Recession will drive employees back to the office, HR exec argues

James Baker
James Baker

The rising risk of a recession could give bosses the leverage they need to get their remote workforce back into the office, especially if employees want to hold onto their jobs, says the head of an Ottawa-based executive search firm.

“I think that’s going to push people back to the office more regularly,” said Keynote Search CEO and co-founder James Baker. “Based on the ongoing conversations we have with employers of all sizes, the general sentiment is that organizations are looking for better output and engagement from their teams.”

Baker said that many companies are facing cash constraints that are affecting all areas of their business, and that’s got employers questioning how they’re going to deal with the potential impact of an economic downturn.

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“This recession isn’t going to be a surprise to anyone; we’ve had well over 10 years of economic growth and the signs are all there. The majority of small and medium businesses are already feeling the pressure of inflation, and it’s having a knock-on effect on staffing budgets. Fortunately, not many in our business community that I’ve spoken to believe it’s going to be like the 2008 recession, though, which was devastating to so many.”

As a result, businesses across all sectors are looking at ways to become more streamlined and efficient and identify productivity gaps, said Baker of a process that usually involves trimming some fat.

“In many organizations, if the employer has a choice between two people: one who they can see, can interact directly with, and another who works completely remote, I think we’re going to see a lot of businesses start to say, ‘I want people who are going to be part of our culture and alongside us through what is coming.’ I think that’s going to cause a real ripple in the market.”

During layoffs, bosses typically target unproductive and underperforming workers first, the so-called “quiet quitters.” They also look to save salary costs by identifying the duplication of managerial roles and subsequently consolidating positions, Baker added.

“Organizations will still have to hire, but they’re going to be far more deliberate and make what we call ‘strategic hires,’” said Baker of a tactical process that involves recruiting, hiring and organizational planning decisions that are aligned with business needs and objectives. “For me, this means we will see more and more businesses adding knowledge and expertise that can help immediately over developing less experienced talent.”

Canada’s unemployment rate continues to remain low while workplace trends such as the Great Resignation and “quiet quitting” are seeing employees put their lifestyle first. At the same time, several large technology companies, including Shopify and Hootsuite, have been laying off people.

“Honestly, there are two opposite worlds existing at the same time,” Baker said. “This is all happening while companies are still feeling like there’s an ongoing shortage of affordable talent. So this is a really confusing time for business leaders.”

The Ottawa business community has not had an easy time, said Baker of the ongoing pandemic, not to mention the Freedom Convoy protests that shut down the downtown core for weeks last winter. 

“I do worry for local businesses. I think they’ve had a tough run of it. Business owners have not been particularly vocal about their problems because they’ve been so scared about losing people during the labour shortages. They had to accommodate employees’ needs over and above business needs at times, and I think that pendulum will need to swing back slightly.”

Keynote Search, which has offices in Ottawa, Toronto and Mississauga, works predominantly with private businesses and non-profit organizations to help them with critical hiring needs from the management to executive level. Baker has been hearing from employers that productivity in the workplace has decreased and they feel that the fatigue of remote work has been a contributing factor.  

“The biggest complaint I’m getting from business leaders is, ‘I’m not getting the same value from my employees for what I’m spending as I was before.’ Salaries have gone up but productivity has gone down. Employers are saying, ‘I’m spending more, getting less.’”

Ottawa needs to stay productive if it wants to compete on a higher level, Baker stressed. “I think you’ll see Toronto, which is a bigger corporate city, promote larger wide-scale HR policies that will almost push people back to the office. We have to keep pace because our competitors are no longer just Ottawa businesses. We compete nationally and internationally.”

Returning to the office, at least to a hybrid model, is also important for training and developing the emerging workforce, he added. 

Baker believes the federal government will play a key role in the future of the local economy.

“I think the federal government is overextended financially, which means they’re going to have to be prudent and show some fiscal restraint,” he said. 

Baker remains concerned that if public servants don’t return to the office, there may then be a push to decentralize service delivery and possibly move those federal government jobs elsewhere in Canada.

“I have some nervousness about the local economy and what we’re going to do, how the feds are going to ensure their employees return to the office. That economic engine drives the downtown, it supports the small businesses, it sustains the barbers, the coffee shops and everything else.

“The feds have got to play their part in getting their people back and contributing to the local economy.”

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