eliminate time-consuming processes, you help shift their focus more towards the bottom line. Outsourcing liberates your team’s best talent by ensuring they don’t become burned out or stretched too thin. This, as we know, boosts employee morale and sets the team up for greater success.


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