Ever since the great recession began in 2008, companies have struggled with how they should navigate the downturn. Many of those that are fortunate enough to generate cash have decided to bank it rather than invest it. So, what should a business leader do when faced with a weak economy? Here are four good ideas:
Make sure that your organization has a laser focus on a few critical strategies: When the economy is robust, companies have the luxury of being able to go in different directions some of which may not be related to their primary mission. However in a weak economy, this is a luxury that few can afford. Companies must focus on the critical few strategies that leverage their strengths and maximize the use of their available resources. If your organization doesn’t have a clear mission and a grand strategy to accomplish it, then this is the first place to start.
Make process improvements that drive efficiencies: The Japanese call it “Kaizan,” the process of continuous improvement. With few exceptions, opportunities exist in every organization to streamline how things get done. In a period of a weak economy, things are slower and companies have extra capacity with employees that are not fully utilized. Sometimes it may be necessary to furlough some employees to trim expenses; however, in other cases, it might be possible to put these people to work on improving processes, implementing new technologies, or managing other projects that drive efficiencies. Efficiencies save money, improve productivity, and deliver better customer service, all of which can improve market-share and sustain the company during a downturn. It can also position the company for future growth when the economy recovers.
Sustain core competencies: When things are slow, it is a good time to train employees and sustain core competencies. When things are busy, it is difficult to take people out of production and away from the day-to-day business. However, many companies choose to cut training when the economy slows down. Sometimes this may be a necessary survival strategy, but in many cases it is the best time to conduct training rather than cut it. Before you downsize the training department, think about how you might be able to use them to sustain core competencies.
Build your bench strength: A downturn in the economy may be one of the best times to focus on talent management and build bench strength. Internally, you might focus your best people on the toughest problems. These might include process improvement projects, business development, and consolidations or opportunistic acquisitions. Externally, there will likely be a pool of talented unemployed candidates who might not otherwise be easily hired. If the resources are available, a downturn might be one of the best times to hire great talent for the future.
These are just a few ideas to deal with a weak economy. Regardless of which ones you use, the most important thing is to take action that makes sense for your company. If you sit still, you get run over. Keep moving.