The economy is a dumpster fire right now.
That's right... my used Toyota Prius as an asset has performed better than the S&P 500 for the last 2 years. Companies are prepping for a world where money is no longer interest-free, and a bunch of other conditions are conspiring to make for a lean year or two. As I'm old enough to remember working through the last recession, In this post I'd like to speak to employers and employees about some things I think they could do to prepare.
Dear Employers:
You're going to feel the urge to tighten your belts, reining in spending, and you may already have begun to reduce staffing. Some of you have frozen hiring (some of you even to the point of rescinding offers you'd already made... I get the urgency but you gotta think about damage control if things are really that dire for you!) and by and large you're just looking at the bottom line. I want to encourage you to take a thoughtful approach to your strategy for dealing with this.
Recessions don't last forever. Your reputation does.
Focus on caring for your employees, and you'll be rewarded down the road. It might make things a little tougher in the short term, but they'll remember the effort you put in. During the last recession, I worked in a business whose back was up against the wall; razor-tight margins, living order-to-order much like a household who lives paycheck-to-paycheck... it was tough. But when the time came that cuts were the only way to survive, the leadership elected to cut pay across the board rather than lay off staff. Did the reduction hurt? Yeah. But knowing that it was being done to save the jobs of people we worked next to every day made the pill easier to swallow. We worked just as hard, maybe even harder, because we took the L as a team instead of dumping on a few. That's community. Your culture is going to be tested right now, because abandoning those Guiding Principles on the wall will often look like a faster/easier fix to your profitability. And your staff is absolutely looking to see if you live up to your words.
Think about where you might buy instead of build.
Particularly in the IT organization, we spend a lot of time on build-versus-buy debates. There's a total-cost-of-ownership calculation that needs to be done to decide whether the dev team has to build it or we invest in a 3rd-party tool.
But the world is changed now. Those calculations may not work out the same any longer... particularly if you elected to build and found out about complexity you hadn't anticipated. Changing your strategy to buy a product might be more attractive now - ignore your urge to apply the sunken-cost fallacy and reevaluate. One reason that this might be effective: you're already asking your teams to do more with less. Buying a product is almost certainly going to require less work for your staff to maintain than if they built it all themselves.
Ruthlessly Prioritize
In times of plenty, we start up lots of exploratory projects. We have the excess so we use it a little bit loosely, investments in ideas that we hope will return in big ways.
As the arrow starts to change direction from 📈 up-to-the-right to 📉 down-to-the-right, it's often hard to remember that those investments were exploratory. But it's critical that we be willing to abandon them - at the very least mothball them - and focus our efforts on our core competencies. Your business doesn't need wild innovation spreading things everywhere right now, it needs solid execution of your fundamentals. It's a great opportunity to reorient some of those fringe-focused teams and get fresh but experienced eyes on nagging problems.
Dear Employees:
This isn't your employer's fault. Hopefully you've realized that by now... the whole planet is reeling. It's been a while since we had to think and act like this - the last decade has been about growth at all costs. Well... that's changed. Just like 2020 happened, you have to accept that the world is going to look different for a while and you can't do a blessed thing about it. Strategies that made you high-performing and successful aren't going to land the same, because the terrain is different. So what can you do to succeed while things are lean?
Respect the bottom line
Everything... and I mean EVERYTHING... subordinates to the bottom line right now. If you're trying to sell a risky experiment to your boss, you're likely to fail. Experiments are still likely to be encouraged as long as they're really low-risk... so find ways to break up big problems into smaller ones. If you've been working toward a more agile work mode, good news: you have a head start on this!
Innovate around ways to deliver more with less
Kinda goes along with the previous point, but the people who thrive during a recession are the ones who identify wastefulness and come up with creative ways to eliminate it. I had a mentor during the last recession who was able to double the productivity of a department while simultaneously halving the hours spent in it, because he was incredibly talented at spotting waste in a process and fixing it. Also important to note - we didn't lay off the people whose hours we didn't need there anymore, we reoriented them to solve other problems.
Don't take it personally
Sometimes, despite your best efforts, things still don't swing favorably. If the worst should come, you absolutely must realize that the people making the decisions are hating their jobs right now. It's the worst part of formal leadership: sometimes you have to end the relationship with a team member. It's not an indictment of your performance, it's not a measure of your worth and value as part of the team... it's survival, and hard decisions have to be made. Take the time you need to grieve your loss, for sure... but know that you'll get back up, dust off, and still have all the value you had before.
Winter is Coming. Find a coat.
Y'all, it's not fun. We'd all much rather live in a world where goods and services are cheaper and we have plenty to go around. But you don't get to choose the cards in your hand, you just have to play what's dealt. A little change in your focus can help you weather the storm and come out the other side in a stronger position.
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