5 Surprising Truths About Hiring and Firing During a Recession

It's a tale as old as time: business is booming, so companies bring on more and more employees without giving a second thought to whether they'll actually be able to keep them busy. And then, as if by magic, a recession hits and those same companies are left with a workforce that's twice the size it needs to be and not nearly as productive as it should be. Sound familiar?

When it comes to weathering a recession, the success or failure of a company's sales team can make all the difference. But how do you ensure that your sales team is set up for success during challenging economic times? As it turns out, the conventional wisdom about hiring and firing during a recession may not always hold true.

In this article, we'll be exploring 5 surprising truths about hiring and firing for the sales team during a recession that may challenge your assumptions. From the potential drawbacks of hiring freezes to the long-term imps of layoffs, we'll be covering everything you need to know to create a more effective and efficient sales team while navigating the challenges of a recession.

Truth #1: Hiring and firing practices for the sales team can impact a company's long-term success.

In times of economic uncertainty, it's natural for companies to focus on cutting costs and preserving their current market share.

However, research suggests that companies that take a more aggressive approach and focus on gaining market share during a recession may ultimately be more successful in the long run. Here are a few reasons why:

• Gaining market share during a recession can lead to long-term success: A study by Bain & Company found that companies that increased their market share during the recession of the early 1990s ultimately had higher sales and profits once the economy recovered.
• Recessions create opportunities for market disruption: During a recession, some competitors may be forced to exit the market or scale back their operations, creating opportunities for companies to gain market share.
• Investing in marketing and sales during a recession can pay off: While it may seem counterintuitive to increase marketing and sales efforts during a recession, research has shown that companies that do so are more likely to see a positive return on investment. A study by the Harvard Business Review found that companies that increased their advertising spend during the recession of the early 2000s saw a higher return on investment compared to those that cut back on advertising.

Truth #2: Hiring freezes may not always be the best option.

On the surface, it seems logical that a hiring freeze would be a smart move during a recession. After all, cutting back on new hires can help a company save money and reduce expenses. However, there are also potential drawbacks to implementing a hiring freeze.

For one, it can prevent a company from bringing on top talent that could drive sales, revenue, and profitability. If a company passes on a highly qualified candidate because of a hiring freeze, that individual may go to a competitor and bring their skills and expertise with them. This can be a major loss for the company that imposed the hiring freeze.

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Additionally, a hiring freeze can damage morale and lead to a lack of growth and innovation within a company. When a company stops hiring, it may also stop investing in its employees and their development. This can lead to a stagnant work environment and a lack of opportunities for career advancement, which can contribute to employee dissatisfaction and turnover.

Despite these potential drawbacks, there are still ways for companies to successfully hire during a recession:

• Focus on long-term value: Rather than looking for the most immediately cost-effective option, consider the potential long-term contributions of a new hire and how they can drive growth and profitability in the future.
• Be flexible with job requirements: Consider alternative work arrangements, such as remote work or part-time employment, which can help a company bring on new talent during a recession.
• Practice selective hiring: Rather than implementing a blanket hiring freeze, consider selectively hiring top performers who can make a significant impact on the company's sales, revenue, and profitability.

By adopting a more selective approach to hiring during a recession, companies can bring on top talent that can drive growth and success in the long run, rather than simply cutting costs in the short term.

Truth #3: Firing top performers can have unintended consequences

When it comes to cutting costs during a recession, it can be tempting to let go of top-performing sales team members who have hit a slump in an effort to save money. However, this strategy can have unintended consequences that can ultimately harm a company's sales, revenue, and profitability. Here are just a few examples:

• Damage to morale: When top performers are let go, it can damage morale among remaining employees and lead to a lack of motivation. If employees see that even top performers are not safe from being let go, they may become less engaged and less likely to go above and beyond in their work.
• Loss of valuable skills and knowledge: When a company lets go of a top performer, it is also losing the expertise and experience that employee brings to the table. This can be especially harmful if the company does not have anyone else with the same level of knowledge to fill the gap.
• Negative impact on client relationships: If a company's top sales performer is responsible for managing key accounts, letting that employee go can lead to a disruption in service and potentially harm the company's relationship with those customers.

While layoffs may be necessary at times, it's important for companies to carefully consider the potential consequences before letting go of top sales team members.

There are many ways to determine who a top performer is, but revenue is the worst way to decide if they are a great salesperson or manager. There are too many outside factors which can influence how much revenue they produce. Were they given a top client, the best region, did they pull 1 big deal and very few others?

As an example, who is more valuable? A rep who had a $15 million book of business that was $16 million last year, or a rep who built a $4 million pipeline from scratch?

Truth #4: Employee retention strategies for the sales team may need to be adjusted during a recession.

Employee retention is crucial for any company, but it's especially important for the sales team. A high turnover rate can lead to a lack of consistency and expertise, which can harm a company's sales, revenue, and profitability. During a recession, employee retention can be even more challenging, as top performers may be more likely to leave in search of stability and opportunity.

To retain top sales team members during a recession, companies may need to adjust their retention strategies. Here are a few ideas:

• Offer flexible work arrangements: This might include reduced hours or the option to work remotely, which can help employees maintain a work-life balance and reduce the need for layoffs.
• Provide training and development opportunities: By investing in employee development, companies can help their top sales performers upskill and stay engaged, even during challenging economic times leading to a more effective team selling more with less. (You can get significant leverage with the cost of a yearly program being about 1 employees salary for every 10 or so employees in a training program.)
• Maintain open lines of communication: It's important for companies to keep their sales team informed about changes and developments within the company, as well as any challenges they may be facing. This can help employees feel more connected to the company and more likely to stay with the organization.

By finding creative ways to retain top sales team members during a recession, companies can maintain a strong and motivated sales force, which can ultimately lead to increased market share, revenue, and profitability.

Truth #5: Layoffs on the sales team can actually be a good thing for some employees.

Let's be real - we've all known those salespeople who just weren't pulling their weight, weren't happy, or simply weren't a good fit for the company. And while layoffs are never a fun decision, they may be necessary to keep the company financially stable.

But here's the thing: for some sales team members, a layoff can actually be a positive career move. They may have the chance to explore new opportunities that better align with their goals and passions, or they may get the opportunity to invest in their own development and upskilling.

In addition, when handled correctly, layoffs can send a message to remaining sales team members about the importance of being at their best. This can motivate them to up their game and take a more proactive approach to career development, such as seeking out additional training or networking opportunities.

The truth about hiring and firing for the sales team during a recession is complex and multifaceted. While it may be necessary to make tough decisions in order to weather economic challenges, it's important for companies to consider the long-term impact of those decisions on their market share, revenue, and profitability. By being mindful of these truths and making strategic decisions about their sales team, companies can set themselves up for success, even during tough economic times.

Ken Lundin is the Founder and President of RevHeat an international sales effectiveness improvement company and the creator of the Revenue Acceleration Roadmap. He is also a father of 3, gym junkie and appreciates a good glass of Staglin Family Vineyards Cabernet or MacAllan Scotch.

Are you looking to grow your company's market share? Let the experts at RevHeat help. As an international sales effectiveness improvement company, we have helped companies grow more than 400% in under 5 years through our proven Revenue Acceleration Roadmap, and with our 100% money-back guarantee, you have nothing to lose.

Send me a message today to learn more about how we can help your business succeed.