Navigating the Downturn: Tips for founders from the Oak HC/FT Chief People Officer Guild

November 30, 2022

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The global macroeconomic environment suggests that we are in a moment to be thoughtful about what it means to be an organization that can weather a storm. It is indisputable that the considerations and decisions made now will impact businesses for years to come. We asked the members of the Oak HC/FT CPO Guild for four tips on how to successfully navigate a downturn.

Differentiate yourself with a strong employee retention strategy.

Data from the U.S. Department of Labor in August shows that there are nearly two open roles for every applicant, so while a recession may be looming,the war for talent has not yet abated. For early-stage companies, it’s a war on two fronts–retaining staff and attracting talent and it can feel a bit like ajuggling act to do both well. Organizations will be best served if they deploy a comprehensive retention strategy focused on effective employee engagement,which involves understanding the complete employee experience.


Culture is usually cited by employees as one of the top reasons they join a particular company and is certainly a reason why many stay. When the engagement, the culture and the experience are world class, it attracts world class talent. The word of mouth and brand recognition provide the needed lift to continually appeal to those looking for a new opportunity.

Mission and Purpose

Mission and purpose can be a real differentiator in both good and bad times. Leaders should communicate to employees about how they will continue to work to achieve the company’s mission and will not be short-sighted in making decisions that go against the purpose of the company. Employees want to believe that the company they joined is the same one regardless of the environment we are operating in and that they are following the same ‘north star’ even when decisions get more difficult to make. 

Focus on efficiency and core business growth.

Rethinking Organizational Design

Rethinking core business growth with people at the center of the strategy is key. One of the best ways to grow during challenging times is to find your best managers and shrink the organization around them. Usually, 20% percent of your existing managers will outperform the remaining 80 percent. Reward managers who are performing exceptionally. Be sure to also ask your managers to dig into team members’ previous experiences and goals. This may present the opportunity to nurture an employee’s career and encourage them to take on new/different workloads of interest that will help you drive efficiency and do more with fewer resources.

Normal Distribution vs Power Law

Your upcoming 2023 planning session presents a great opportunity to look for star leaders and reward them generously with whatever salary and equity budget you have. A fair and efficient performance process is essential but distributing rewards cannot follow a bell curve. You are better off applying the power law and ensuring your best talent is also disproportionately rewarded. Actions speak volumes, and rewards are closely watched.

Headcount Planning and the Core vs Contextual Debate

The FAANG companies figured out early on that while annual planning must be done, only releasing headcount for part of the year allows you to plan for an unpredictable year ahead. Consider taking a page out of their book here. Additionally, break down your roles into core and contextual. A “core” role has direct impact on your roadmap and hence may require a full-time employee, while a contextual role might be better filled by a contractor or a vendor. Spending a few hours with your executive teams on what roles are core versus contextual is time well spent and has a direct impact on your OpEx, Cap table dilution, and fungibility of talent.

Non-Linear Results via Managers

Most industry-dominating companies share a common trait: they repeatedly produce non-linear outcomes through their people managers. Managers are expected to act as coaches and build strong managerial infrastructure by designing their teams lean, setting clear stretch goals, recognizing and rewarding top performers and making quick moves when someone isn’t cutting it. They are then expected to inspire their teams by being several things: hands-on, a subject matter expert, a developer of talent and a guide when things get tough.

Early-stage companies generally do not have a well-defined “how” on producing non-linear results, let alone a playbook on what their managers need to do. If you want to build non-linearity, define it, write it, publish those behaviors and poll the team on how managers are showing up. This will push your organizational capability to the next level almost immediately.

Invest internally and extract greater value.

If you’ve been judicious in hiring, have clear goals in place across the company and give feedback consistently, you already have some tools in place to weather this downturn storm. If you don’t, it’s best start prepping those now.  

Goal Setting

Begin with goal setting and performance management. If the company has clearly articulated goals and objectives then be clear on how those are changing in this economic environment. Ensure every employee has goals that link up to the team/company level goals and begin tracking those on a regular cadence to ensure the entire system is maximizing productivity.  

Communications Cadence

You can’t extract value from your teams if they are in the dark, expending precious energy worrying about their job security. Employees need to hear from the CEO and executive team more often in the “bad” times than in ‘good’ times. Explain how the macroenvironment is impacting your company and the changes your company needs to make. Be clear on how your expectations of the workforce are changing your teams and what employees need to do differently.  

Make sure to give your managers talking points—they need to be equipped to reinforce key messages and assuage employee concerns on the ground. If you have a younger workforce, keep in mind that most early career staff have not yet worked through an economic downturn and may be anxious about what this means for them. Create smaller venues (team meetings, “office hours”) where employees can ask questions and you can address their concerns.

Develop a consistent framework around people decisions.

Focused Vision

Scarcity breeds focus, and focus means you won’t be able to do everything on the priority list.  You will need to choose the areas in which you double down and ones in which you choose to wind-down or decrease your investment. Don’t delay. Identify areas and roles and then mobilize to decrease spend. Eliminating roles means saying goodbye to people, which is really difficult. Boxes and roles are one thing but when you know business decisions will impact people—the heart and soul of a company—it’s anything but easy and so critical to get right. Though it’s obviously more difficult for the people who leave; it still leaves a mark on the people who stay.

Local Laws and Market Severance Offerings

If your company is global, how you legally say goodbye to colleagues needs to reflect the practices of the region. Get smart quickly. Leverage internal and external counsel. Understand what other companies are doing. If possible, having an “at least” approach is beneficial as it is a consistent message and package to those losing their jobs. Take the most generous path and treat employees with dignity and respect.

Re-Recruitment Strategy

The employees who remain at the company will have a lot of questions. Provide them with a safe forum in which they can voice their concerns. Have a plan in place to re-recruit these employees so they are inspired to stay and dig deep. Painting a path for impact and growth, along with ensuring employees feel valued, will be even more important in the months following a reduction.

If the steps outlined here are done well, companies can emerge from the eventual recession in a position of strength. They will have a robust bench of talent and the organizational fundamentals in place to weather a future storm.