Turning Economic Downturn into Organizational Prosperity

Five Organizational Development Priorities

“We had to stop that initiative (or insert other adverse outcome) due to the COVID-19 pandemic.”

-Most Worldwide Corporations

You may have heard something similar in your organization, from your colleagues in other organizations or from your family and friends in the past couple of months. In times of an economic downturn, companies that prioritize future growth and organizational development through its people and create robust programs can resurface from the recession healthier than before. It can help them be a capable business for the future.

As easy as that sounds, the challenge for organizational leaders and HR is navigating the tightrope between financial stability, savings, and building while also maintaining a highly-skilled workforce. Over the years, there has been a wave of change to where HR professionals now have more of a strategic organizational development mindset. When human resource leadership is able to establish a more strategic platform, they are able to effect change more effectively because the impact of the change efforts will be felt not only on the ‘soft side of change’ but also on the hard aspects  (revenue, client satisfaction, product innovation) of the organizational change efforts.

Granted that change management processes will be different for organizations during an economic slump, change is change, and the ways of dealing with change are no different during a recession than at any other time. During times of a downturn, the most obvious reaction for most organizations is to focus on the financial aspect of the business, such as cost reductions. However, that tunnel vision may not always provide the best long-term results. Building an organizational development strategy during a shrinking economy sets the organization up to flourish when the cycle is reversed. In other words, even if you have little in terms of organizational development strategies in place, now is the time to start thinking about them. Strengthening your organization doesn’t just involve financial management for today. Tomorrow’s outcomes will be a result of the decisions made today. There is even evidence of this through ratings in Glassdoor. They found that companies on their “Best Places to Work” list outperformed the S&P 500 by 7.4% between 2009 and 2019. So, what decision will you be making to strengthen your organization for the future?

People Strategies for Organizational Development

A business that is looking to strengthen itself during and after a recession should be focusing on its workforce and culture. Workforce is the lifeblood of any organization and should be nourished from the beginning. The right employees, within the right culture can invent new business ideas that will lead to unheard of success. Ever wondered how the post-it note came about? It was from Art Fry, a 3M employee who came up with the invention. By being allowed to work on inventive ideas as part of the company culture, he designed a product that is a staple on any desk today.

Post it note on a board listing out traits at the center of organizational development.
Without Art Fry being allowed to innovate on his own time, we’d all forget a lot of meetings..

Modern employee selection methods can be traced back to World War I in 1917, when the US entered the conflict by declaring war on Germany. Psychologists partnered with the US Starting today, as a first step, evaluate how you recruit, train, and retain your employees. Do you have best practices you adopt for your selection strategy selection strategy? That is, processes such as structured interviews, personality or ability assessments. If you have these best practices, are they aligned to your organization’s overall strategy and talent needs? If you don’t have these best practices, start with identifying your strategy and talent needs. These will help inform the practices that are best suited for your organization. Talent powers the organization’s growth both during and after an economic downturn. Developing and retaining performing employees is essential for any business strategy, especially during an economic downturn. For several organizations, resupplying talent will be key. It is easy as the economy makes quick strides forward to act hastily and just refill positions quickly. A careful selection strategy with accurate tools and processes can strengthen your workforce and reinforce company culture.

To retain your employees, think of what your company culture is like right now. Is it a place where employees can thrive? The company culture is important and closely linked to the employee experience. Examine whether your company culture is congruent with your values. Do employees embody and display the behavioral traits and characteristics associated with the values of your organization? If they do not, is there something in the environment/culture preventing them from doing so? These are questions that you should ask and that can be answered by a well-constructed employee pulse or engagement survey. If you have never done an engagement survey, now would be a good time to consider doing one and implement it to be administered periodically throughout the year. There have been many changes to how work is getting done for many organizations, especially through virtual working, and by taking the pulse of your organization, you can find ways through organizational development to make important improvements to drive employee engagement.

Improving Leadership Capability

Good leadership is at the center of organizational development.
“Do as I say, not as I do” is not the motto of great leadership..

If you take some time to do some quick research on what you can do right now at your organization to ease the unpredictability that comes with a recession, you will see an overwhelming number of articles focused on leadership. Why do you think that is? Because without good leadership to steer the boat, the organization may crash. Especially when a global pandemic hits and leaders can be distracted by just keeping the boat afloat. However, research from the Center for Creative Leadership shows that one of the biggest areas for budget cuts historically is training and development. Such cuts may realize short-term savings but minimizing leadership development may have negative long-term effects for an organization.

One of the most effective organizational development strategies to implement when the business is struggling that would also yield benefits in times of prosperity is to improve the leadership capability of the organization. Without capable leadership, talent, and organizational development interventions or strategies can struggle. Research consistently shows that about two-thirds of all change initiatives fail to deliver the intended outcomes. These failures are often a result of poor implementation and lack of executive commitment, rather than faulty thinking.

HR can only do so much when it comes to the implementation of strategies. They can facilitate the process, but the bulk of it has to be done by the leaders of the employees being impacted. If they are not capable enough, the change effort almost always fails. The importance of improving leadership capability in an organization cannot be understated. The success of other change initiatives hinges on leadership. Perception seems to be everything when it comes to change initiatives. If the words and actions of the immediate leader or manager are perceived to be in support of the intervention, then there is a much greater chance that the intervention will be successful.

