Call to Action — Talent and Culture

People- and culture-related issues dominate the top 10 global risk issues for 2023, as do concerns related to the economy. Many boards and executives, especially chief human resources officers, understand that economic headwinds can be a precursor to job cuts that, if overdone, will create long-term challenges to managing human capital. That is why the following steps should be emphasized over the near term to sustain progress in transforming talent management and preserving the culture:

• Make your talent your customer. The organization’s focus on the customer experience should extend to its own people and talent. Many companies can slice and dice data to understand their customers, but fewer do this with regard to the talent in their enterprise. This is an opportunity for positive change and growth. As part of these efforts, position an advocate for the preservation of talent and culture at the decision-making table as the organization focuses on sustaining its financial health.
• Be prudent and thoughtful in decision-making. Should a recession inhibit growth:
  • Pursue all appropriate measures to preserve operating margin before moving forward with talent cuts. For example, reduce other SG&A costs, consider outsourcing noncore activities, sell noncore assets, adjust base and incentive compensation and benefits, etc.
  • Focus on retaining “A” players by designing and de­ploying repeatable assessments of the organizational talent and skills needed to exit a recession in a strong position to capitalize on market opportunities.
  • Be mindful of the employee experience and employee well-being by aligning these areas with the customer experience in ways that, to the extent possible, reflect the organization’s unique employee value proposition. Also, maximize the flexibility of work arrangements.
• Treat people like people. Should workforce reductions and changes to hiring practices (e.g., a hiring freeze) become necessary, make decisions objectively and approach them smartly. There is a right and wrong way to approach these matters.
  • Communicate thoughtfully and frequently.
  • Understand the talent and skills required for the organization to achieve its strategy as the economy recovers.
  • Focus on workforce reductions that eliminate overlaps in skills and capabilities.
  • Consider third-party resources to provide certain skills.
  • Explore opportunities to eliminate jobs that can be displaced by technology with the attendant workforce reskilling and upskilling.
• Build a resilient culture. Inculcate a philosophy of embracing change.
• Integrate upskilling and retention strategies. Ensure the organization’s investments in upskilling employees are fully realized.
• Make succession planning a strategic priority. This needs to happen beyond the senior executive suite. Devise and test knowledge transfer processes and leadership development plans to increase flexibility and reduce the high costs and stress associated with reassigning roles and responsibilities in a reactive manner. Consider how the organization is going to retain its key people and keep them engaged long-term to increase the strength of the executive bench.
• Keep DEI and ESG top of mind. Monitor employee sentiment on DEI and other ESG matters to identify and assess the broad range of human capital risks to inform decision-making processes on taking corporate stances on contentious issues.