Insight

Three steps to coping in a downturn

March 2016


There's a well-known phrase in business: "When the going gets tough, the tough get going." We like to extend that a bit further by saying: "When the going gets tough, the smart business people make positive changes." In this article we look at three steps you can take to help you through an economic downturn.

Be innovative

One logical approach is to try something different. Business clouds often have silver linings: they force us to be innovative and to try new ways of working.

We saw this with one of our clients who, facing difficult trading, realised that his new products were very much a luxury rather than a necessity. He looked again at another, until now neglected, part of his business - rebuilding used products - and developed it to be affordable to customers. Changing his focus ensured his business stayed profitable in testing conditions.

Ask yourself these questions:

  • Have you looked at old and established methods in your business to ensure you are not missing ways to innovate? Maybe there are new and more efficient ways of doing things.
  • Can you use technology to solve problems you've come across that you may have thought insurmountable?

Increase transparency and trust

When times are difficult one of your biggest challenges may be keeping hold of your best people. When the recovery comes they will form the core of your experience and the base of your intelligence; you will need them if you are to take advantage of the recovery.

It is no coincidence that businesses with a culture of openness and transparency, those that share information with employees, foster trust among employees. This trust breeds loyalty and commitment. Businesses that operate on a need-to-know basis experience the opposite.

Employees who are developing their careers want their employers to tell it how it is, good or bad. In a downturn, when everyone has one eye on the future, this becomes even more acute. Make this communication personal too. Forget email; face-to-face communication is better. Talk about their career options so they can plan; if you don't they might just plan their careers elsewhere.

Even in a downturn, experience is a valuable commodity. Your best employees may have more choices open to them than might appear at first glance. Look after them or you might lose them. If you lose them, when the recovery happens you will have to go to the effort and expense of recruiting replacements.

Ask yourself these questions:

  • Have you identified the key people that you want to keep?
  • Is there information you could share that would build trust and help them plan their careers?
  • What steps can you take to build a more trusting culture?

Future proof your workforce

If you can gain any benefit from a downturn, it is that a whole generation of employees have experienced one and have learnt how to manage through challenging conditions. This is valuable experience.

One of our clients has seen the benefit of this and, rather than wait until the next downturn, is investing in training and development. This includes financial literacy training. This client believes that improving knowledge in financial literacy will equip its workforce to be better financial managers. The client has also found that investing in employees builds trust and loyalty, increasing the likelihood that they will stay for the long term.

Ask yourself these questions:

  • How are you developing your employees so they better understand how to manage in difficult times?
  • Are your employees as financially literate as they could be?
  • Do you understand the development needs of your key people? Have you planned to meet these needs?
  • Have you discussed development plans with your key people?

Often the activities you carry out during a booming economy are not the right ones during a downturn. As we said at the beginning: "When the going gets tough, the smart business people make positive changes." Even during a time when the pressure to show a return on investment is at its highest, there are always steps you can take to prepare your people and your business to fly once the economy recovers. And it always does.

Author: Esther Ewing, Bill Sedgwick