XPG Insights

Staffing industry recruiting news, advice and thought leadership.

XPG Insights

Staffing industry recruiting news, advice and thought leadership.

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Ways a Recession Affects the Workplace 

The economy is slowing by many measures, and employers are making adjustments that will allow them to weather a downturn. With the threat of recession looming, it looks like the balance of power is shifting from workers back to employers. The Quiet Quitting movement couldn’t have picked worse timing.  

One of the changes we’re seeing is a return to the office for many companies. Managers are taking inventory and working on ways to enhance productivity and build team camaraderie again. They’re also ready to make workers wear pants again, literally. No more Zoom calls wearing a blazer on top and pajamas on the bottom. Those who aren’t willing to come back in at least a couple of days a week may see their value reduced if times get tough. 

This is mostly good news for the youngest generation of workers who started their careers remotely and may never have had the benefit of hallway check-ins and office mentoring relationships. Or break room cupcakes for birthdays. 

But we already hear about return to the office tensions. The essential staff who stayed during the pandemic feel unappreciated for their sacrifice as the returning workers are lionized for showing up again. Some workers’ social skills and enthusiasm for teamwork have eroded over the past couple of years, which could make for some awkward meetings. After months or years of working from home, it will take some time to get back into the flow of managing office hierarchy and the grapevine.  

A July 2022 Indeed.com survey of workers indicated mixed feelings about the return to the office. Forty-five percent of workers now view the physical office as less important than before the pandemic. Although most felt good about returning to the office, having missed the collaboration and social aspects of working together, over 70% were still concerned about health risks associated with COVID-19. 

Commute times and costs were the main concern as workers contemplated changing to in-person work. Forty-five percent were concerned about commuting hours, while 38% were concerned about gas or public transportation costs. Thirty-one percent also fretted about the cost of dressing for the office again, including dry cleaning and other clothing-related expenses.  

Ryan Wong is CEO of Visier, a people analytics company. Writing for Fast Company, Wong says other changes to the office will include phasing out the financial incentives employers used to attract talent. “Over the past two years, employers used bonuses, lavish trips, and lotteries for free cars to attract and retain talent in a uniquely competitive market. As the economy shifts downward, they are likely to be among the first expenses to go. Meanwhile, fast-growing startups that incentivized hires with equity packages face reduced valuations, reducing the allure of options.” 

This means people will be paid less in an environment where everything is more expensive due to inflation.

Older workers may put off retirement if a recession takes place, some by choice and some because their financial safety net has been eroded. That might create a bottleneck for younger workers looking to move up the career ladder. We may see a shift in financial incentives for retirement, allowing workers to move on voluntarily with a financial cushion rather than being laid off – or staying on indefinitely.  

Meanwhile, Wong writes, “In lean times, one of the worst mistakes a leader can make is calling for arbitrary reductions—like across-the-board budget cuts or laying off the younger, newer employees who represent the next stage of the company’s growth. Above all, informed workforce planning is essential to ensure your staff includes a healthy mix of new, developing, and seasoned employees.”