If you pay attention to the business news, you’ve probably heard many economists predicting that the American economy will go into recession in 2023. Are you ready? Are you training for the next recession?
The definition of an economic recession is two consecutive quarters where the United States Gross Domestic Product (GDP) declines from the previous year.
Gross domestic product (GDP) is the total market or monetary value of all the services and finished goods produced at a specific time. GDP is a comprehensive analysis of our country’s economic health.
Since my first job in 1973, I’ve seen seven recessions over the past 50 years. The average length of those seven recessions was ten and a half months. The “Great Recession” was the most prolonged recession, lasting 18 months from 2007 to 2009.
The shortest recession on record was the COVID-19 Recession, lasting only two months from February through April 2020, helped partly by online purchases, zero interest rates, and the infusion of vast amounts of support money from the Federal Reserve.
Even though the COVID-19 Recession was the shortest, it was the worst in my work career. We saw the most significant drop of 19.2% from the peak to the trough. Twenty-four million people lost their jobs in April 2020 alone. GDP during the Great Recession of 2007 through 2009 fell just 5.1%.
In 2022, GDP declined in both the first and second quarters, which is technically a recession. Still, economists are hesitant to classify that as a recession because of the conflicting nature of various economic indicators, mainly record low unemployment numbers and the scarcity of potential employees. At one point, there were 11 million jobs open but only 8 million available job seekers.
Gross Domestic Product quickly rebounded and grew 3.2% in the third quarter of 2022. The Federal Reserve’s current estimate for the fourth quarter of 2022 GDP is 3.7%.
According to Mastercard SpendingPulse, American retail sales rose 7.6% year-over-year (YOY) this holiday season from November 1st through December 24th, 2022.
Over the past 50 years, the economy has been in recession for 84 months. The economy has been in growth mode for 519 months. That is 84% of the time in growth mode and only 16% of the time in recession.
In the past 50 years, there have been more good times than bad. In every case, the economy continued to grow after each recession.
Most business consultants promote conservative business practices to prepare for a recession. They suggest common tactics like reducing expenses and securing a line of credit for unexpected circumstances. Those are always wise decisions.
But cutting back on the investment you make in your employees could be the worst decision you can make.
Top-performing companies recognize not only the importance of their people but also the need to provide the right skills and tools to enable their people. According to the IBM Smarter Workforces Study, 71% of CEOs cited human capital, ahead of products, customer relationships, and brands, as the leading source of sustained economic value. They rank people skills in the top four “external forces” that impact their business.
Today, more than ever, companies need to maximize their human capital by engaging with their employees to ensure the training and support provided align with the company’s priorities.
According to Forbes, companies with highly engaged employees experience 21% greater profitability.
That’s why I enjoy what I do so much. When I help a company or an individual with their learning agenda, I know that I contribute positively to help others in their business, personal, and family life.
However, with traditional training and instruction methods, many companies struggle to see a positive return on their training investment. The company provides some training, and the employees pass a test, but the company doesn’t see any change in performance or behavior.
I use a competency-based education (CBE) technique in my work. CBE is a formal method of academic instruction and evaluation based on the employee’s ability to demonstrate mastery of a subject or skill.
In a sales environment, a clear competency framework has a direct impact on the bottom line for the whole organization. It lets you put the right people in the right roles and identify opportunities to improve their performance.
Competency-based training today has wide-ranging consequences for the entire organization:
- 87% greater ability to hire the best people.
- 40% lower turnover among high performers.
- 17% lower overall voluntary turnover.
- 26% higher revenue per employee.
- 19% improvement in employee performance
- 92% greater ability to respond to changing economic conditions.
- 144% greater ability to plan for future workforce needs.
- 156% greater ability to develop leaders.
CBE is a learning methodology, not a replacement for your current training curriculum or content. It is not a new software program. We start with what you already have and build from there with a focus on your business priorities.
If you are frustrated with the results of your training curriculum, click here to learn more about Competency-based Education. If you would like to speak with me about your specific needs, it would be a pleasure to hear from you. Click here to send me an email. Perhaps, together, we can develop a solution for you.
Source: Sherman Garr, S., (2012) Integrated Talent Management: A Roadmap for Success. Bersin and Associates
