“Some confluence of events at some point in the future will cause a recession. I don’t know what those are, nobody knows what those are, and nobody will ever know what they are.” – Jamie Dimon, CEO JPMorgan
So I am as uncertain about a coming recession as a guy on track to make $30 million in salary this year and whose business it is to see them coming. But it is an honest answer and it is important to watch and see if, “at some point,” is this point in time.
- American central bankers have grown more fearful, models gauging recession probabilities had “increased notably in recent months.” Meanwhile, indicators tracking manufacturing and services industries, as well as business and consumer confidence — so-called “soft” indicators often seen as a harbinger for weakness in hiring and spending — continued to worsen. – Livemint · October 10, 2019
- In a recent Forbes article Sergei Klebnikovthat Harvard University professor and former treasury secretary Larry Summers placed the odds of a recession before 2021 at nearly 50%. This supports Summers’ interview with the Wall Street Journal, In which Summers delivered a grim outlook for U.S. economic conditions—“I haven’t been this alarmed since the financial crisis,” he admitted.
- Even our prescient friends at SHRM, in a 2017 article entitled, “How HR can prepare for the next recession,” plainly stated, “Economic downturns are inevitable, so HR should act now to prepare for the next one.”
L&D Under the Macroscope
While the L&D industry (IMHO) can get caught upin the micro (is. learning solutions, platforms, evaluation) I prefer to focus my attention on the macro because these become the undercurrents that drive the broader industry. Judging by my LinkedIn connections there are a number of L&D leaders that were not in place in 2009. So let’s begin with a quick L&D recession primer.
- The effects last longer than you think. a Harvard Business Review article entitled “Roaring out of the Recession,” (published in 2010!) stated, “CEOs continue to combat the myriad challenges thrown up by the Great Recession of 2007.”
- L&D gets the axe. JB at Bersin & Associates reported that average training expenditures per employee fell 11 percent in the past year, from $1,202 per learner in 2007 to $1,075 per learner in 2008.
- It is global. The UK Commission for Employment and Skills released a report on the impact of the 2008-2009 recession on training at workIn it authors Alan Felstead, Francis Green and Nick Jewson made it clear that discretionary training got the brunt of it with, “Private sector employers continued to train their workforces because they were faced with a number of ‘training floors’; that is, types of training that are essential, and therefore cannot be abandoned, by functioning businesses or organisations.”
- It doesn’t go back to the way to was. Bersin’s group also noted that at the time almost all business leaders reluctantly admit that the current crisis also marks an inflection point: The world after it is unlikely to resemble the one before it.
Why I am Excited About a Recession
“He said what?!?!” I recently met a out-of-town friend at the New Orleans Air BnB he was staying at. I took an Uber to his place. Why does this matter. Because macros trends like recessions have played in role in both Air BnB’s and Uber’s success. In his “startup land famous” TED talk Bill Gross identified the number one factor in determining startup success. Bill should know. His firm, IdeaLab has been there since the beginning and has seen hundreds If not thousands of startup over that time.
In his talk Gross identified “timing” as the most highly correlated factor. Not quality of idea. Not founder, industry or technology. If the recession had not occurred would the founders of Air BnB needed to rent out thier extra air mattress to make ends meet? If you ever wondered where the “Air” came from, it isn’t from aspirations to sell plane tickets. Would people be willing to offer perfect strangers rides in their personal vehicles if it weren’t for the need for extra income in an economy where it can feel like job skills have the shelf life of an avocado.
In addition to the economy, another macro that caught my attention this was this one showing that at H1B visas are being issued at record LOW levels! Combined with the fear of recession does this accelerate the trend towards remote workers? With budget reductions in the back of executives’ minds is L&D empowered to more effectively implement new ways of doing things (given we can make the cost-saving case) that were resisted prior?
Discomfort enables behavior change and constraints drive innovation. I agreed with JB when he said last time. I agree with it for the recession to come.
“The world after it is unlikely to resemble the one before it.”
And I, for one, think that that is something to get excited about.