Adopt these strategies to remain agile and alert in this rapidly changing business environment.
In all financial recessions despite the negative impact on economy, businesses and world in general, some great opportunities appear. For example, the growth of e-commerce during the current recession. But that is not the main point of this article. The point of this article is that great things during recessions happen to organisations that are willing to adopt strategies and mechanisms, that will allow them to survive but also thrive in many cases. Ηuman force is very important asset in such times. The strategies we want to emphasise below are people oriented.
Bad news. Everybody has to know.
It’s hard and may be counter intuitive sometimes, but when the clouds are grey there’s greater need for transparency. This is the time when leaders should be frank with employees, consultants, and treat them like true partners. In a recession, these people are actively looking for the bad news, and need you to trust them with it. Don’t try to pretend that everything is great. Let them know the battle plan, and how their roles will contribute to win the war. Share with the team what you are concerns are and how you plan to act. Show trust and communicate that you need them with your side on this.
Conserve cash and be creative with your stock.
Small cuts early to avoid bigger cuts later on. Cash is king during any recession. There are several ways to conserve cash, and among them should be compensation.
It’s good to be proactive in saving jobs during a recession using stock in lieu of cash can help you achieve that. It is important that you understand peoples’ different motivations first. For some people, cash is critical, while others will prefer to be rewarded with stock, or long-term security their position. If you can segment your employees by what each person needs and wants – cash or equity – you can create a win-win for everyone while improving your cash position, fostering long-term loyalty, and safeguarding the jobs of people you need to help you through the recession.
But employees are not your only constituency concerned with compensation. During wartime, a wide variety of vendors will often be open to accepting stock instead of cash – for example, landlords, consultants, parts suppliers, insurance companies, mortgage holders, and various service providers.
Make small cuts earlier to avoid bigger cuts later.
While small budget items may appear inconsequential by themselves, they add up significantly. Just think of unused software licenses, monthly retainers, extra office space, dormant-unused equipment, free lunches or unnecessary outings. You can start making cuts in one of two ways: now or later. According to financial experts, for maximum impact, you must make as many small cuts as you can – and earlier than you might expect. In this way you start immediately creating runway for the company.
Make time your ally. Don’t wait and hope that the storm will just go. A significant monthly cost reduction early on can save jobs. Make sure you enlist your employees in this effort and motivate them to move quickly to chop the fat.
Many CEOs are afraid of the perception this may create with employees about the state of the company. However, experts suggest that if you are transparent with your employees, they will actually appreciate the small cuts and their ultimate goal: saving jobs. Nor should cost-cutting measures be finite. Ιt’s important you target revenue and cash plans for the worst-case scenario.
Don’t stop hiring.
It’s no secret that talent is more available than ever during recessions. Yet in 2001 and again in 2008, many businesses lost momentum because they stopped hiring. Essentially, they lost their hiring groove. And once lost, it’s hard to get that motion going again. Most of the businesses tear down the entire recruiting department during downturns. Keep using your recruiting team during wartime or you’ll fall behind in filling key jobs. Invest in key roles before it gets tough to fill them.
An opportunity to thrive, not just survive.
Downturns can be liberating. Meaning that you get to act fast and see results immediately. It’s high stress, but also high impact. You’re operating with a strong imperative during these times. Because the alternative is downhill or even death.
If you can do it, don’t just plan how to survive but focus on making assets more productive and successful. Invest in your sales force and the rest of the revenue chain. And always keep your eye on coming out stronger on the other side.