8 trends to determine company success during economic downturns
There’s no shortage of public domain information on what does and doesn’t make up a successful and sustainable business in times of crisis. HR Directors, HR Vice Presidents and CHRO’s all have a responsibility to make sure their business management teams are equipped with the right mindsets and abilities to steer the organisation through good times, and bad. Here are 8 immediate similarities shared by the companies we worked with over many years, whom we’ve directly seen thrive compared to their competitors during various times of economic downturns.
Quality.
Whether they made the best bread in their region, or provided the best software for a critical (rather than luxury) need, or reliably produced an “in demand” chemical, or gave the most useful advice to their customer group. Being the best (or being viewed as one of the best) at what they did seemed to make a difference.
Focus.
There’s nothing wrong with diversification. But doing a lot of things not very well, versus doing less but very well? The companies that met their promises, ensured reliability and consistency, continued to offer value for money (at all price points), continued to innovate and improve their product and/or service - they seemed to offer a security that all types of consumers gravitated to.
Extraordinary customer experience.
As competitors cut prices, offered crazy extras and drowned the market with bargain deals to “buy" new short term business - the companies who made sure that their customers had reliably fabulous purchasing experiences and post purchase support, seemed more likely to receive loyalty. This applied across all industry sectors and business types.
Internal agility.
Consumer appetites and buying practices change. Government legislation changes. And with little warning, work practices have just changed. Those companies who had built virtual shops and/or parallel purchase partnerships as well as their traditional retail outlets often survived. Those companies who had diversity of customer portfolios rather than an emphasis on any one industry sector, often continued trading. Today, we're already seeing that those companies who had already invested in cloud solutions and apps for remote work access have helped to ensure business continuity. Already we’re watching companies fold, not because their core offering wasn't sound, but because their leaders and/or staff refuse to make and embrace change.
Conservative financials.
Those companies who always kept a cash reserve to tide over any business slumps, seemed to have a better chance than their competitors who ran "close to the wire", operating from sale to sale to pay costs. And those companies who were active for keeping debts controlled also reduced their risks of being "taken down" when a customer went bankrupt.
Employee engagement.
Companies that always treated their staff with dignity and respect, and communicated openly with them, typically found those staff doing extraordinary things to keep the company viable, even if it meant some kind of impact on their jobs. We’ve repeatedly seen that employees who “buy into” the business and its management, who buy into the company culture and their colleagues, have been more willing to enable cuts in pay, cuts in work hours, and come up with ideas to help the business. Heck, we’ve seen leaders volunteer to leave such places (without personal financial gain), for the sake of retaining the jobs of their teams!
Fairness.
The companies that stayed close to their employees, that respected their customers, that respected their suppliers….those that didn’t use their terms or policies to exploit others experiencing hardship and instead actually waived conditions to ensure “win-win” situations - they benefited in the longer term over competitors who took a short term view on holding stakeholders to ransom for "a quick buck"
Mindset for growth and success.
Some companies had a constant excuse for every lull - they were victims of events happening around them. Others took the knock on the chin, sought opportunities to reassess, ratify, modify, change and improve both internally and externally. They applied a thoughtful and laser like focus to set about capturing a greater share of any reduced market. And when economic conditions changed for the better, they reaped the benefits.
“HR leaders working on culture change and transformation have the opportunity to fundamentally change companies to be commercially viable and sustainable through good and bad market conditions”
So many companies are directly affected with the changes we're experiencing around the world right now. For some it will mean shutting the doors. For others that survive, it may mean scraping through until the next crisis. For others again, it’s a chance to thrive. Which will it be for your business or enterprise?
About the Author
Leanne Morris is well known as a both an outspoken advocate and critic of the HR profession. With long standing networks across 94 countries in all specialist areas of the function, and a multi- continent work history, she is a sought after subject matter expert on international HR hiring trends and HR hiring best practice.