By Lisa Taylor

Canada, we’re in for a rough ride.

Not that the last few years haven’t been rough. Between COVID-19, geopolitical unrest, and ongoing polarization, we’ve been navigating through choppy waters for quite some time.

But this feels different.

I normally write a year-end message on behalf of Challenge Factory that goes out in December. It usually summarizes highlights from the year and looks ahead with informed and aspirational predictions. This year, we decided to let 2024 end without trying to tie it up in a bow. Instead, we’re focusing on how January can ground our team and yours for what lies ahead.

The labour market from all angles

Challenge Factory is invited into many conversations with many different populations.

We sit with policymakers and government leaders shaping labour markets and workforces, and we also work directly with individuals navigating their own careers. We notice when something related to labour supply is about to cause unintended consequences (like people choosing to quit rather than return to the office), or when labour demand starts moving in directions that workers and jobseekers may not be prepared for. This firsthand exposure to all aspects and angles of the labour and employment ecosystem helps us stay ahead of trends.

As 2025 begins, observers of labour supply and labour demand are reacting as if both are in acute crisis. This is dangerous, since most of what we are about to experience is not acute. It’s chronic.

Last year was “a peculiar year for the economy, full of contradictions and crosscurrents,” writes policy analyst Theo Argitis. “While economic growth has outpaced expectations, the labour market has underperformed. Canada finds itself in the unusual position of simultaneously creating significant employment and experiencing substantial unemployment.”

In the final weeks of 2024, Challenge Factory saw a dramatic increase in requests from organizations to help support their outplacement or downsizing needs. This is always a concerning sign for what companies see on their horizon. In my year-end letter to Challenge Factory’s Advisory Board, I described this focus on workforce reduction as a short-sighted response to stalled and uncertain market conditions.

After more than a year of everyone waiting for circumstances to feel less risky before resuming more innovative initiatives or advancing future-focused strategies, organizations have hit a threshold where they can’t “do nothing” any longer. At some point, growth has to be supported or costs need to be cut. For a variety of reasons that differ from sector to sector, everyone has concluded they can and need to shed workers to weather another year or two of instability and uncertainty.

The danger of misdiagnosing acute and chronic issues  

Choosing to cut rather than grow can feel safer in the short term. In my corporate career, leaders would often say “we need to stop the bleeding.” But in these revolutionary times, organizations that resort to cuts as their main response to today’s uncertainty may find themselves missing out on opportunity.

Reducing the intake of international students, strained relationships with the United States, advancements in AI, inflation and interest rates, a slowdown in the EV manufacturing landscape, the inability to get real estate development moving (a key economic contributor), housing shortages, mental health and addiction crises, and pockets of significant underemployment and unemployment all need attention. These issues are challenging traditional operating models and expectations at a time when trust is at an all-time low.

Low trust fosters fear. It drives visceral and reactive responses and can cause leaders to treat every issue and situation as if it were an acute crisis. To use a health analogy, acute situations result in an emergency room visit. They are resource intensive, expensive, and stressful as various specialists and complex equipment work to find a solution to the immediate presenting problem.

Acute approaches require rapid triage and accurate diagnosis. The goal is to move out of this mode as quickly as possible, shifting to a more sustainable chronic approach to risk and workforce strategy. The shift from acute treatment to chronic management requires high degrees of trust. Teams need to know they are supported and working toward a common goal.

During COVID-19, many leadership teams adopted patterns and protocols that treated most issues as acute. In the pandemic’s early and most fraught days, it made sense to consolidate decision-making and assume high levels of risk and a need for rapid resolution. But we’ve never reset this mindset or behaviour to better triage and treat what is actually chronic and in need of sustainable, long-term treatment and intervention. This is why leadership teams are so tired. This is also why a new crisis seems to pop up as soon as the last one is averted.

Why thinking bigger—not smaller—is the answer during revolution

The complex challenges we’re facing in 2025 will be with us for a long time to come.

