5 minute read 28 Nov 2022

Why people-centricity is the key to navigating the economic turmoil

Authors
Gilles Carlier d’Odeigne

EY Belgium Workforce Advisory Executive Director

Agility Catalyst. Recognized expert in organizational agility and agile mindset. Tennis and hockey fan. Passionate about nature and trees. Avid reader of non-fiction books. Proud father of two.

Pieter Nobels

EY Belgium People Advisory Services Executive Director

People Innovator. Curious mind, practical focus. Building a Better Working World. Passionate about purpose, education and future of work.

Stephanie Baele

EY Belgium People Advisory Services Manager

Psychologist; driven by people; passionate about Learning and Change. High paced personality with strong sense of accountability and responsibility.

5 minute read 28 Nov 2022

By adopting a people-centric approach, organizations can better navigate the economic unrest and outperform their peers.

In brief

  • Progressive organizations have the best post-recession growth in sales and earnings.
  • Dismissing people has high direct and indirect costs.
  • Developing people-centric organizations is the solution to boost people engagement, enhancing the ability to adapt to change and innovate organically. 

Every week brings new evidence to the deterioration of the economic context: skyrocketing energy prices and inflation, disrupted supply chains, decreasing consumer and business confidence, ... In Belgium, the automatic salary indexation seriously adds to the list of challenges faced by organizations.

As economic conditions worsen, the labor market is nevertheless very hot. This is shown in the tension index, calculated by the VDAB (public employment service of Flanders), which considers the average number of available qualified candidates per vacancy. While the index was around 9 in 2016, this index has been below 2 since May 2022, meaning fewer than 2 candidates are available per vacancy.

Four options are available to organizations to go through the turmoil

Organizations have several options in this tense context, per the research undertaken by Gulatie, Nohria and Wohlgezogen1.

  1. Some organizations adopt a prevention approach to go through the turmoil, cutting costs, rationalizing their business portfolios, and postponing investments.
  2. Others follow a promotion approach, capturing and investing in opportunities that will arise in turbulent conditions. They act opportunistically to acquire talent, assets or businesses that become available during a downturn.
  3. A pragmatic approach is a balancing act, recognizing that cost-cutting might be necessary to survive a recession and that, at the same time, investment is equally essential to spur growth.
  4. Finally, progressive organizations also cut costs, but they preferably do so by improving operational efficiency rather than by reducing the number of employees. While doing that, they also invest significantly, developing new business opportunities by making investments in R&D and marketing and in assets such as plants and machinery.

Their research demonstrates that progressive organizations have the best post-recession growth in sales and earnings. As the late Brazilian car-racing champion Ayrton Senna once said, “You cannot overtake 15 cars in sunny weather, but you can when it’s raining.” It is to be believed that progressive organizations will outperform their peers in the current context as well.

This article focuses on a progressive approach to the current context, highlighting the costs and risks associated with dismissing people and the benefits of developing an organization where people can thrive.
 

The cost of dismissing people should not be underestimated

If dismissing people might be unavoidable in some situations for progressive organizations, it is nevertheless important to highlight the direct and indirect costs of doing so.

Firstly, in a context of uncertainty for the future involving a risk of dismissals, an organization sees their best talents quitting first, as they are the ones with the most value on the market. Secondly, seeing people leaving greatly impacts the morale of those who stay and might lead to overwork. Additionally, if the organization’s behavior in difficult times is perceived as unfair and unethical, this leaves scars in the long run in terms of morale and reputation.

Finally, as the market will likely remain hot, recruiting talents will not only be hard but also costly when the volume of activities picks up again. Besides high wages, organizations must also factor in the cost and time of onboarding.
 

A people-centric organization focuses on doing better and adapting better with the same crew, decreasing its dependence on the external labor market.
Gilles Carlier d’Odeigne
EY Belgium Workforce Advisory Executive Director

A people-centric organization is the progressive solution to navigate uncertainties

In a context of economic uncertainty and tension in the talent market, instead of reducing the workforce in the short term, developing people-centric organizations is the solution to boost people engagement, enhancing the ability to organically adapt to change and innovate.  

