Why Investing in Management Development in a Downturn is the Difference Between Success and Failure
A global recession in the year ahead is looking more likely. With a real squeeze on living standards, due to inflation and the prospect of weaker consumer spending, economists suggest the chances of recession are currently between 35% and 50%.
Many economists also highlight that there is a real risk of stagflation — the toxic combination of high inflation, high unemployment, and stagnating demand which creates low growth. This is something that has not been talked about for over 40 years since the 1970s and the prospect of which the International Monetary Fund describes as “gloomy.”
But things are also different now from the economics of the 1970s. We aren’t currently suffering from high unemployment — it is at record lows and wages are rising. One of the biggest problems for businesses right now is hiring staff. Some 24% of business leaders cite talent acquisition as the main issue holding their organization back, according to research by HubSpot and Boom. In the UK, recruitment problems are at ‘record highs’ as 76% of companies struggle to hire new staff. In the US the nuances of labor shortages across different industries are clear. A recent report from the US Chamber of Commerce shows some industries have labor shortages while others face surplus supply. With roughly 47 million people quitting their jobs last year in the US as part of the Great Reshuffle, the impact of talent supply is not consistent. For example, the report reveals that if every unemployed person with experience in the durable goods manufacturing industry were employed, the industry would only fill 65% of the vacant jobs.
Whether we head into a downturn or not, what is clear is that ‘economic headwinds’ are going to be challenging for us all. Indeed, in certain industries and regions, the economic augers look bad.
Despite these uncertainties, one factor remains constant: good organizations are built off the work of great people. So, the ability to keep, grow, and attract high-performing people is going to underpin organizational success more than ever. And arguably it’s even more important when times are tough. Why? Because high performers are an astonishing 800% more productive than average performers. So, finding, attracting, developing, and retaining high-performing talent needs to be a priority in order for organizations to thrive.
How do you then create an environment that is irresistible to great people? It’s all about culture and having managers who can create a great place to work. Managers have a critical role to play. In its research of 32 million profiles, LinkedIn found that retention is driven by managers.
- Internal employee mobility: Employees who change positions are more likely to stay. Those who are promoted were 55% more likely to stay at a company for three years compared with someone who remained in the same position. And even a lateral move to a new function meant that person was 38% more likely to stay.
- High-quality management: Organizations with highly-rated management see better retention. Research published in the Harvard Business Review examined eight management behaviors that promote trust — including recognizing excellence, creating challenging but achievable goals, and sharing information broadly. It found that half of those working in high-trust organizations planned to stay with their employer over the next year.
- Empowered employees: These are employees who feel they have an influence on how work gets done. Employees want control over their work, whether that comes from flexible working or freedom from micromanagement.
But research from Gallup shows that although most people lack the ability to manage others, two in 10 people exhibit some characteristics of basic managerial talent and ‘can function at a high level if their company invests in coaching and developmental plans for them.’
The good news is that we can help managers become more effective by investing in their management skills and behaviors, coaching and training them to be better managers, and providing them with the tools they need to excel.
How organizations can create sustainable manager development without breaking the bank
So, how do you create sustainable manager development in a cost-effective way?
- Measure: Benchmark a manager’s skills through feedback, employee listening tools, and self-assessment. This means working with HR to assess managers’ capabilities and impact on their people.
- Analyze: Use the benchmarking data to help managers prioritize their development sprints — 2–3 week periods of active learning to improve priority aspects of their management practice — as part of a cohort activity or with the support of a peer, mentor, or coach.
- Plan, learn, and apply: Schedule milestones into the manager’s development journey. Focus on the priority areas for improvement and support this with journaling. This can be broken down into input, action, feedback, and reflection stages — which can be supported by online learning resources for input. Then use buddying, coaching, and mentoring to add feedback and augment reflection on what to do next, be that to develop a skill deeper or to move onto a new development goal.
- Sustain: Re-benchmark managers’ skills via feedback, employee listening, and self- and 360-assessments.
That may sound like a lot of work, but by using action learning cohorts together, with each member sharing and being supported by the cohort — and the occasional input from a more experienced coach — management development becomes more pragmatic and scalable.
To help things further scale and attune to individual needs, online courses and resources can be woven into the journey to provide fresh insight, thinking, and inspiration for continuous management development.
It’s a modern learning approach: human-centered, individually targeted, and digitally enabled. And it might just be the difference between your organization thriving or struggling in a recession. For more insights on how strong leaders build strong companies, read the ebook Leadership Development as a Strategic Advantage.
Empower your team. Lead the industry.
Get a subscription to a library of online courses and digital learning tools for your organization with Udemy Business.