It’s easy to look at them and get overwhelmed, decide “everything is broken,” and scale back. There’s a school of thought on systems that says getting smaller will protect and allow us to control what we can until conditions settle down and order reemerges. This is what fuels reduced activity and workforce layoffs when our capacity to hold current conditions with future possibilities gets overwhelmed.

But sometimes you have to make problems bigger to solve them. We are in one of those “bigger” moments. The challenges listed above are not separate. They are all happening at the same time, with interrelated causes and impacts to workforces, markets, and productivity. We need to work in many dimensions at the same time.

Using an acute approach to try to solve these challenges would ignore that we are in the midst of several revolutions, from technology to talent, and that revolutions occur over a long period of time. We are not in a short-term crisis. We are in a long-game revolution that is challenging many structures and assumptions that have underpinned our talent and employment systems for decades. As a result, we need to think bigger, not smaller, as each organization, leader, and worker considers how to ride out what will be a rocky 2025.

5 questions to ask to triage your workforce issues

Problem solving and moving forward starts with asking better questions and focusing on triage. Read through the definitions of acute and chronic issues below, then ask yourself the five questions that follow.

Acute issue

• Emergency room-level need
• Imminent demise or permanent damage is likely within the very near term
• Goal is to prevent unrecoverable outcomes that threaten viability of the plan

Chronic issue

• Ongoing long-term treatment need
• Monitoring and reassessment are required to navigate changing situations and produce intended outcomes
• Goal is long-term stewardship and health

Workforce triage questions

First, answer “yes” or “no” to each question. Then, decide how certain you are of your answer on a scale of 1 to 10.

1. Is any part of your organization at risk of missing essential business or performance goals because either you’ll lose critical people within the next 12 months or you don’t have the skills or perspectives needed to do mission-critical work?
2. In uncertain times, do staff trust communication coming from their manager?
3. Have changing work models and policies resulted in “have” and “have-not” groups of employees within your organization?
4. Will platform-based services upend your competitive advantage or relationships within the next 12 months?
5. Will AI displace large numbers of your staff within the next 12 months?

Take a look at your answers. Any question you answered “yes” to should be a high priority and likely has at least one acute underlying issue that needs addressing immediately. For any question you answered “no” to, you may feel as if the question didn’t capture your most pressing issues. If you responded by thinking, “Yeah, but we have a bunch of other priorities that are more important,” then the issues in front of you might not actually be acute. They may well be chronic.

Now, look at the “certainty” score you assigned each of your answers on a 1-10 scale. If you’re uncertain about an answer, recognize that better triage is required before strategies and action plans can be implemented. Consider what resources you need to do that triaging. Now is the time to make sure you aren’t defaulting to thinking small or operating with a limited field of view.

These questions correspond to Challenge Factory’s Five Drivers shaping the Future of Work. We use this model to decode what current trends and events mean for the well-being and success of our clients. The Five Drivers also help leadership teams understand what is acute, what is chronic, and what key decisions about resources, risk, and timing will lead them to sustainable solutions that create competitive advantage.

Career development as your secret weapon

If workforce disruption is a key theme in 2025, sound career development offers leadership teams tools to ensure better triage. Placing career development at the core of workforce strategy fosters hope, broadens possibilities, and builds agency when it feels like little is within our control.

Career development a chronic, long-term, lifelong, and ever-evolving layer of support and resilience that helps both individuals and organizations navigate shifting labour markets and changing economic conditions. It all starts with an honest, hope-based conversation with senior leaders who are often uncertain about the future even as they project confidence.

In periods of uncertainty, we often look to what we’ve done in down cycles to guide current action. But today’s revolutionary times demand different. Workforce reduction won’t foster the culture of trust and innovation that organizations need to address productivity challenges with growth. 2025 calls for big thinking and collaborative action sustained by partnership, good data, and effective triaging of issues.

It’s time to trust that we can do hard things and take the risk. To our partners and clients, we’re starting this year with one clear message: We’ve got you.

Let’s set up a time to talk about what’s really happening. Then, let’s get to work.