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Why You Must Focus on Your Culture Amid Economic Uncertainty

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Opinions expressed by Entrepreneur contributors are their own.

Amidst today’s market uncertainty, some organizational leaders feel they don’t have to focus as much on their workplace cultures now that power dynamics are shifting from employees back to employers. The real or anticipated labor market corrections suggest to them they can devote a significant portion of their time and attention elsewhere.

They couldn’t be more mistaken.

Economic downturns represent culturally critical times for organizations, especially those that rely heavily on their people. The threat of layoffs, compensation reductions, reorganizations and other internal changes all serve to severely depress morale. And while the anxieties that permeate such workplace events can drive some people to work “harder,” these efforts don’t usually result in better outcomes. Instead, underlying fears hinder connectivity and collaboration, preventing teams from driving value and achieving ambitious goals.

What’s more, organizations that fall into this trap often suffer more when markets recover. Even brief cultural lapses make it extra challenging for them to engage in successful culture-building in better times, keeping them from capitalizing on new opportunities. Eventually, they lose out to the competition.

Related: What Makes a Great Company Culture (and Why It Matters)

The importance of culture building

Workplace cultures β€” meaning the encouraged behaviors that, ideally, have been intentionally shaped to help employees reach and exceed big-picture objectives β€” are critical to the health of organizations. As an advisor who has facilitated hundreds of culture-building initiatives, I have seen firsthand how the strength of a business is usually directly tied to the strength of its culture.

To illustrate, a long-time client in the highly competitive health technology space decided to invest in culture building in 2019 as a means of differentiating itself and preserving the organization’s legacy. This work helped it attract and retain top talent and instill a highly collaborative mindset, such that when the CEO explored a sale in 2021, valuations experts made specific reference to the company’s culture and put premium placement on its value.

Simply, culture serves as an organization’s very foundation. And just like physical foundations, a culture’s real value and potential are often revealed when calamities strike.

Related: Company Culture Is Everything

What should leaders do?

Leaders who are currently facing or anticipating challenges would thus be wise to keep culture efforts front and center. At a minimum, they can clearly and consistently reinforce their established mission, vision and values as a way to maintain teams’ sense of purpose and belonging. For organizations that have yet to put in place a mission, vision and values, conducting this very exercise is an ideal first step toward culture-building.

Leaders can also embrace cultural norms that have been shown to consistently help organizations weather challenging environments. To illustrate, while every culture sits in a unique spot on various behavioral spectrums, those that lean toward greater transparency in their communications usually do better maintaining their people’s trust in challenging environments. Similarly, organizations that are more collaborative, innovative, inclusive and relationship-oriented, and those that take a longer-term view when it comes to how to measure returns on time investments, typically come out of downturns in stronger shape β€” both financially and culturally.

Embracing these norms often requires leaders to give up some level of perceived or real control. It’s fairly common for top executives to seek control over not just systems, processes and messages, but authentic human responses that naturally defy top-down domination. They should consider letting go of this need and make space for their people’s messy, complex individuality in order to achieve greater transparency and build engagement and trust.

In addition, leaders would be wise to reject any hint of the misguided notions tied to “capitalizing” on employee fears and anxieties for the good of their enterprises. This might mean bucking the emerging trend of walking back popular workplace policies, like flexible or hybrid work arrangements. Unless there’s a well-communicated strategic need to do away with such programs, employees will register such changes as calculated, punitive, traditional and unnecessary. They will impact the level of engagement and productivity teams bring to their work and inform their thinking when they have more employment options. Of course, employees are much more open-minded about in-person work when it’s directly tied to objectives such as team building and brainstorming.

Related: 5 Ways to Turn Your Company Culture Around

Rise to the challenge

Rising to the challenge of organizational leadership requires top executives to constantly wrestle with the tension of doing the best for their people while doing the best for their organizations, keeping in mind opportunities and consequences that can impact both individuals and the collective. This means placing real value on team members’ high performance along with their humanity, accepting the challenge of prioritizing both simultaneously even in challenging times. While leaders might need to make difficult decisions, which, of course, can include letting people go, they must not lose their sense of empathy and compassion in the process β€”and not just because it represents poor corporate citizenship. It’s also a strategically bad move that will prove unwise sooner or later.

The more leaders rise to this challenge, prioritizing their people’s humanity alongside their high performance, the more they’ll see their culture improve and serve to brace their organizations against whatever lies ahead.

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