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Prophets of gloom vs profits of boom

Whilst I don't want to down-play the seriousness of the world recession and its impact on the New Zealand economy going forward, the media has certainly painted a picture of a blanket "doom and gloom". My view is that like in "boom times" people go out of business, just as much as some prosper during "gloom times". Not wanting to sound a bit cliched, but it's about turning adversity into opportunity, and some people are good at that.

It reminds me of an old story that has been modified so many times, but to give a local spin, but it goes something like this:

"An older guy runs an established takeaways on the Waikato west coast. His burgers were recognised as the best around and people would drive from Hamilton, Te Awamutu, Cambridge and beyond, just to sample them, such was their quality. He was technologically illiterate, and because he was so busy, he rarely read the newspapers and never watched television as he couldn't get reception. His son, who he hadn't seen for some time, and who was a stockbroker living in Auckland, came to visit one weekend last October, and informed his father that there was a serious recession and that the economy was falling apart. He said that he needed to prepare for the inevitable and ensure his future security. So to reduce his costs, his father cut down on the size of his burgers and got cheaper cuts of meat and contents. Obviously his burgers weren't as good, so many of his loyal customers decided that the drive was no longer worth it and his turnover dropped dramatically, and by the end of December he closed the shop down. When his son visited him a couple of weeks back to console him, the father said 'You were right son. There is a recession and business is hard. I can only but thank you for your worldly advice'."

Much of what we do becomes so self-fulfilling, and whilst we know that there are certain realities with what your customers will do as far as spending goes, there are ways to combat downturns. The recent surprises around Christmas spending seemed to confound the media and once some good news came out, the reporting seemed to fade!

Over the 26 plus years of involvement in recruiting to New Zealand businesses, I have seen the same mistake made over and over again. In boom times, companies spend and do little to preserve their cash reserves to insulate them from times like these. And they don't staff smartly. It's almost like it doesn't matter, when in fact those who have been in business for a long time should know that the good times simply do not last.

A very good client of mine, whose group is rather cashed up (yes, they have a visionary CEO who staffed smartly!), sees this as a time of opportunity and a chance to grab market-share. The funny thing is that they have had no redundancies and little restructuring, other than to make be more effective in doing business. In fact they are currently establishing a large greenfields national business in a sector where they see growth, and that means they require more people, not the opposite. It's all about how you see the situation.

It is also not uncommon to see the shedding of roles such as Marketing and HR in these times. Clever companies don't automatically see these areas as a "cost", but use them to ensure that the best external customer initiatives, and internal people strategies, support their business endeavours effectively and profitably. The cardinal sin is shedding sales and customer service staff - something we are seeing more and more of. Then the downturn does become a self-fulfilling prophesy for these companies. As someone said to me the other day "It's all about holding your nerve"!

So what's going to happen around the structure of employment, or engaging people? In experiencing a number of these downturns over the last 25 plus years, in previous periods, the market shifted to utilising resources differently. Expertise is still needed and we saw a marked increase in the use of contractors, even when the market was less sophisticated. We've already seen a lift in this category and anticipate demand in areas associated with enhancing revenue, managing costs, and facilitating change, all areas where excellent resource is available in the market.

Take the opportunity to take an opportunity! Ensure business continuity by utilising the best asset available - skilled people - in an effective way, without adding to fixed overheads. And who knows, you may even turn those prophets of gloom into profits of boom!

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