Management at fictional Company B reacted quite differently. They had admitted mistakes and learned from the previous recession, creating strong financial reserves that enabled them to maintain staffing levels. They eliminated overtime and used government support programmes; they froze wages and reduced their own remuneration. They knew the recession offered exceptional opportunities to extract the quality talent they longed for, so they kept their eyes open. Although it would have been easy to shorten the training, top management decided to keep its key elements so as better to prepare its workforce for the future ...
Which company will recover better from a sudden crisis? What variables do managers need to keep in mind when navigating their teams across crises? What should they pay attention to? Here are some suggestions on how to deal with a crisis situation.
Create scenarios
With so many unknowns, it is necessary to prepare more scenarios. You should outline at least three variations, from best to worst. Assessing the impact of these on the company and its competitors will help identify weaknesses and areas that require immediate action, as well as aid communication arrangements within the company.
Consider sales and acquisitions
Selling a less key business or division can help a company focus on what it does best. So can acquisitions. An intelligent company will have a free form of cash and liquid resources in the system. An economic downturn then represents an excellent opportunity to strengthen the company's own position. Conversely, waiting can jeopardise its ability to capitalise on opportunities when an inevitable break occurs.
Emphasise meaning and culture
In difficult times, top management must give employees a sense of purpose. Remind them of the bigger picture in terms of the company's aims. Managers' actions should show they care about the company.
Involve employees in the company's turnover plan
An excellent way to deal with the work ethic is to involve employees in activities that will help put the company on a good path. Top management should encourage staff at all levels to provide ideas that could lead to corporate money savings or better preparation for the future. In addition, if significant reductions in working hours are unavoidable, allow executives at different levels of the organisation to take the lead in designing the best way to achieve this. Involve them in developing plans to move people to where they are most needed.
Be careful with firing
Even in the case of a substantial decline, it is unwise to rush into firing people. If at all possible, it is much better to follow more sophisticated methods, like Company B above. If a reduction in staff is inevitable, it should always be done in a dignified manner.
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