A few years ago, Sebastian Junger wrote the best selling novel, "The Perfect Storm," which became so popular, the title is now synonymous with any incredibly harsh occurrence.
I believe our current financial/economic situation qualifies. So does Jack Welch. Referring to "Seizing the Storm," he recently wrote an article on what strategies we, as executives, need to now consider.
I believe that some of our best opportunities occur when times are toughest. You can add these ideas to your arsenal of management tools for tough times:
Increase spending in critical areas.
Reducing costs is not only recommended, it is almost always mandatory. However, so many of us get caught up in cutting costs that opportunities are lost. For example, marketing budgets, new equipment acquisition and customer service are almost always reduced in slower times, along with everything else. These are examples of areas that can add revenue, in both the long and short run, while everyone else is hitting the brakes. Here, we spend money to save it.
Set targets and then allow your managers to hit them.
Leaders will be much more effective if they will simply state what is needed instead of mandating specifics. Examples might be, "take $150,000 out of your budget," rather than "lay off five FTE’s," or "that line has to generate $50,000 more gross profit over the next six months," rather than "cancel the scheduled upgrades for the equipment." You tell them the what and why; they tell you the how. They are so much closer to it than you, and they almost always will surprise you with their creativity.
Cut costs, not good people.
I once had a CEO that at the first sign of a downturn would call an executive committee meeting and mandate staff cuts. Not only did we lose good people on occasion, we also found ourselves short-staffed when business picked up. The business was hurt instead of helped. Fortunately, we often were able to talk to him in terms of efficiency savings, training or better equipment, rather than just staff reductions.
Aggressively recruit the best people in your marketplace.
Since your competitors may make the mistake of laying off competent and motivated employees, you may find hires available only in poorer economic times. We only need to remember back three years, right here in southeastern Wisconsin, when we had an acute shortage of even marginally competent persons. Accordingly, go get them now when they are most available. Your money will be well spent and serve you especially well when demand rebounds.
Talk to prospective customers who have never listened to you before.
Customers are most receptive during challenging periods. They are more apt to respond to e-mails, phone calls, sales calls and proposals, than ever. It’s in precisely these times that contracts change, efficiencies are welcomed, and relationships are cultivated. Spend time, money, and people to reach prospects.
As Jack Welch says, we must, in these periods, take our classic defensive posture, but we need to go on the offense as well. Do this and you’ll weather the perfect storm.
Jeff Hengsbach is president of Hengsbach and Associates in Mukwonago and has years experience in company management, with a focus in the printing industry. For additional information, visit www.hengsbachandassociates.com.