If you don’t know where to start with improving leadership capability in your organization, start with focusing on the skills and competencies critical to organizational success as well as the success of the individual leaders. In a report published by the Center for Creative Leadership in 2020, the top 3 skills organizations address with leadership development are ones that improve individual leadership skills and make more effective managers and leaders. These skills are: effective communication, leading and managing teams, and decision making. Another half of respondents reported other skills they advance through leadership development activities: strategic thinking, planning, and execution, leading and managing change, coaching and developing others, managing risk and complexity, and creating a culture of innovation. Determine which competencies are most important for your leadership team, assess those competencies, and create a leadership development program to increase the capability of your leaders around these skills.

Employee Wellness Strategies

There’s no better time to focus on the wellbeing of your employees than during a worldwide pandemic. There’s more to an employee than just their jobs. An employee is a well-rounded individual with family, hobbies, emergencies, health issues etc. The better you can help them navigate their personal and professional life, the better you can show them how much they are valued. Valued employees tend to go the extra mile for the organization. Think of the employee like your customer. You have a responsibility to create an experience for your employees that is similar to that of your customers. Your employees will feel like an indispensable part of the system.

Employee wellness is one consideration in organizational development.
Employee wellness can come in the form of mental, physical, and/or social wellness programs.

According to the Wellness Council of America, successful organizational development wellness initiatives help employees fulfill their needs in the following areas: health, meaning, safety, connection, achievement, growth, and resiliency. Pending the time that it’s safe to be around people again, some wellness strategies to implement include virtual wellness fairs, wellness challenges, and mindfulness meetings. Mindfulness can have positive benefits for anxiety and help employees remain more present. It involves teaching meditation techniques such as how to breathe deeply or have a clear head.

Social distancing doesn’t have to equal social isolation. Encourage your employees to interact with each other by encouraging social relationships such as virtual happy hour or team lunch. With employees having to work from home and some having to take on more responsibilities such as teaching their kids while at home, providing emotional and mental health support may also be beneficial.

To set your organization up for success even after the economic downturn, plan for the flourishing times by putting together other wellness programs such as on and off site fitness accessibility that will encourage physical activity, having healthy snacks in the office, in-office health screenings, and flexible work hours/ remote work. When it comes to employee wellness programs, even the simplest things such as a healthy meal plan promoting a nutritious diet can have positive benefits.

Innovative Organizational Development Strategies

Expense reduction, although a focal point during a period of struggle should not be the only focus. During this time, organizations can take a look at their business model and look for ways to innovate, which may sometimes save more expenses than expected. One such example of an organization that looked inward is IBM. Once, the king of computers started struggling as the market became more saturated with other competitors. IBM reinvented themselves and shifted the focus from computer production to IT and computing services. IBM was able to save in production costs by refocusing their workforce to provide services without having to resort to drastic cost-saving measures or large layoffs. As a business, take a cue from IBM and focus on reviewing your products and (or) services to where you can shift, adjust, and provide more value.

Communication Plan

Organizational Development can help with communications between departments.
What communication looked like (before Covid-19)

More than ever, people like to stay informed especially during an economic downturn. Use this period as an opportunity to increase the communication between upper leadership and employees. Timely, open, and honest communication is vital to preserving morale in tough times. Transparency is very effective because from an employee perspective, no news doesn’t necessarily mean good news. It’s important to develop and maintain communication channels with employees especially if employees are working remotely as is the case with many organizations due to COVID-19. Send out weekly newsletters and constantly share information with employees. Engage with them, not only via email but on other informal communication platforms such as slack, or other social media used in your organization. Be sure to keep the communication lines open.


Implementing the above organizational development interventions can really help set organizations up for present and future success. However, the reality is that recessions can be extremely difficult on the ecosystem of an organization and threaten its stability. In times of economic uncertainty and bleak profit margins, companies of all sizes undergo pressure to cut costs in order to keep business alive. One of the most common ways organizations cut costs is through workforce reduction. Although workforce reductions may be an effective way of saving costs, they do come with other hidden organizational expenses. The savings created through reducing your workforce can be visibly offset through COBRA plans, unemployment insurance taxes, severance costs, and even potential lawsuits. Other costs such as employee morale and engagement, trust in the organization are not so visible but may be more damaging than the visible costs. 

If all else fails and workforce reduction is inevitable, ensure that it is done correctly. The costs, implications, and potential downfalls are higher if executed incorrectly. Reduced productivity, increased future turnover, rising cases of inappropriate work behaviors are some of the unintended consequences of an improperly executed reduction to watch out for. Companies that reduce their workforce lose the time that was invested in training their workforce. A Harvard Business Review study in 2018 showed that organizations that downsize their workforce by 1% see a 31% increase in voluntary turn over the next year. This spike in voluntary turn over could cripple a company during the economic recovery.

One way to avoid the unintended consequences of a workforce reduction while setting the organization up for economic stability and prosperity is to apply a competency modeling framework. When things get better and you are no longer in survival mode, you want to be sure that you have the talent and processes in place to ensure continued success in the future.  When considering a workforce reduction, companies can structure themselves towards the future through competency modeling and use it as a framework to divest skillsets that will not be necessary for the future.

Article by Alex Gould, Ore Osikoya, & Brandon Jordan

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