Managing in the Downturn: 10 Principles

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4. Focus

A truism of recession is that the unwillingness to do anything new is matched only by reluctance to stop something in progress. Organizations need to decide which functions and initiatives to concentrate on, and which should be outsourced or stopped altogether. If outsourcing is deemed to be the solution, organizations need to beware of rushing to appoint new suppliers and to take due care in planning and negotiating contracts.

5. Seize the opportunities

If an organization is prepared to act, the opportunities can be significant. Downturns are famously the best times for buying assets at knockdown prices; good people can be recruited at more reasonable salaries.

6. Look after your customers

One thing that does not change in a downturn is consumer expectations. Someone spending less in a supermarket still doesn't want to wait at the checkout. Maintaining ever-increasing standards of customer service will be crucial. Rather than fighting to increase share in a shrinking market, organizations would do better to focus on keeping the customers they have.

7. Improve productivity

Cutting costs indiscriminately will only result in short-term gains and may damage an organization's ability to compete in the future. Organizations have typically invested the most in technology, but forthcoming research from the MCA indicates that there are far more benefits to be had from changing the way people behave.

8. Look after your suppliers

Organizations need to look after their suppliers as they now rely on a far more complex supply chain than was the case in the early 1990s. Forcing suppliers to cut costs can have a negative impact on quality and ultimately on sales and customer retention. A better approach is to use the downturn as an opportunity to work with suppliers to increase market share by improving quality and service.

9. Look after your employees

One of the biggest risks in a downturn is that whole functions or departments may be axed, often with little regard for the quality of people being lost or the long-term messages being sent to the labor market. Rather than focusing on whom to let go, organizations should start by identifying who they need to keep.

10. Don't expect the government to solve the problem

Good management, aided by an appropriate regulatory response, is the key to recovery.

In summary, the 10 critical actions highlighted in Dealing with the Downturn will help to answer the questions that thousands of leaders in companies and other organizations are now asking themselves. It is vital that leaders do not underestimate the challenges that lie ahead; they are about to prove their real worth.

The full Dealing with the Downturn report is available online.

Alan Leaman is CEO of the Management Consultancies Assn., a London association of British consulting firms. MCA members work with more than 90 of the FTSE 100 companies.