Managing a Successful Business...

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During a Recession

The general rules of management do not change, whether the economy is in a recession or not. Managers still need to ensure current efficiency, build a future for the company, and keep customers purchasing the product or service the company provides. However, there are several ways to ensure your management decisions enable your company to survive the recession, and importantly, to be in a position to take advantage of business building opportunities in the future.

A recession does not last forever, so business managers have to consider both the current situation and the future when making decisions during the recession. Here are six ways business managers can work to streamline the business and ensure the company survives the recession.

1 – Streamline Processes for Greater Efficiency
During peak working periods, when everyone is busy often staff members streamline processes unintentionally, as staff cut corners to get the job done. During a boom time, inefficiencies may go unnoticed because everyone is busy, and the company has enough money to pick up the difference. However, in the recession every cent spent counts.

Review all the current processes with employees who actually complete the tasks to see where you can streamline processes to prevent double handling of tasks, inefficiencies, or time wasted. Each of these costs the company money. Streamlining processes to prevent time wasting will increase productivity levels and you may be able to reduce the cost of labor by reducing staff hours. Efficient processes means the company will be in a better position to expand once the economy improves.

2 – Combine Departments to Prevent Double Handling
Many companies consider restructuring the organization during a recession. In a similar way that streamlining the processes and procedures followed by staff saves the company money, reducing the need for double handling and opportunities for mis-communication across company departments can increase efficiency and reduce waste for the company.

Consider carefully how the organization structure affects reporting and communication functions across different departments. If two departments within the company complete the same task, it may be more cost-effective to combine the functions of the departments, reducing the need for double reporting to different managers. You may save in several ways by combining departments, including reduced maintenance on property and equipment, greater efficiency in communication, or preventing double data entry because the departments work on different internal systems.

3 – Cut Unnecessary Capital Expenditure
During a recession, it is better to cut unnecessary capital expenditure. You may be dreaming of building a new factory, but your company may not be able to afford it just at the moment.

Unless the capital expenditure will drastically reduce the bottom line for the company quickly, that is the expenditure is justified in the short-term, as well as in the long-term, it may be better to put the project on hold for a while. Capital expenditure on projects that have a long-term return for the company is good, only when the company has the surplus in the budget to allow time to wait for the benefits.

4 – Maintain Safety in the Workplace
Skimping on safety will only increase the company’s costs in the long term. During a recession, it is easy to keep thinking about cutting costs, but if you do this to the detriment of safety in the workplace, you will regret it. Not only are employees more likely to have a low morale and become unproductive if unsafe practices become the norm, but the company will face larger insurance premiums, lost time injury costs, greater sick leave payments, medical costs, and claims from injured employees.

Safe work practices are not a cost to the company, but are cost-cutting devices. It is much cheaper to provide all your employees with safety shoes than to pay even a single employee compensation for having a foot amputated.

5 – Reduce Staff Turnover Costs
Although the company may have a larger pool of people to recruit from during a recession, due to higher levels of unemployment, every time you need to replace a staff member the recruitment and training costs add up.

Productivity of new, untrained employees is much lower than employees who have been in the company for many years. When you lose a staff member, you also lose the wealth of knowledge, skills, and experience the employee brings to your company. You also have added costs in advertising, time in recruiting and interviewing applicants for the position, and the training of the successful applicant. It may be months before the new employee reaches the productivity levels of the employee who left the company.

Managers can work to reduce staff turnover costs by ensuring employees enjoy a high rate of job satisfaction, eliminating bullying, harassment, and office politicking behaviors, and providing a safe, comfortable, friendly workplace for employees.

6 – Continue to Market and Ensure Customer Satisfaction
The final step focuses on maintaining the current customer base during the recession, and allowing the company to build a secure and expanding customer base in the future. The key to a successful business in any economic climate are ensuring customers keep purchasing your product or service. Marketing your company, branding, and products during the recession creates a feeling of security for customers. If the company stops all marketing practices, customers may believe the company has closed and then you will lose current customers, as well as the potential for future customers.

By looking at each of these areas when making management decisions, you should be able to enable the business to survive the recession. More importantly, streamlining processes and departments, reducing staff turnover costs, and continuing marketing activities will all lead the company into an efficient, productive, and successful future.


By Hayley Hunkin