People + Strategy Journal

Fall 2022

A Strong Workplace Culture Will Help Businesses Navigate the Economic Storms Ahead

With all this change, the fundamentals have not changed. CEOs still expect their HR executives to understand their unique business needs.

By Johnny C. Taylor, Jr., SHRM-SCP, President and CEO, SHRM

Is a recession coming? Are we already there? All of this depends on whom you ask or how a recession is defined.. Certainly we are facing some worrisome economic signals that have business leaders on edge, and rightly so. The better question might be, "Is the economy slowing down or is it shifting?" Some sectors have seen layoffs, hiring freezes and rescinded job offers as others have experienced job growth. Some even frame the Great Resignation as more of a "Great Retirement" as the pandemic has accelerated Baby Boomers' exit from the workforce. Safe to say, the dynamics of the economy and the world of work are changing.

Oddly, the recent economic landscape defies convention. We've seen productivity drop for two straight quarters, which would typically indicate to many that we are indeed in a recession. However, those who factor in the labor market against productivity (GDP) see the picture a bit differently. Low unemployment (3.7 percent in August), a record 11.2 million job openings and 20 consecutive months of job growth paint an alternate portrait of an economy with a strong labor market. Conversely, the quit rate (2.7 percent) remains elevated, and labor force participation (62.1 percent) is still near a record low—both reasons to be cautious. All of this tells us we are wading into uncharted economic waters.

These economic indicators factor into how we should view work, workers and the workplace in the coming weeks and months. With all this change, the fundamentals have not changed. CEOs still expect their HR executives to understand their unique business needs. HR executives should know how their organizations are accessing economic impacts and how they are responding. What are they projecting? How can HR support their organization's strategic response? 

People keep the lights on. The top thing CEOs expect from CHROs continues to be talent solutions. More specifically, finding, hiring and engaging the right talent to thrive now and in the future will pose a continuing organizational need, especially in a turbulent economic environment. People are the energy source of an organization. Productivity is derived chiefly through the effort and energy of people. Now, the specifics of what capabilities your workforce calls for will vary based on an organization's unique situation. Understanding what it is will inform your talent strategy.

The workforce is at the other end of the workplace equation. Looking back before the pandemic and the Great Resignation, we are seeing a much different workforce than we are accustomed to. Some of the things that engaged workers in the past just aren't resonating the same. The playing field has changed, and for our organizations to remain viable we must understand this new workforce and not cling to the assumptions of the past.

Tuning into your workers, candidates and the entire talent pool is critical for fulfilling your talent needs. HR is a vital broker in the relationship between organizations and workers. Yes, HR represents the interest of the enterprise, but HR also needs to be aware of the preferences and needs of the workforce it intends to leverage. Having robust workplace surveys, entry/retention/exit interviews and other feedback channels are all valuable resources for gathering insights of varied scope and depth on workers' preferences and perspectives. As the stewards of the employer/employee covenant, HR is charged with charting the path to mutually benefit both sides. Even as businesses look to tighten their belts, having enough of the right people on board well help keep them afloat. 

Culture is still king. Successful organizations all have a secret sauce. What they consistently do best stems from their workplace culture. Now more than ever, workers see culture defined as purpose. For them, it is not just about money. The total workplace experience must make sense for workers to fully buy in. Culture recruits and engages the workforce. Culture is the organization's operating system that is constantly working in the background. It's the glue binding together seemingly disparate groups in an organization and orchestrating how work gets done.

Can you build and maintain a technically competent, culturally aligned workforce amidst an economic storm? To do so, you must be acutely tuned to the latest economic indicators, your core business needs and emerging workforce trends. With these in mind, always be cultivating culture in every aspect of the workplace.