How a Banking Collapse Can Impact the Workplace

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News of the recent collapse of Silicon Valley bank and Credit Suisse among others teetering swirl about us. Many may lay awake at night worried if their deposits or investments in respective banks are safe. While we watch what news unfold, I’ve been developing information and resources for proactive HR professionals, leaders, and clients.

Out of curiosity I asked ChatGPT how a banking collapse would impact the workplace. Here is the response.

ChatGPT: A banking collapse can have significant impacts on workplaces. Some of the potential impacts include:

1. Job Losses: A banking collapse could lead to job losses as banks may need to cut costs or even shut down completely. This could impact not only the employees directly working in the banking sector but also those indirectly employed, such as vendors, suppliers, and other businesses that rely on the banks.

2. Economic Recession: A banking collapse could trigger an economic recession, which would impact all sectors of the economy. Companies may struggle to maintain their revenue streams, which could lead to layoffs and reduced wages.

3. Reduced Lending: In the aftermath of a banking collapse, banks may become more cautious about lending money, which could impact businesses' ability to access credit. With less credit available, companies may struggle to finance their operations, leading to reduced investment and growth.

4. Lower Confidence: A banking collapse could lead to a loss of confidence in the financial system, which would impact businesses' willingness to invest and grow. This could lead to a vicious cycle where reduced investment leads to lower growth, which further reduces investment.

Overall, a banking collapse could have severe and long-lasting impacts on workplaces and the broader economy.

Proactive leaders will first seek to understand what if any risks that may exist for their specific workplace. With that information we can determine a pathway towards protecting our organizations, teams, and employees. In my experience as a CHRO for a health system during the 2008 market crash/recession we were thrust into a world of cost cutting in order to remain viable. I’ve learned how to implement workforce plans that enable an organization to navigate financial difficulties.

Here are 3 areas to get you started:

1. Communication Plan

Transparency matters specially to mitigate panic and maintain employee engagement. It's best to have a plan in place before you need one. What may have worked during the pandemic may not now. Communicate early and often.

2. Evaluate Benefits

Cost savings is typically top of mind when there is a financial crisis, and rightfully so. But also, it is good to remember that employers have a fiduciary responsibility to ensure retirement fund investments are sound. While a banking crisis may not directly impact retirement funds, but a ripple effect such as a market crash certainly may.

3. Workforce Levels

From personal experience I’ve seen FTE creep turn into a disaster for organizations suddenly faced with financial challenge. FTE creep is when more people are hired than what is necessary to produce quality services, goods or products. This happens when there is no workforce plan in place.

It is good planning to have proactive safeguards and “go to” plan in the event the worse happens. You will be far ahead and able to hit the ground running on the other side of any crisis.

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Tresha Moreland

Tresha Moreland is a 30-year organizational effectiveness and strategic workforce planning expert. She partners with business leaders to develop workplace strategies that achieve best-in-class results. She has held key organizational leadership roles in multiple industries such as manufacturing, distribution, retail, hospitality, and healthcare. Tresha is the founder and principal consultant of HR C-Suite, LLC (www.hrcsuite.com). HR C-Suite is a results-based HR strategy resource dedicated to connecting HR with business results. She has received a master’s degree in human resource management (MS) and a master’s degree in business administration (MBA). She has also earned a Senior Professional in Human Resources (SPHR), Six Sigma Black Belt Professional (SSBBP) Certification. She is also recognized as a Fellow with the American College Healthcare Executives with a FACHE designation.