“Recession”, the dreaded demon has almost succeeded in killing the economies of many developed and growing countries. History says that the current recession might be equivalent to the “Great World Depression in 1929”, a collapse in world economy caused by the First World War. Well, just because there is a recession does not mean that companies must think bearish. How can you improve a dying economy by cutting costs??
Everyday I read the paper or visit a news site, all I can read is “Company ZYZ cuts down 1500 jobs, ZYE cuts 1467 jobs etc….”. Even globally renowned companies like Hewlett and Packard, IBM, and Sony have succumbed to the tactic of downsizing people. The worst thing is Indian companies are following suit.
Now, since we have already stepped into recession, the only way companies can beat economic slowdown is by thinking positively,i.e by being bullish. But unfortunately, they consider downsizing as the sole option, which is negative and infact counter-productive. Let me say why?
SAY NO TO DOWNSIZING1)Companies that downsize not only throw out employees in redundant posts, but sometimes even those who are in vital posts or in production. In doing so, they only gain a temporary reprieve, but they lose permanently in terms of experience, hands-on knowledge, and skill set.
2)By sending out employees who have contributed significantly, the company sends an indirect message to the other employees that they might be next. The last thing they need during troubled periods is a team of employees working in constant fear. The end result is a fall in production and thereby further loss in revenue.
3)Many companies do not realize that downsizing can be detrimental in the longer run. Good and talented employees may fear to join such MNCs due to their notorious record.
4)Suppose there is a mini boom, the company has to spend more amount of money to recruit resources and train them again. Good and talented employees are in a way, the proverbial goose that lays a golden egg per day. So why kill the goose?

Instead of following negative methods, companies can resort to positive measures which may be painful in the short run, but may bring prosperity in the future.
1) If
really required, Announce a 10% pay cut across employees at middle and lower levels, and 15-20% at management levels. This paycut must only be for a stipulated period.
2) Announce that employees would be rewarded significantly if they provide ideas, suggestions to enhance profits. Bring transparency in such rewarding system. Let employees know that good performances will be rewarded.
3) Conduct a thorough performance appraisal for employees at all levels. Identify the people who are performing poorly. Warn them to perform properly or sack them immediately. Bad employees are a big NO NO.
4) DO NOT cut any employee-beneficial measures such as Cab facilities, food allowances etc. Most employees adjudge a company by these measures more than salary. Cutting down these measures would only cause employees to doubt the company.
5) Analyze the talent pool for resources who can do multiple roles, and then delegate the appropriate responsibilities to these people. This not only reduces the cost factor, but increases productivity and also helps an employee to develop his/her skill set.
6) Address the members of the management to THINK CREATIVELY and come out with various innovations to increase revenue, tap new markets, implement good marketing strategies etc. Make the MANAGEMENT ACCOUNTABLE.
7) Thinking futuristically. Companies should try to spend a amount of their revenue genuinely in measures that reap long-term gains such as training employees on new market trends, technologies etc.
8) The last and the most difficult thing to do. Keep your employees happy. Organize fun events on a small scale. Reward employees who ensured that the success of a crucial project despite obstacles. Ensure a good management-employee rapport. A good rapport with an employee means good business.
9) Avoid providing exorbitant salaries to CEO/COO? or other managers.
10) Avoid wasteful expenditure by all means.
Some people may say that the measures that I have listed above are either already used or not doable. All I wish to say is that you cannot beat recession by just cost-cutting. True cost-cutting involves the cutting of wasteful expenditures, followed by increased investment in revenue generating methods.
You cannot save a sinking ship by throwing cargo off the board, but rather by plugging the hole via which water is gushing. Similarly, you cannot save a company by downsizing, but rather by inventing methods that allow the company to find new clients, increase revenue and form a nice in the market.
As they say, “Necessity is the mother of all inventions/innovations.” This recession is the perfect time for companies to innovate. The Management of every company should think positively and implement innovative measures to beat the trend.
I end by saying, “An average company finds a difficulty in every opportunity while the great companies find an opportunity in each difficulty”, which category do you belong to?