If your company needs to reduce costs, you don’t have to abandon your mid- to long-term plans. With the right talent strategies, you can prepare for growth, even when budgets are tight.

In a recent LinkedIn LiveAlan Guarino, Vice Chairman of Korn Ferry’s CEO and Board Services practice, shared insights that leaders can use to help their organizations continue with growth plans during a downturn.

Reduce overhead with interims

When leaders or senior members of your team leave or you need additional expertise for specific projects, one way to temporarily reduce overhead is with interim specialists. These professionals bring years of experience with them and can help you bridge a gap without all of the costs associated with a full employee.

Companies going through an economic downturn or dealing with smaller budgets “need a combination of full-time committed employees on the payroll and as part of your fixed overhead, plus judicious use of interim staffing,” Guarino says.

The same is true for less mission-critical positions, too, where temporary staff or freelancers can step in to provide cover as you assess your longer-term talent needs. This can be particularly crucial when planning for growth as the skills you might need in a few months or a year could be significantly different than those you need now.

This essentially means you’re renting services from experts, consultants, or critical partners within functions such as HR, finance, or technology, in order to complement in-house teams. Guarino says that this blended approach can inject new skills and energy to drive transformation, while keeping total overhead costs down.

Hold onto skills

When it comes to employee retention during a budget crunch, if you’re planning for growth, you need to shift your thinking. The most critical talent to focus your best retention strategies on will be those who have in-demand skills for your growth plans.

You need to align your organizational strategy to your growth plans to understand where to focus limited resources. Think carefully about the skills you’ll need tomorrow, from tech to leadership, and not just those you use today. You can often upskill or reskill existing staff at a much lower cost than hiring new team members, so try to map out in your talent pool the key people with the potential to learn the skills you’ll need to grow.

Once you’ve identified them, look at your Employee Value Proposition (EVP) and make sure you communicate effectively with them their potential for personal growth and development, as well as any rewards you can offer. This can help you retain those people who will be critical to your growth when you can’t offer them an increased salary due to current budget restrictions.

“Companies are customizing and focusing on rewards to retain top performers or skill sets in short supply,” notes Don Lowman, leader of Korn Ferry’s Global Total Rewards practice.

People Cost Optimization

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Be honest with your people

It is not always easy to motivate teams when times are tough, but leading by example is crucial to bolstering morale, says Guarino. He urges executives to be “visibly vulnerable” by admitting uncertainty and asking for input. He also says that “transparency” and “being genuine” are essential for bonding with teams during adversity.

“People follow when they feel that the leadership is genuine and authentic,” he says. “We might have to reduce talent costs in downturns, but you can do it in a caring way.” 

When you have more cashflow and are ready to rehire those positions, you can be sure that how you handled a crisis will be reflected in your ability to recruit candidates later. “People pay attention to how you treated their friends who had to leave the company,” he explains, and they’re more likely to want to work for someone who engaged in this way.

Businesses have been talking about transformation consistently over the years, but it now seems to be at “fever pitch”, notes Guarino. He says a change mindset is needed, with organizations putting strategies in place now that will set them up for growth in the future–and part of that is making sure your reputation will allow you to attract the best candidates when you need them.

Plan for growth

For any business to thrive, you need to keep one eye on the future at all times. Find out how to prepare your business for growth with cost optimization and organizational transformationGet in touch if you’d like to find out how Korn Ferry can help your business grow while managing costs.

Watch Alan Guarino, Vice Chairman, Korn Ferry's CEO and Board Services practice, share more insights on how to grow your business through a downturn on the 17-minute LinkedIn Live replay, 2024 Economic Squeeze: Turning Pain into Opportunity.