Managing In A Downturn
Recessions and downturns often offer great opportunities for business start ups. They do so because entrepreneurs who begin trading in hard times must learn to be agile, frugal and inventive if they are to survive.
Large companies, however, prefer to launch new businesses in the fatter years, closing them, sometimes, as a panic measure when markets take a dip. I know this from bitter experience. But, in spite of my reluctance to start a business within the confines of a larger enterprise, I might do so to save my job.
The temptation of managements when confronted with a need for economies is to start hacking at the workforce. Cuts always seem to be made in neat proportions – 10 per cent here or five per cent there. It’s rarely 6.25 per cent. Yet every job is precious to the individual doing that job.
Suppose, instead, an employer takes a “people last” approach to cutbacks. If companies really believe that their people are their greatest asset, they would do anything to hold on to their employees, would they not?
We have to question the sincerity of such beliefs when we see swathes of employees loosing their jobs. But desperate times call for desperate measures and redundancy hit companies would argue they had no alternative but to part with staff.
Some, such as Landrover and BMW, had built whole shifts from temporary workers for just such a contingency. The use of temporary workers in this way makes sense if companies must plan for fluctuations of demand.
But can companies afford to be so arbitrary with skilled workers. Jaguar decided it could not afford to let go of its skilled woodworkers responsible for some of the finer features and veneers in its cars. Managers found alternative work for its carpenters building furniture.
If managers can’t think of projects themselves – and they don’t have a monopoly on ideas, after all – they can seek ideas from their workforces. Suggestions schemes have been running for years. They tend to be short lived and faddish. But such schemes can extend working lifelines to creative staff with great project ideas.
This is the time that businesses should throw away fashionable theories on “core and none core” business. Some of the world’s best businesses have grown from so-called none-core sidelines.
Nokia, the mobile phone company, began life as a paper mill that switched to rubber boot production, then cabling. It’s ironic that a company, making cables should find itself a pioneer in wireless telephony, but Nokia is a business that has developed a talent for spotting and pursuing innovation.
Most companies are not good at this. Many boards of large public companies, partially divorced from the day to day running of their businesses, become focused on buying and selling. Manufacturers, to their credit, tend to remain close to their products because innovation is a continuous process. A car company cannot survive without new product in the pipeline.
Sparing funds for new projects is difficult in a recession but start ups do not always need big cash injections. Many of today’s internet businesses have been started on a shoestring. Often they require nothing more than a leap of faith.
It’s surely better to let people try something new than keeping them on the bench – the term that is applied by companies who sometimes retain workers with nothing to do. Sometime there is no alternative to redundancy but every troubled company should see it as a duty to ensure they have explored every alternative first. Employees respect that kind of response.
Tags: companies, downturn, Richard Donkin