by Keith McFarland
Assuming you've saved some cash, there are a few steps you can take to weather the economic downturn, and even flourish
The U.S. has officially entered a recession. What's the best thing to do when times get tough? Hunker down, right? Wrong. I spent the last five years studying the financial performance of more than 7,000 growth companies over a 22-year period for my recent book, The Breakthrough Company (BusinessWeek.com, 1/14/08). I learned that companies that achieve breakthrough performance don't batten down the hatches during tough times—they look for the opportunities that tough times inevitably bring. If you didn't go crazy and load up on debt during the good times, you may be in a position to really take advantage of the current downturn. Here are three ways to capitalize.
Get rid of the deadwood. During good times, it's easy for companies to accumulate people whose performance is less than stellar. Business is growing, the job market is tight—and you justify in your mind keeping mediocre performers because the thought of interviewing 10 or 20 people to fill a position just turns you off. Also, during good times there is usually some staffing creep as managers pad their labor budgets to make sure they are able to handle any unexpected jump in business. When the market turns downward, leaders have the opportunity to prune away the deadwood in their organizations in a way that makes them more efficient, and that positions them to hire the best and the brightest in the industry when business picks back up.
Consider what the president of a regional real estate company told me recently: "We are making decisions in our business today that we simply could not have made when the business was on fire. We are laying off the least effective people in our business and getting a 'double hit' to productivity—the poor performers are out and the good performers are even more productive as they see us finally dealing with the poor performers. This downturn has positioned us to blow away our performance numbers of the past—even though our numbers were already some of the best in the nation."