Economic downturns shake the foundations of even the most stable organisations. For employees, particularly those on the frontlines, this often entails dealing with frustrated customers, sudden policy shifts, and heightened job insecurity. Leaders face the daunting challenge of keeping the workforce motivated while steering the business through difficult times.
In such situations, leaders grapple with a critical decision: whether to continue investing in employee culture or to cut back in the name of survival. Culture may seem expendable during economic hardships, but history and research emphasise that inclusion is vital for building resilient and successful businesses.
Inclusion strengthens stability
In the U.S., recessions occur approximately every six years, meaning most employees may experience multiple downturns early in their careers. During these times, a robust company culture can significantly impact its ability to endure. Employees often navigate uncertainty, with younger workers particularly anxious during their first downturn. Those supporting families carry additional emotional burdens.
Inclusion makes a substantial difference in these contexts. Leaders who embrace transparency and inclusivity create a sense of stability. Employees who feel valued are less likely to disengage, even in bleak circumstances. Research from Harvard Business Publishing highlights that authentic, people-centric leadership correlates with improved morale, particularly when paired with inclusive practices. When employees trust their leaders and understand their contributions to the company’s survival, they remain motivated and productive, even under pressure.
Economic perceptions and workplace behaviour
Studies show that employees’ perceptions of the economy can significantly affect their interactions with colleagues. Negative economic news can lead to self-preserving behaviour, making employees less likely to help one another. This undermines organisational resilience. Managers must acknowledge that some workers might not act in the company’s best economic interest during downturns. To combat these effects, they should cultivate a culture of mutual support and cohesion in the workplace.
Avoiding the cost of neglect
Neglecting inclusion during economic challenges can have costly repercussions. Companies that overlook equity and inclusion often grapple with legal and reputational issues, compounding financial woes. For instance, Trident Mortgage Company faced a $22 million fine for discriminatory practices, presenting a clear warning about the risks of failing to prioritise equity.
Conversely, inclusive companies integrate checks and balances within their culture. These mechanisms minimise risks and align decisions with long-term business objectives and community expectations.
Diverse teams drive adaptability and loyalty
Inclusive organisations possess a unique advantage in challenging times: their inherent adaptability. Diverse teams bring a range of perspectives, enabling innovative solutions and preventing groupthink. Research from McKinsey during the COVID-19 pandemic illustrated that companies with diverse leadership were better equipped to anticipate shifts in consumer behaviour and respond swiftly. This adaptability is vital in volatile markets, where adjusting strategies and reimagining customer experiences are crucial.
The tech sector, particularly Silicon Valley, exemplifies this principle. While its reputation rests on technological innovation, its true strength lies in its culture of tolerance and inclusivity. A company’s inclusive culture not only attracts top talent but also maintains high-performing teams during economic downturns.
Resilience for the long haul
Economic downturns are inevitable, but their impact need not be catastrophic. Companies that weave inclusion into their core values are better positioned to navigate uncertainty. By fostering diverse perspectives, building trust with employees, and aligning with modern consumer values, they develop a resilient foundation that extends beyond immediate crises.
Ultimately, inclusion provides a blueprint for long-term success. Companies should recognise the intrinsic value of inclusion, viewing it as an investment that will yield returns well beyond the economic downturn.
Serein has developed a range of advanced tools that consider the complexities of human behavior and the dynamics of the economy. Our goal is to help organisations become more resilient and ensure a stronger culture. Write to us at hello@serein.in to learn more.