Drastic cutbacks are not the answer

A point of view

All indicators confirm that we are in a new business cycle where the idea of an economic slowdown seems to be taking hold. Depending on the source and their interests, this slowdown is depicted as happening to a greater or lesser degree. We are also witnessing the initial ‘strategic’ solutions to this scenario.

I must confess that I am concerned by some early reactions, as it appears that we are returning to the tired, worn out prescriptions of days gone by that have proven themselves incapable of aiding organisations to adapt to the ups and downs of the situation. We are again bearing witness to anti-recession plans which are in essence ‘anorexic’, and which intend to trim every inch of fat of an organisation in order to supposedly favour its ability to react to changes.

The financial institutions affected by the mortgage crisis have reacted by indiscriminately cutting jobs. Builders and property developers have made similar announcements. These drastic measures beg some important questions. Do exorbitant salaries have to be paid to a large number of executives so that they can make the same decisions a first year Business Administration student would make? Is that the only value we can contribute to the organisations in which we work?
It would appear so. What’s more, owing to a lack of strategic commitment to the future, so called short-term gains cause long term pain in a number of ways. With the motto of ‘until times are better’, cutbacks are not only restricted to the destruction of quality employment, but are usually extended to training ‘expenses’, with a winding down of research and development projects, among other dietary measures affecting the future.

My personal stance on how organisations should respond to this new scenario is to do just the opposite. In my view, it is precisely the time to boost the processes of company transformation by investing, without ignoring the present situation. Moreover, it is in fact, along with other measures, the time to consolidate projects, to generate initiatives, and to prepare for the future.
This impending new scenario, in my opinion, ought to be viewed by companies as an opportunity for their future positioning. We must not cut back talent in our organisations, but rather seek out formulae to adequately deal with this temporary situation, and to develop sources of advantage for a competitive future.

Let’s take the opportunity to inject human capital and improve people’s capabilities in our organisation. Let’s take this opportunity to break into new geographical markets which are affected differently by this economic slowdown. Let’s seek out new ways of competing which would allow our organisations to continue to grow. Let’s build closer ties with our clients. Let’s boost our organisation’s technological and innovative capabilities, to name but a few possibilities.

In my opinion, if we avail ourselves of what is coldly called a ‘threat’, and transform it into a window of opportunities, we will be capable of gaining competitive ground, since the vast majority of our competitors will unfortunately opt for anorexic strategies.
Despite frequent talk of corporate social responsibility, often motivated by a discourse of demagoguery and of improving the organisation’s public image, we entrepreneurs and executives need to bear in mind that a company’s prime responsibility is to develop a sustainable long-term business project. This project would be the setting within which the capabilities of the organisation’s people would be developed, as well as a vehicle for providing the right products and services to clients.

I feel it is important to recall this basic tenet of social corporate responsibility at this time of slowdown in economic growth so as not to fall into the temptation of decapitalising our organisations. We need to be fully aware that such a move would cause talent to leave and never return.

I would encourage business leaders to look at this slowdown through a new lens, and not from the point of view of outdated prescriptions. Let’s ensure that what prevails in this turbulent environment is that our talk of innovation turns into action, and we place importance on people and improving competitiveness.

Sabin Azua

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