Unemployment has been high and economic velocity has been low. Many companies and even countries are in economic crisis… the effect has been felt all over the world. One thing we are confident about: The global economy will emerge from this global economic recession.
If the goal is to emerge as a strong, competitive, invigorated company, what can be done to seize the opportunity when the economy recovers? What are business leaders are doing, or not doing, to prepare for success?
Many companies make common mistakes in response to adverse economic pressure. Training is cut, benefits are reduced, and employees are laid-off, perhaps the most common practice, to cut costs. While this can help a company save money due to a drop in demand, cutting too deeply can have lasting effects.
The morale for “survivors” of layoffs is often lower due to the loss of colleagues and increased workloads. When the economy begins to improve, the first expectation is to ask the staff to increase their workload. Hiring tends to lag thereby exacerbating the situation. When the economy improves, the attrition rate among existing overstressed staff rises due to the stronger job market. Therefore, the result of layoffs that are too deep; a decreasing workforce just as economic opportunities return. Many small and large companies find themselves in exactly this situation; working to meet demand as the economy improves but finding their growth is stifled by an over-worked and decreasing workforce.
Here are some tactics that companies are employing to develop themselves in the modern economy.
Tactic #1: Use slower economic times to invest in employee training and education. While other companies cut training programs to cut costs, modern companies invest in training when resources are idle due to short-term slower demand. These trainings should be consistent with the company strategy, but also tailored to the individual’s aspirations. Do you have interest in pursuing a Project Management Certification? Let them invest company time into the endeavor and you will have a stronger (and likely more loyal) employee afterwards. Is a manager trying to improve his sales team’s skills? This is the time, before sales increase, to make that investment.
Tactic #2: Have multiple lines of revenue and be flexible enough to pursue the “hot” line of business. As the needs of the marketplace change with the economic times, some segments of your business may have more demand than others. As the recession hit, one manager found that while corporations were spending less on traditional market research consulting there was increase in demand for information on how to develop new sales channels for existing products. Her ability to aid companies on how to sell through existing online infrastructure was in greater demand. She focused her resources into that line of business to meet demand and shifted the focus of her team accordingly. For this instance, diversification was the key.
Tactic #3: Keep the workforce flexible to be ready when demand returns. Many modern companies use flexible human resource models facilitated by contractors, consultants, temporary workers, shared workers, outsourced workers and so forth. In some cases, companies can develop talent on a contract basis before investing in full time employment. In other cases, for seasonal or dynamic workflows, a team of contractors or consultants may be the best way to keep moving forward. Flexibly is the key.
As the economy improves, companies that made smart moves to stay ahead of the competition and invested in the future will benefit the most. Other companies, who hunkered down looking to protect themselves instead of planning for future growth, may find themselves playing catch-up as the economy grows. It is during these times that a manager should consider developing training programs, diversifying revenue streams, and creating an adaptable, nimble workforce. When the economic winds begin moving in the right direction, you can be the first ship with your sails up.
This article is the result of a Learning Circle Session on December 10, 2010, hosted by the Graduate Business Forum and attended by Graduate Business Conference Alumni. The ideas in this paper derive from this session and reflect only the views of the attendees. Corporate strategies discussed range from American Express, Microsoft, VeriSign, and Cardinal Health to service companies assisting larger entities with online penetration/distribution leveraging Amazon.
Bonnie Schwerin (GBC ’06, ’07, ’08) is a Consulting Manager for Bridge Partners Consulting and is a member of the Board of Directors of the Graduate Business Forum. She received her MBA from the University of Washington, Foster School of Business where she also served as the president of the student government.