A people-centric organization is designed to enable human potential, leading to a better performance and impact. It focuses on doing better and adapting better with the same crew, decreasing its dependence on the external labor market.

EY has developed a people-centric framework consisting of four ingredients to that effect. 

Graph: people-centric framework consisting of four ingredients

Shared and meaningful project

In stormy weather, the crew on the boat – referring to all members of the organization – needs a compass to navigate, define and maintain direction and to ensure coherence of actions. The collective compass responds to the key questions of purpose (Why do we exist?), mission (What is our role?), ambition (What is our vision of success?), operational vision (Where do we go towards?) and behaviors (What behaviors do we value?). This compass must be meaningful to all members, therefore regularly revisited based on open and deep conversations.

Trust-based culture

Organic change, learning and innovation are key attributes in navigating a turbulent context. They are nurtured by a specific CLIMATE, an acronym for ’Collaboration, Learning, Innovation, Meaning, Trust, and Energy‘. 

To vitalize this culture, formal and informal leaders are expected to play a different role or adopt a different posture. They should move from an expert position to one of a gardener, who seeds and nurtures the soil that the organization needs in order to flourish. Both personal agility and leadership are required for this cultural shift.

Enabling structure

An organizational structure that enables people’s potential promotes teams to operate in a self-directed way. The teams are supported by high-quality standards and processes that allow flexibility in the allocation of resources. Furthermore, information is open by default and flows openly and freely, allowing people to connect easily in a network fashion. Additionally, each layer of the hierarchy clearly adds value to the organization and establishes a healthy dialogue between the levels.

Moving from a job-based to a skills-based architecture is also a great driver of people-centricity and agility. People are no longer ’locked‘ into jobs (e.g., IT engineer) but are seen as owning a portfolio of granular skills (e.g., coding languages, agile, negotiation, system-thinking, …). This provides more flexibility in resource allocation, as well as autonomy, and agency in their career development.

Anchoring practices

Practices are methods, tools, meetings, symbols, rituals, habits and routines. They are essential to connect concepts to reality. It is about moments where actors can brainstorm, share, align, decide, plan, improve, collaborate and learn.

Through practices and feedback from clients and colleagues, team members learn. In the right learning environment, they increasingly take ownership of growing their skills. Moreover, when considering skills rather than jobs, they have more opportunities to apply to various projects and contexts, thereby growing their skills as they try out new things and learn through real problems and direct feedback from peers.

These four ingredients lead to people-centricity since they are directly mapped with the four drivers of intrinsic motivation2, as represented in the schema below. As these motivational drivers are nourished, engagement increases, participation and human intelligence are unlocked, individuals and teams are driven and enabled to take initiative and form new connections, leading to learning and adaptation.
 

Graph: the four drivers of intrinsic motivation

At EY, we would be delighted to open a conversation with you on the people-centric concept and reflect on how to push the people agenda in your organization further. 

  • Show references#Hide references

    [1] Following categorisation is based on a research project dating from 2008 – 2010 and published by Harvard School of Business. Researchers Gulatie, Nohria and Wohlgezogen studied strategy selection and corporate performance of 4.700 public companies during 3 previous recessions, pre-, during and post-recession.

    [2] According to the self-determination theory of Ryan and Deci, with the addition of “Purpose” (Daniel Pink)

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Summary

A people-centric organization is designed to enable human potential and provides a progressive solution to navigate uncertainties. EY has developed a people-centric framework of four ingredients that allows organizations to unlock their full human potential.

About this article

Authors
Gilles Carlier d’Odeigne

EY Belgium Workforce Advisory Executive Director

Agility Catalyst. Recognized expert in organizational agility and agile mindset. Tennis and hockey fan. Passionate about nature and trees. Avid reader of non-fiction books. Proud father of two.

Pieter Nobels

EY Belgium People Advisory Services Executive Director

People Innovator. Curious mind, practical focus. Building a Better Working World. Passionate about purpose, education and future of work.

Stephanie Baele

EY Belgium People Advisory Services Manager

Psychologist; driven by people; passionate about Learning and Change. High paced personality with strong sense of accountability and responsibility.