Today’s world of business is reluctantly coming to the realisation that many senior managers (up to 60 per cent, according to a recent University of Southern California Centre for Effective Organisations study) have no experience in leading firms through a downturn. A recent commentary called them downturn virgins.
They react to the situation by slashing costs. They reduce headcount through a fancy phrase called redundancies; they cut travel budgets and slash marketing and training activities. At the same time they eliminate bonuses (for others in the organisation), reduce IT investment and cut back on training. A handful is seen as recognising the downturn as an opportunity to win market share, gain advantages over their weaker competitors and use technology investments as a strategic tool.
While accepting the management truism that any company under profit constraint needs to cut costs, reducing customer service, product development, product visibility and training are not only false economies but will make it proportionately more difficult to ride out the recession, let alone gain ground.
Firms that panic lose key talent
So what should a good manager do in this economic climate? Global human resources consultants, the Hay Group, published a report earlier this year suggesting that downturns are the ideal opportunity for smart managers to make a difference. The report said this is the very time a manager needs to be straight with staff, asking people what suits them, examining the reward structure and putting in rewards and incentives that hold on to your best people, without necessarily blowing out costs.
“The best CEOs see every downturn as an opportunity to strengthen their organisations, so that when the recovery comes around, they’re in a good position. Such leaders do not, in our experience, go for across-the-board headcount cuts. Firms that panic lose key talent,” the Hay report concluded.
Similarly, the best CEO questions everything, pores over every facet of the business and looks for ways to maximise opportunities and effectiveness. No area of the business, no expense, no consideration is too small in this re-evaluation process, not when it comes down to the wire that the business’s life is potentially on the line. When business starts slowing down is the time to look for wasted money, wasted opportunity for efficiency in the production process. Ways to minimise the number of steps an employee walks between the sink and the press is one extreme but not unrealistic example. There are many more, assuredly in the process of everyday business activities.
Gobsmacked or ho-hum
On the topic of visibility, the website is probably the major imperative. A later ProPrint business feature will cover the area of websites and their importance to visibility.
Emphasis on customer service and product development are givens in today’s competitive environment. When it comes to service, the best managers focus their attention on their best customers. The truism that 20 per cent of a customer base produces 80 per cent of a company’s profits is irrefutable. Consequently, it makes little sense to dilute those profits by trying to broaden the customer base when that involves barely affordable additional costs. Far better to invest and enhance customer service to the 20 per cent, by determining how to do more for and with them. It costs little or nothing to expand that relationship, while extremely expensive to replace their business.
Many a manager or proprietor carries the bruises of previous downturns. Hence he or she will plan and invest in strategies and tactics to make the business stronger when the storm clouds recede. With struggling sales, many companies are having to lay off employees to stay afloat. Each day’s business pages headline the thousands being let go.
The numbers, however, are only the tip of the iceberg. Laying off employees is not the only way to get through the economic crisis. The pivotal issue is to consider how to ensure staff works more productively and efficiently to increase profit. And one of those investments must surely be in the area of training. A finely honed workforce can mean all the difference between a gobsmacked customer and a ho-hum one.
Most companies know that investing in training is essential to their business. However, in the current economic climate this is more important than ever. Yet a hurdle on this particular track is the cost of training. Particularly for SMEs, traditional face-to-face training methods often involve unaffordable amounts of money. Trainers, in-class instructors and self-styled experts don’t come cheap. On top of hefty fees there are often the extras such as travel and meals expenses.
Staff can log on at work or at home
One of the emerging training solutions has surfaced in the form of eLearning — a type of Technology Supported Education/Learning (TSL) where the medium of instruction is computer technology, according to one authority who has analysed the opportunities where learning is used interchangeably in a wide variety of contexts. Its biggest plus factor, of course, is overall money and time savings. The analysis outlined some of the advantages, including the fact that the eLearner can access the course at any time that is convenient, not just during the specific one to three hour period which needs to be set for a conventional course.
These episodes can be quick snatches at odd times or longer later at night sessions. Staff can log on at work or at home. There is no need for the physical presence of the teacher or learners in the learning process. The main cost saving is in eliminating the expense and inconvenience of putting the instructor and students together in one place. Moreover, travel and meals costs no longer apply.
Today’s web world provides access to a container load of authoring tools and eLearning programmes, some at small cost, some free. All in, they represent a positive approach to staff efficiency enhancement. What’s more, they will move a manager in two minds into a resolute planner for the future strength of the enterprise.
Because if there is one ingredient in today’s recipe for survival, it is customer satisfaction. Make them feel warm and fuzzy about the supplier with which they are dealing, about the quality of the product and the breadth of service which goes with it and, above all, about the (highly trained) professionalism of the supplier’s staff, and there will be a future for that supplier. Keeping a wary eye on the way staff deal with your customers and how well trained they are to go the extra yard for that customer will go a long way to ensuring — recession or no recession — that supplier is you and not your competitor.
Questions every business should ask:
1) Do you know what impact the downturn will have?
2) Are you ready and prepared for the downturn?
3) Have you secured your financial sustainability?
4) Are you reducing costs effectively?
5) Can you get the right information?
6) Have you planned for success?
7) Do you have the right people?
8) Are your stakeholders on side?
9) Are you looking for opportunities?
10) Do you understand your important customers?
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