A REVIEW OF HISTORY
The world has gone yet into another recession. Some even argue that it is as bad as, if not worse than the great depression of the 30s which never really recovered till the early 40s for some countries. This story we see today, we learnt in economic history that it also took place once in the 50s, again in the 70s as a result of oil prices, again in the 90s which predominantly affected Asia, passed the Millennium when the dot.com bubble burst and now, here we are.
In these economic upheavals, the causes were, although mostly financial in nature, differ in industry and geography. However, what rarely differ are its effects on the singular domestic economy. We see prices on the stock market plummet, unrealistic oil prices, reduction in investment and industrial production, high unemployment rates, higher rates of receiverships, you get the idea.
THE IMPACT OF ECONOMIC WOES IN ORGANISATIONS
This trickles down further affecting the singular company. That’s where we see the real cookie crumbling; bottom line shrinking and worse, retrenchments. But all is not lost because in this particular global financial meltdown, there is a greater crisis of confidence as opposed to a crisis of fundamentals, especially in the medium enterprise sector of South-East Asia. Many companies within this bracket are financially well-geared. They are sitting tight and waiting for the storm to pass; but is waiting a good enough thing to do?
I submit to the reading business leader of any thriving medium enterprise that conserving finance, cutting cost and sitting tight are IRRESPONSIBLE acts in an economic downturn. Your company will continue to be profitable when the markets turn for the better; but be assured, you will not quantum leap. As a large part of management theory is derived from military ones, it is interesting to note the things soldiers do during times of peace and times of war. In times of peace, they train for war and in times of war, they try to achieve their missions. Similar to military units, companies too should do two simple things in quieter times.
1. Renew Your People
(Train & Change)
2.Build Capabilities
(Newer & Better ones)
AN OPPORTUNITY FOR RENEWAL AND DEVELOPMENT
It is absolutely crucial for medium-sized business leaders to develop an understanding of organisational capabilities that can help them manage their way through a crisis. The first thing to do in the face of tough economic times is to review the firm’s overall situation which involves its strategy, order books, financial gearing and staff issues. Then think about how these are to be adjusted and adapted most efficiently with a focus people and capabilities development. Many HR theorists argue that training should be an ongoing process of an organisation (sounds like a textbook?) and that’s not to be disputed. What this article proposes is that the bulk of the people in an organisation during an economic bull should be focused on the harvest with a small portion of time dedicated to training. The time to train is now.
CEOs, make a list of all the names of your deputies. Sit alone over coffee and think about their gaps. Speak to your customers and to the people who work for them if you have to. Then devise a mentoring plan around them. Call for a meeting with each one separately and share your plans with what they are to do during this downturn to improve and how you will help them.
Then call for a collective meeting with all your deputies, tell them to retrieve and review their appraisals with their staff down their lines. Do the same “dance”; instruct them to make a list of the good, bad and ugly performers. Those who are good, empower them with newer responsibilities and train them in those areas. The bad ones have to be re-trained or transferred to another department (which gives you good reason to up-skill them). This is the best time to change the ugly ones. Do it in good faith and when you take in replacements, train them hard and instill in them the expectation of the organization and values of the corporate brand. Implement these efforts relentlessly until you see early signs of recovery.
BUILDING CAPABILITIES IN CRISIS
In terms of developing your organisation’s capabilities, start with the gaps and shortcomings of the recent economic high. A good point to start would be the firm’s market orientation and strategic flexibility. In other words, review how your customers are being managed and how you would like your markets to be expanded in the forthcoming new economic upswing. This will have an impact on how you will have to increase the effectiveness of communications, plans and strategies to enhance performance going forward.
Building a strong brand in tough economic times is the best time to do so. Think seriously about how you intend to position and differentiate your brand and how you intend to articulate it to your stakeholders. This is the best time to do so simply because it would cost the firm lesser; and you do have more time. Being ready in an economic upswing is important to a good harvest and it’s about being seen in tough times so that one can be easily recalled when the need arises in better times. It is also important to remember that strong brands make marketing easy. Strong marketing makes the selling process easier.Then you harvest.
By Wilson Chew, Group Principal Consultant & CEO
wilson.chew@strategicom.com