Market Contraction is an opportunity
Attitude determines outcome. How businesses emerge after a market contraction depend a lot on how they take on the challenge – fight it with downsizing maneuvers, embrace it as enhancement opportunities, or enact a mix from both camps. Although majority of executives select the pruning approaches, the ones emphasizing uplifting strategies are usually the few whose businesses are fortified on market positions, operation capabilities, customer satisfaction, and many other aspects after reappearing from an industry decline. A down economy means that businesses have the time, the man power, and the know how to embark on betterment programs. What’s lacking oftentimes is the will to aggressively implement and take these programs through their full courses without succumbing to the pressure from the boardrooms to slash expenses.
Propositions for dealing with recessions
Companies adjust their business strategies to cope with industry-wide slowdowns all the time, but few have successfully leveraged these turmoil to come out stronger on their market shares, brand appeals, product quality, operation proficiencies, or any other aspects that businesses strive to boost. The following ideas can be powerful instruments to help leaders to make the best of industry slowdowns:
- Look beyond immediate impacts, aim for future rewards
- Whatever you clip, don’t clip happiness
- Slogans need to be put to action
- Rolling layoffs is never a good idea
- Excess should be utilized, not minimized
Look beyond immediate impacts, aim for future rewards
The best business strategy during a recession is to take the offense. Defensive mechanisms like travel freeze, hiring suspension, and layoff are reactive measures, and they come with gloomy connotations that impact moral, brand reputation, and many other things crucial to business health. Business should see market downturn as a perfect chance to actualize the programs and plans that they have been putting off for so long, apparatuses that would give them the edge over their competitions, initiatives that would foster employee enthusiasm, fan confidence, and brand image, and things that would help them to regain their tractions easily when the market revives. These long term vigor-building activities should take priority over short term expense pruning.
Whatever you clip, don’t clip happiness
During recessions, many companies adopt the right strategies, but few implement them properly. The missing ingredient that causes their ineffectiveness is employee happiness. Studies show that happy staffs make a big difference on companies’ performance. They help their companies to outperform their competitions by a large margin; they operate much more effectively, and they take fewer and shorter sick leaves. When employee happiness is needed the most in a shrinking economy, few businesses handle this crucial factor adequately. Although executives put priority on heightening productivity, quality, efficiency, and trimming expenses and excesses, they do little to prevent their deployments from impairing employee happiness. When an action weakens workforce contentment, it will usually impede the very things that businesses try so hard to elevate during those dire situations.
Slogans need to be put to action
Executives know that companies need to improve quality, soar brand reputation, and increase productivity to better combat the economic disturbance, but merely proclaiming this message is not enough to reach such targets; concrete implementation plans are needed to mobilize their employees and functional teams to attain these goals. Many executives fail on this aspect because it is hard enough for any corporation to actuate these plans which do not show short term results in any circumstance, let alone when their industries are contracting. But no pain no gain; biting the bullet is the necessary step to leverage the hard times. How about transform itself to become an ISO 9001 organization? How about raise current processes to lean six sigma level? How about strengthen the company’s customer experience programs beyond mere slogan?
Rolling layoffs is never a good idea
Layoffs are very bad to morale. Some companies crop their forces slyly by successively laying off in small droves hoping that each time’s small percentage dismissals will not attract the media’s attentions and will not be noticeable by their fans or their own workers. While media might not report on small sackings, employees on the other hand will learn from their terminated colleagues and through rumor mills. When staffs are not happy with this tactic and worry about their own fates, the companies’ hopes of improving on productivity, quality, and efficiency vaporize. Layoffs should be done sparsely and be avoided by all means; rolling layoffs is never a good idea because they can hardly be unnoticed by the employees and therefore they will distract the operations and harm the charted courses just like or even worse than one big explicit work force reduction will.
Excess should be utilized, not minimized
Businesses want to bolster their brands. It’s the best of time for corporations to roll out new initiatives to achieve this goal when they have excess resource due to industry shrinkage. Cutting these resource is many executives’ first course of action, but it’s doubtfully the best choice. Taking well trained personnel off the payrolls demolish employee enthusiasm and alongside topple the opportunity to build something good to advance their brand reputations. What better time to carry out green or corporate social responsibility (CSR) initiatives could it be than during the slump when experienced folks are available to execute on these important social and environmental programs that will do good to both the brands and the Earth? Additionally, when companies are going full throttle in a bull market, employees have little time to get training or to involve themselves in process betterment programs because they are probably already over-worked. That’s why a recession offers the best of time to any company to train and cross-train their workers, and to pursue process improvements. The pressure to get rid of excess resource is high, but the opportunity to effectively retool their processes to reinforce the companies’ proficiency and efficiency will be lost if this precious option crumble under resource and expense pruning pressures.
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By Chi-Pong Wong, Service Segment Manager V at HP Inc.
He has published articles on leading online magazines including Venture Beat, Internet Retailer, Marketing Profs, CEOWORLD magazine, Smart Business, Customer Think, Triple Pundit, UX Matters, Service Director Business Review, Project Times, Project Management, PM Hut, Supply Chain Brain, Supply Chain Digital, and other popular journals.
He earned a MA in Economics at SUNY @ Stony Brook and a MS in Computer Science at Duke University. Before working for HP Inc, he has previously held various strategy, operations, and management positions at Hewlett-Packard, Arrow Electronics, IBM, STMicroelectronics, and NEC Electronics.
Latest posts by Chi-Pong Wong
- How to Overtake Your Rivals like This Pizzeria Has - 16/08/2017
- Strengthen your brand in a recession - 29/03/2016
- Satisfaction and Loyalty – So Transient and So Circumstantial - 08/10/2015