How to Survive Tough Economic Times

June 26, 2008

Record gasoline prices; declining home values; lower consumer confidence; and a tight credit market. So, what else is new? It's a steady drumbeat of bad economic news these days.

And from all indications, the current slowdown in business is likely to continue for at least a while longer.

As a manager, what does it mean to you?

Chances are, it means the potential is there for additional budget cuts, further reductions in hiring, and possibly even layoffs.

The trouble is, if your organization is affected by current economic conditions as most are, then you probably have already taken the usual measures, such as postponing plans for expansion or new initiatives, adjusting the thermostat in order to lower the utility bills, and eliminating all non- essential services, travel, and other such expenses. You may have also cut back or placed a freeze on hiring, or even experienced layoffs already.

So, having already done those things, what is next? In the event that further cuts are needed, where will they come from? What's left to cut?

When times are good, resources are plentiful and you have the luxury of choices. There are problems to be sure, but the problems associated with expansion seem a lot easier to solve. The most difficult decisions you have to make are how to allocate the growing pool of resources. And whatever you choose, the outcome of those kinds of decisions are likely to be good.

Managing in an era of contraction, however, is a different story. Budget cuts are painful. The range of options available to you appear to be much more limited and none of the options look very desirable.

During lean times such as these, opportunities for advancement are slim. And pay raises? Don't even think about it! And then, of course there is always the potential for layoffs, the mere mention of which can send shudders through your entire organization.

In spite of the difficulties, there is opportunity for managers in these lean times, if they develop the right mindset. Clearly, managing in tough times calls for a different approach and a different set of skills. For example, it requires that you make good decisions, focus on the right priorities, and be creative. Effective managers are able to see opportunity where others only see problems. Develop the leadership skills needed to manage effectively now, when resources are scarce and you will not only survive these tough times, you can help ensure that your organization emerges from them stronger than ever.

Here a few things you can do to help you and your organization survive and prosper in these difficult times.

1. Focus on essential functions.

What are the top two or three things your department or team does that are absolutely essential to your organization's long-term success? Whatever they are, concentrate your resources on them and make any necessary cost cuts to other, less critical areas.

Keep in mind that budget cuts are almost never solely about costs: they are about making choices and setting priorities. Make them wisely. While it might be easier to make across- the-board cuts of say 5, 10, or 15 percent, doing so has the effect of weakening every link in the chain. The better choice is to drop lower-priority programs or initiatives altogether, and instead concentrate your resources on what you deem to be most critical to your organization's long-term success.

2. Innovate.

Innovation is getting more attention these days in management books and articles because it is the best - if not the only - way organizations can remain stay afloat. "Innovate or die," is the phrase heard most often. And it applies even more so now, when times are tough. Why? Because in lean times, the margin for error is smaller. Every decision is critical. Your best chance for survival may depend on your ability to break out of the old way of doing things. Brainstorm ideas with your team members and others. Find new ways to deliver your product or service cheaper.

3. Make good use of technology.

Technology offers an excellent source of innovation and cost- savings. Use technology in place of time-consuming or labor- intensive activities, For example, teleconferencing and web conferencing can be used in place of face-to-face meetings.

4. Collaborate with other departments or organizations

Find ways to undertake joint projects with people outside your own department or work unit. The act of bringing together people with different experiences and areas of expertise to solve a particular challenge helps everyone gain a better perspective on it. Collaboration is a great way to stimulate innovative ideas at little or no additional cost.

5. Keep a long-term focus.

Don't cut things that you will need later on when conditions change and your organization begins to grow again. For example, don't skimp on training. Instead, look for a more cost-effective way to deliver it. And don't abandon your recruiting efforts either. Even if you are not hiring now, keep the channels open so you will be able ramp up quickly, when the next growth cycle comes around.

6. Cross-train your workers.

If people are properly trained they can be called upon as needed to help others. This gives you greater flexibility in moving people into different job roles and temporary assignments when people are stretched too thin. This doesn't necessarily mean that people can be viewed as interchangable parts - most jobs these days are way too specialized for that. Nevertheless, most people can easily be trained to perform certain parts of other jobs, so they can be called upon during crunch times to help others out. This gives you, the manager a lot of flexibility.

7. Be on the lookout for talent.

As any shopper knows, the best time to find great bargains is when business is slow. The same holds true for the labor market. Any time another organization is laying off workers - or even if people THINK they might get laid off - it presents a great opportunity. There is a good chance you can attract some very talented people to come and work for you.

Managing during lean times such as these may not be as much fun as managing a growing organization. But it does offer the opportunity to learn new skills. You are forced to find new ways to produce more work with fewer resources. You learn how to be creative. And even in the best of times, those are highly marketable skills, for any manager.

Stephen K. Foster, Ph.D., SPHR
Canopy Software, Inc.
1493 Market Street
Tallahassee, FL 32312
(850) 893-5699

E-mail me at: Steve.Foster@ExpertSupervisor.com.