By Dr. Sara Pixley, Head of Strategic Insights, ExecOnline
On top of the significant talent pressures caused by the pandemic and resulting Great Resignation, organizations are now experiencing a new challenge: economic uncertainty. In this precarious moment, L&D leaders have an opportunity to drive business results by investing in high-impact leadership strategies.
Braving New Economic Headwinds
In recent months, rising inflation rates put a significant crimp on organizational budgets and added pressure to consumer and business spending. Now, with elevated interest rates curbing borrowing power, an economic downturn may soon be on the horizon.
However, this economic downturn is likely to be very different from the recessions of the past. At the onset of the Great Recession of 2008-2009, leaders were asked to reduce organizational layers and protect critical talent. The leadership skills needed to succeed at that time were largely technical, with emphasis on budget management.
Today, organizations are at a very different starting point. Many companies are struggling to acquire talent in the wake of the Great Resignation. As a result, there are fewer organizational layers to cut, and existing talent is already burned out by the shifting demands of the pandemic. In an ExecOnline survey of thousands of leaders, 75% reported feeling at least somewhat burned out in their role.
Replacing leaders in an increasingly volatile economic environment is costly. Turnover costs are increasing with U.S. quit rates approaching 3% and wages increasing by 5.2% in 2022. Turnover is estimated to cost organizations $16-32 million per year*, and there is every indication that number is growing. The solution is hiding in plain sight. L&D is the critical lever that can drive critical improvements in workforce retention without requiring large budget increases.
Empower Leaders to Manage Cost and Talent Pressures
Typically, the solution to retaining and engaging employees in tight talent markets has been to invest in competitive compensation packages. However, tightened budgets have curtailed organizations’ ability to spend. During the first half of 2022, the biggest challenge cited by leaders was motivating their employees without being able to offer incentives.
Today’s leaders must be able to manage cost and talent pressures. And C-suite executives are increasingly recognizing the need to invest in developing leaders’ capabilities to do so successfully, at scale.
Through data-driven strategies, L&D teams can identify critical competency gaps and map needed leadership capabilities to business priorities for maximum impact and ROI. Virtual tools and the normalization of online work and learning have empowered L&D teams to cost-effectively scale learning across organizations with less disruption to business activities.
Human-Centered Leadership: How Leaders Can Succeed in this Challenging Moment
To successfully balance competing demands on budget and talent, managers at every level must be able to efficiently drive strategy and engage their teams. If not developed properly, these two skill sets can be at odds with one another.
The pace of change continues to accelerate and the volatility of the current business environment continues to proliferate competing challenges and opportunities. Organizations need leaders who can relentlessly prioritize limited resources and conflicting organizational demands. They must be strategic thinkers, and exhibit good judgment, decision making, and business acumen to anticipate challenges and delegate effectively.
Leaders must be equipped to analyze and streamline solutions to complex problems, identify business opportunities, and take smart risks. Through project-based leadership development, leaders are empowered to apply their learning in these critical areas directly to the specific business challenges facing their organization.
The pandemic had a profound impact on employee attitudes toward work-life balance. Sustained stress managing work and family responsibilities amid an unfolding global crisis has driven record high resignation rates.
To prevent burnout, engage and retain top talent, leaders must take a human-centered approach to management that prioritizes employee well-being and fosters a truly diverse and inclusive work environment. They must be able to lead others, but with empathy and clarity of purpose.
If not balanced properly, empathetic leadership and strategic prioritization can work against each other, solving either talent or economic pressures, but not both. By placing a human-centered lens over strategic leadership, L&D helps resolve the C-level dilemma of meeting budget and talent challenges.
Stay Ahead of the Curve
Heads of L&D and HR can gain support for leadership development initiatives by proactively benchmarking, measuring, and reporting impact as it relates to organizational business priorities. Areas of focus include:
- Business Alignment: Align leadership development with your organization’s short- and long-term goals, and leadership trends in your broader business environment.
- Relevant Application: Identify the leadership capabilities needed by various talent populations in order to achieve business goals.
- Leadership Pulses: Stay ahead of leadership challenges by measuring existing employee competencies, attitudes, and perceptions through frequent leadership pulse surveys.
- Easy Access: Reduce barriers to leadership development opportunities by offering leadership coaching and flexible, easily-accessible learning experiences that equitably meet leaders’ needs.
- Demonstrated Value: Frequently measure engagement and impact of leadership development initiatives to refine and improve strategy, as well as provide common language to communicate the value of investment to senior leadership.
*Cost estimated for organizations with at least 10,000 employees.
Dr. Sara Pixley is Head of Strategic Insights at ExecOnline, where she leads quantitative efforts to track program impact and drives frame-breaking thought leadership. She has a Ph.D. in cognitive science from Rice University and is a published author of heavily cited research in the field of learning optimization. She has experience leading quantitative and qualitative HR research, most notably within learning and development, total rewards, compensation, and benefits. Before joining ExecOnline, Sara ran an internationally recognized cognitive science center as the executive director and member of the faculty.