The Herman Trend Alert
February 15, 2023
The Role of Recession Fatigue in HR
The other day I had the privilege of attending Clicksuasion Labs' Spring Client Appreciation Breakfast. There I heard my friend Dr. Michael Barbera, their Founder and Chief Behavioral Officer, talk about Recession Fatigue and how it is affecting consumer markets. As a follow-up, I asked Michael to talk about how Recession Fatigue has affected the wild and crazy labor market in the United States---and elsewhere---and how that informs what will happen next.
A Bit of Recent History
The lockdown for the COVID-19 Pandemic officially started March 15, 2020. What followed was a series of policies that told non-essential personnel that they were not needed. Not surprisingly, they did not go looking for work. Some people were earning more money from unemployment than they were from their previous jobs, especially people who had been in retail and hospitality, those earning minimum wage and slightly above. Once these folks had a taste of higher income, they wanted to keep earning money at that level.
What Happened Next
By the time their unemployment ran out, and it was possible for them to find jobs, they had reevaluated their options. Many people tried to level up, going from Blue- to White-collar jobs and many hospitality and retail workers decided to look for office work instead.
Revenge Spending
When the government started to open businesses and the pent-up demand for travel and big-ticket items was released, we saw a lot of revenge spending. People spent the money they had not been able to spend in months, and most had a great time---the Delta and Omicron Variants notwithstanding. Sadly, people have continued to spend, and consumer debt is mounting. Some folks were expecting a one-day drop in stock market that would signal a problem in the economy and that signal has not come. Now, we have a unique combination of rising inflation, rising consumer debt, and consumers who are willing to spend money.
What's Happening in the Labor Market
Though some companies have experienced the benefit of this increased spending, as employers, they have experienced that their workers are looking for more money. However, interestingly. It's the non-monetary compensation that seems to be making the difference. As people have reevaluated their priorities, flexibility is the key.
The Effects of Recession Fatigue: Quiet Quitting and Loud Layoffs
Not everyone was able to find another role elsewhere or get more money in their current position. They felt undervalued and that led to quiet quitting. To mitigate quiet quitting and to maintain profitability, employers have resorted to Loud Layoffs. Tech companies have (and continue to) lay off thousands of employees. Every major technology company has had a reduction in force: Salesforce laid off 10,000; Go Daddy announced it will cut 8 percent of its global workforce; Zoom is reducing its workforce by 15 percent; Microsoft intends to layoff 10,000 workers, to name a few. The layoffs are employers' attempts to motivate their employees to work harder and make an impact beyond their bare minimums. Many employers are worried about productivity and short-term profits. Short term thinking is reflected in some employers' neglecting strategic planning and long-term investment.
Experience Rules
According to Barbera, employers need to focus on the Employee Experience. As I do in my new book, Experience Rules: How Positive Experiences Will Drive Profit Into The Future, he believes that experience includes many aspects of the employees' work life from their day-to-day interactions to their roles and responsibilities, the corporate culture, as well as the evolved definition of benefits.
What Employees Value Now
Leading the way is flexible scheduling, including what Barbera calls "mommy and daddy hours," not sending email at 11 pm, free meals in the workplace, and much more. "It's all about convenience," added Barbera. Anything that makes employees' lives easier is most desirable. From USD $300 subscription to a food service to childcare on site to mobile apps, like Ingomu, offering group coaching and learning opportunities, employers are getting creative to provide that convenience in all kinds of ways.
Quiet Hiring is also Happening Now
In the book Lean & Meaningful: A New Culture for Corporate America, published more than 20 years ago, the authors (including me) talked about how companies would continue to evolve, letting go of employees not needed at that time and hiring others. That is exactly what is happening now. Amid the loud layoffs, companies, including Big Tech, are quietly hiring, in part by promoting from within; when they can't find the talent they are looking for, they will hire contractors. This hiring of contractors is hastening the arrival of the Gig Economy forecasted in Daniel Pink's landmark book, Free Agent Nation.
Actionable Insights about Loyalty
Traditionalists are loyal to the organization, while Baby Boomers are loyal to their teams. Gen Xers are loyal to their managers, while Millennials are loyal to their colleagues, and Gen Zers are loyal to the experience. Recruiters and mangers alike need to be aware that traditional language, like talking about the team being "a family" represents red flags to prospective and current employees; when people hear that language, they expect to be taken advantage of.
Not Just in the US
Lest you believe that these developments are only happening domestically, be advised that these trends are indeed global. From The Philippines to Germany to Australia, these shifts are being seen and experienced by companies and employees worldwide. Wise employers will heed this information and advice and take steps to respond to recession fatigue and engage and retain their valued employees.
Next Week's Herman Trend Alert: Groundbreaking Book Released: Experience Rules
At long last, my new book Experience Rules: How Positive Experiences Will Drive Profit Into The Future is finally ready for primetime. Next week's Alert will give you an overview of the book and share many of its pearls of wisdom. And, next week, I will share how you may buy your very own hard- or soft-cover copy at the regular prices or even the Kindle copy for only 99 cents! And when you post a review, I will send you an additional reward! Plus, you'll find a whole new website that is a vast improvement.
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