Archive for November, 2008

Delivering Results In Spite Of The Recession

The National Association for Business Economics (NABE) just released survey results that indicate what many of us seem to know, but haven’t said out loud; the economy is getting worse and won’t recover quickly.  According to their survey, completed November 7, the U.S. economy is contracting at a 2.6% annual rate in the 4th quarter of 2008 and will fall at a 1.3% pace in the 1st quarter of 2009. 

These results are a big change from the survey conducted in September, which forecasted slow growth for the same periods.  These are the experts and even they don’t know where the bottom is. 

How bad will it get?  Chris Varvares, NABE president said “There has been this perfect storm that has slammed the consumer sector.”  Not since the Great Depression have we encountered a housing bubble collapse, a credit crisis, skyrocketing energy costs, a plummeting stock market, a recession and increasing unemployment all at the same time.

So, if this new forecast is accurate, how are you preparing your organization for the recession?  Here are four steps that business leaders should take to weather this perfect storm:

First, cut 20%.  This is both a financial step and a mental exercise.  Let me explain. 

Financially, ensure that your company can weather the storm by increasing cash reserves and cutting expenses significantly.  If the economists can’t predict where the bottom is, we all have to be prepared to survive this recession. 

As a mental exercise, decide what you would actually cut if you had to reduce your budget 20%.  The value in the exercise is that it forces you to prioritize what you would keep and what you would cut.  It helps you narrow your focus and put your efforts into those activities that provide the best return.  So, this chapter of economic turmoil may actually help you improve your organizational performance and financial results.

Second, challenge the “It Can’t Be Dones.”  You already have a picture in your mind of one of your employees who frequently says that it can’t be done.  But, I’m also talking about the unwritten “rules” that drive your organization.  It takes five days to ship an order.  We’re not set up to do big jobs.  We have to follow the ten step project management process.  Our management team always meets for four hours.  That machine can’t be operated by less than three people.

This economic downturn is a perfect excuse.  Cancel your four-hour management team meeting and have your managers go challenge every “It Can’t Be Done” and every unwritten rule that operates in your organization without your permission.  If your managers have the “It Can’t Be Done” disease, start with them.  Use the economy as an excuse to improve productivity.

As you face the “It Can’t Be Dones,” you are also thinking of that employee whose issues go beyond “It Can’t Be Done.”   Everyone else has to work around them and their issues.  Others handle issues so that he doesn’t have to get involved.  You’ve moved her so that she has less customer contact.  He says he’ll get the job done, but he doesn’t.  As people come in they walk on eggshells to see if Dr. Jekyll or Mr. Hyde showed up today. 

This leads us to step three.  Work up the courage to have the conversation that should have taken place months ago. It may be messy.  It may be disruptive.   But, it will be less disruptive and less costly than to let it go on.  Besides, you’re losing credibility with your employees by letting it go on and on.  They’re more annoyed at you than at the problem employee.  Call your employment attorney or another trusted advisor and talk through how to address the issue at hand.  You and your employees will be more productive and you’ll enjoy coming to work again.

Finally, increase your marketing.  Yes, I did say to cut your expenses, but I didn’t say cut your marketing expenses.  In an economic recession, the pie gets smaller.  You have a decision to make.  Accept a smaller slice of a smaller pie…or, use this time to get stronger while your competitors get weaker.  Increase your marketing efforts and sell the benefits of your products or services like never before.  Reach out to old customers you haven’t done business with in a while.  Enter a related market niche in order to get a slice of more than one pie.  Advertise to your existing customers.  You’ll be amazed to find out how many existing customers don’t know what else you sell.

By all accounts, we are in a recession.  Will you be a victim of the recession or will you be victorious over it?