Managing in a downturn

When economic times are slow, it’s
hard not to focus strictly on your
bottom line. Whether it’s buying product at a reduced price or taking
advantage of a larger talent pool, there
are a number of best practices that can
help ensure that, once businesses do
come out of the downturn, they are in a
position to tackle the market head-on.

“Businesses must have a sober look at
where they are now in the downturn, a
realistic look at how long they think they
can survive and, if they’re clear about
what they think is going to happen, a
coherent plan of action for when they
come out of it,” says Mike Leach, senior
vice president at Employco Group. “It’s
those people who are prepared to hit the
ground running in the inevitable upturn
that capture more market share.”

Smart Business asked Leach about
wise management moves to make in a
lagging economy.

What are the mistakes that business owners
make when the economy is slow?

The biggest mistake is not planning for
the future. Companies have to forecast
and think, ‘How can we get through this
and better manage the process so when
the upswing does come we’re five steps
ahead of the competition?’ Focus on
retaining your best talent. Take a look at
what your benefits are, both hard and
soft, and how you compare to the competition. Whether it’s a flexible work-place or health insurance, you need to
look at what you offer and fine-tune
those offerings so that your best talent
doesn’t get recruited away.

Something that you should be doing if
you’re not already is communicating
with your employees — and not just with
your upper management but on all levels
— to share your vision of what’s happening now and in the future and try to paint
the picture of how you’re going to survive the downturn. If you’re losing market share and struggling, people may be
worrying.

How should the work force be managed differently?

Do a skills assessment of your staff to
see what skill level they have and what
skill level they would need to either help
you during the downturn or be an even
greater asset when the upturn comes.
Here you have the opportunity for cross-training that lets employees gain expertise in other areas. You can figure out
what you need in the future and whether
your people have the skill level to make
that happen and, if they don’t, what type
of training can get them there.

For example, if someone has better
knowledge of a certain product, take the
opportunity to train that person in another product. Or take someone that’s in the
client service area — it might be a good
opportunity to work on some of his or
her sales skills so that when the turn happens that person can actually help you
out on sales. Or maybe service is very
important to your organization and you
don’t want to lose any clients. Some of those salespeople could help you on the
service side.

What should companies keep in mind when
hiring in a downturn?

The fact is that companies want to
retain their best people. They’re hoping
just to lose their least productive or least
experienced. So there are highly skilled
people available out there, but you have
to be able to cut through the rest to find
the ones that are right for you. You have
to ascertain if candidates are unemployed
because they got stuck in a down economy and their company went out of business or if they are unemployed because
their company let the weakest go. You
serve yourself well by doing strategic
recruiting to make sure that you’re really
targeting the skill sets that you need.

For example, in the banking and mortgage industry, there are a lot of good people out of work, and they may not necessarily have the product knowledge you’re
looking for, but they do have the skill
level you’re looking for. For example,
they’re persuasive or have great presentation skills. A lot of those talents are
transferable.

Is this a good time to outsource?

In a downturn, you may not have the
people with the skill level you need, but
you could go outside the company to others that are more specialized. Often you
can get better services and pay less by
outsourcing. You don’t have the cost of a
full-time employee, you don’t have to pay
for benefits, and you get better results.
So companies can outsource wherever
possible and use that savings to cover
increased expenses or as they look to the
future to potentially hire another salesperson or put the money in R&D or wherever it’s needed.

MIKE LEACH is senior vice president, Employco Group (www.Employco.com), a division of The Wilson Companies. Employco handles
human resource outsourcing for 400 small and medium-sized Midwest companies. Reach him at (630) 286-7357 or
[email protected].