This post follows Rob’s and Simon England’s article on protecting value through a recession. As that article provides important context we have included the briefest of summaries below.
Whilst there has been much-publicised commentary and analysis in whether the UK economy is (yet) officially in recession; high energy prices, elevated inflation, rising interest rates and global economic weakness mean that economies across the globe are at very real risk of doing so in 2023. The shape – U, V, W – and scale, we’ll leave for others to comment.
In addressing the recession, we believe that Professional Service firms will broadly go through three phases:
We also believe that there are five themes or subject areas that require specific attention/action during the transition through the three phases.
At Garwood, we have developed a framework that codifies the activities by phase and theme. That framework (and it’s only that and not a methodology) is based on distilling the sum of our respective experience over the last 30 years. We have tried to capture the practical aspects of successfully leading businesses through past downturns.
In order to survive, stabilise and succeed, you will need to reset your operating model for the medium term (three to five years). The Garwood ‘survive, stabilise and succeed’ framework focuses on the tactical tasks. However, the further you progress through the framework the more you can look to the future and that means resetting your operating model.
It is also important to do so early and swiftly. Let’s consider the following model …
A typical innovation adoption curve ranges from the Early Adopters to the Laggards with the bulk forming the Late Majority. Under normal circumstances, the adoption will typically be measured in years. However, we know that responding to Covid accelerated years of innovation into a few months.
In oft-quoted words, Microsoft CEO Satya Nadella said “As COVID-19 impacts every aspect of our work and life, we [Microsoft] have seen two years’ worth of digital transformation in two months”.
Whilst we couldn’t agree more, we believe that this change in pace equally applies to value propositions, business operating norms and employee value propositions and not just solely in digital transformation.
Many people see operating models through the dual lens of business processes and business technology. Whilst this is valid, in a professional services business, it is not sufficient. We are first and foremost people businesses. Therefore, any change to a professional service operating model needs to consider the human dimension.
In addition to the ‘normal’ human dimensions faced during a recession or crisis – aligning the leadership and rightsizing the team among them – you will also need to consider:
You will need a high performing HR function with a clear strategy, and the capability and capacity to execute it. Rob says that he never ‘lent’ on his HR colleagues so heavily as he did during a recession or crisis.
We all recognise a high performing HR function when we see one …
In the circumstances of a recession or crisis, they may be doing all these things, at the same time as potentially being at risk themselves. That takes a certain personal quality that Rob says that he can’t describe but that he knows it when he sees it.
In Tribal Consulting in 2010, Rob had a small, dedicated permanent HR team. Having just supported a restructure to prepare for the impending  recession, they were then thrown into supporting the ‘rightsizing’. Rob immediately expanded the HR team and asked the new temporary team members to take on the day-to-day HR work whilst the dedicated permanent team supported the business leaders in the rightsizing exercise. During this period, they helped the leaders to drive an exemplary process whilst at the same time providing wellbeing/emotional support to those most badly affected. They were not the decision makers but they did provide the advice and guidance to sometimes hesitant leaders in their decision making.
Having the right capability and capacity in your HR function is crucial to navigating a recession and resetting your operating model.
Against a backdrop of diminished opportunity, ensuring that you have the right team means assessing objectively your current talent and determining their suitability for the future. That implies having a view about future markets and value propositions. For the talent you want to retain or even attract, you need to have the right ‘employee value proposition’ (EVP). Rob suggests that developing a new EVP is critical to ultimate Success. You’ll be doing this during a time of great uncertainty and therefore staff ‘promises’ become difficult.
Over the summer 2022 McKinsey surveyed over 13,000 employees across six nations and 16 sectors to learn more about what is driving people to stay, leave, or return. Employers may be offering attractive compensation, job titles and advancement opportunities but the Covid pandemic has led to many people re-evaluating what they want from a job.
And according to Gartner’s recently published Location flexibility report: Two out of three candidates place high importance on a hybrid model in their job search and companies only offered about 4% of their roles as remote or hybrid in 2019, but that grew to more than 17% in February 2022.
It is likely that your EVP will need to address some or all of the following:
In 2017 Rob was the Interim CEO for a recently acquired healthcare software and services business. It was rapidly growing and as such, was recruiting hard. The business was at a real inflexion point and inflexion points cause you to reappraise what you’re doing and how you are doing it. In this case, the recruitment of friends, family and former colleagues had run its natural course and the business had to attract new talent. To do so, the business needed an EVP that reflected the future, not the past. The leadership engaged the business in developing their EVP. Through a series of workshops and staff surveys the leadership sought answers to question such as … Why did they work here? What did they want the business to deliver? What would cause them to leave? etc. etc. The approach was highly effective. The leadership also asked two of the more junior but vocal members of the team to own the initiative reporting to Rob and the newly appointed HR manager. The results were great. Far-reaching and insightful.
If you’re going to retain and attract the best talent, you will need to quickly evolve an employee value strategy that is seen by employees, and prospective employees, as fair and balanced, cognizant of personal requirements and socially conscious too.
If you would like to talk further about any of the elements of this approach, please get in touch, we’d be happy to answer any questions you might have.