Including diversity in your recession planning will help you weather the storm.
As the possibility of an economic recession grows, so does my concern that companies’ commitment to hiring and keeping diverse leaders will recede. I successfully led companies through the 2001 and 2008 recessions (remember Sequoia’s R.I.P. Good Times deck?), so I'm here to tell you: Including diversity in your recession planning will help you weather the storm.
In the recent Business Insider article, Tech is facing a wave of layoffs, and diversity-and-inclusion experts say the downsizing could 'undo what little progress has been made,’ Catherine Henderson and Rebecca Knight write:
“[R]esearch suggests that when companies downsize, they use supposedly neutral criteria that end up not being neutral at all. For instance, a company might lay off only recent hires — but if it's newly committed to a more diverse workforce, people of color and women could be the first out the door. Another company might lay off only those with lower performance evaluations. But studies suggest that those evaluations are biased and that women and people of color receive lower ratings for the same performance, when controlling for tenure and position.”
As a leader preparing for a recession, you’re going to need to:
- Understand how long your runway is and budget accordingly.
- Create a strategy that uses the recession as an opportunity.
- Communicate honestly and clearly with your staff about the reality of “what is” and empower them to contribute to the company’s survival.
In Lowering the Bar to Meet Leadership Diversity Goals is BS. Here's How To Debunk This Executive Hiring Myth With Facts, I talked about how diverse teams increase performance, innovation, brand success, and employee satisfaction. Why in the world would you want to throw that away, especially during challenging economic times?
If you want to extend your runway during a recession, prioritize diversity.
If you want to design a creative strategy that uses the recession as an opportunity, cultivate diversity.
And if you want to keep the diverse team you already have, be an honest and empowering communicator.
Diversity is a practical tool to help your company survive a recession. Now is the time to lean into it more, not less.