Troubling Times Are The Best Time To Invest, Especially In People
Martin Reeves, chair of the Bruce Henderson Institute—BCG’s internal think tank—and co-author of several books, including “Your Strategy Needs a Strategy” and “The Resilient Enterprise,” recently told a group of CEOs that the actions companies take during relatively short periods of adversity are what often create their long-term advantage.
He wasn’t talking about cutting costs to survive, but rather about building, investing, and innovating while others are cutting back and retrenching. The analogy he used to make it come alive was a quote from the late Formula One racing great Ayrton Senna, winner of 41 Grand Prix races and three world championships, who said, “You cannot overtake 15 cars in sunny weather… but you can when it is raining.”
The message should be clear: Though it takes courage to accelerate in the rain when others are understandably being extra cautious and holding back—or in the case of business, to increase investment in uncertain and even troubled economic times—that’s when the greatest opportunity exists to speed past the competition. That’s when it’s best to invest.
Since this is a column about business, not auto racing, what investments should business leaders “accelerate” during troubled times?
One option might be to beef up sales, marketing, and advertising in an effort to take market share from competitors (some of which may be trimming their advertising and marketing budgets). Another option might be to boost research and development (R&D) spending in an effort to speed product innovation, while others are going lean and making careful, blunt, and in some cases deep cuts. We know from both academic research and anecdotal evidence going back at least to the Great Depression that many companies have benefitted from such aggressive, counterintuitive approaches over the years.
But let me propose another essential area in which companies should be investing during times of uncertainty: talent. More specifically, creating talent advantage.
During the pandemic, the Great Resignation (or big quit) that accompanied it, and the “quiet quit” that has followed, talent gained the upper hand. Or put another way, companies became hostages to their talent needs.MORE FROMFORBES ADVISOR
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As a result, many have been reworking their people policies, increasing employee flexibility, agency, trust, and accountability. That’s a smart move because it will continue to attract, inspire, and retain talent to deliver their best long after the uncertain times are over.
Creating people advantage is not inconsistent with managing costs and creating business resilience during a downturn. It’s not an either-or choice. Here are two examples:
The Mr. Cooper Group—Dallas-area mortgage giant Mr. Cooper Group invested in creating a highly flexible, “home-centric” work culture during the pandemic, which included not only front-office employees but also the company’s thousands of call center workers. They also invested in enabling managers—through training and technology—to coach, mentor, and lead their teams from home, which became an essential component of their strategy. “Home-centric” doesn’t mean never together. The company makes a point of bringing people together, face-to-face, for onboarding, training, team building events, and building connections.
What makes it possible? Mr. Cooper tripled down on communication, listening to internal chat on Yammer, and equipping managers with weekly updates to share with their team members so everyone knows what’s going on. Trust and transparency became the North Star, driving an impressive increase in the company’s “Great Place to Work” ranking.
symplr—A healthcare operations software company, symplr also leaned into flexibility when Covid-19 hit—going almost 100% remote with its U.S.-based workforce in the fall of 2021.
But they didn’t stop at just announcing the new “all-remote” policy. They invested in a wide range of tangibles and intangibles that would make it work, including start-up stipends for home office furniture and equipment, monthly internet allowances, and team budgets for online games, virtual happy hours, and virtual lunches. They also were careful and clear about specific work-from-home norms (such as camera usage, blocking personal time, and managing work-life balance). But perhaps the biggest booster of all was the surprisingly highly motivating company swag!
Like Mr. Cooper, symplr also understood the importance of internal communications and invested heavily in that area, along with other activities and initiatives intended to strengthen culture and team-building, improve employee recognition, and bring people together. In fact, the company reportedly has invested nearly half of what it’s saved on leases directly in its people.
One year in and the arrangement is working extremely well. Says CEO BJ Schaknowski, “We have been doing this for well over a year pretty successfully with no dip in productivity.” How does he know? Because they set quarterly top-down outcomes goals (such as sales) for every department and examine them weekly. They know!
But that’s not all. Not only is the new working model working well financially, but by investing a large chunk of its real estate savings in its people, symplr has experienced decreased employee turnover, with attrition rates of about half of what its competitors have experienced in the same time period.
So, as we continue to fight inflation and confront a possible recession, please remember that now might be the best time to increase your investments in your people, creating the people advantage that will enable you not only to overtake 15 cars in the rain, but when the sun starts shining again as well.