An article I saw today in SmartPlanet.com confirmed what I’ve been feeling for some time: businesses have over-done the cost-cutting and are poorly placed for the economic upswing.
The fact that leading economists and business leaders around the world have declared an end to the recession is great news. However, even though nobody is talking about a ‘V-shaped recovery’ or quick upswing, the Forbes study of 200 large companies cited in the article showed that leading executives believe the level of cost cutting undertaken will severely restrict their future growth prospects.
As I posted a few weeks ago, short-term business thinking has done enormous damage – and unfortunately this thinking carried through the recession with companies cutting costs as hard and fast as they could with little thought for the future.
While I don’t have the statistics to hand that the Forbes study has, my own observations indicate that perhaps the report is conservative: it showed 22% of executives believing their recruiting/retention policies were not aligned with their strategic goals, while a quarter indicated their training and development programs were similarly misaligned. My observations indicate this figure to be significantly higher – here in the Middle East, training and recruitment all but ground to a complete halt for the first 3 quarters of this year, right at the time when forward-looking companies should have been upskilling and upgrading their staff.
This really points to the core of the issue – the study showing that nearly all (93%) companies had updated their strategies and priorities to address the slowdown, but only 51% admitted to having a plan in place to guide strategy once the economy turns. Granted, the almost all rest said they were working on a plan, but is it not too late?
Certainly it seems that companies around the globe have missed great opportunities to position themselves strongly for the upturn and this is sure to lead to many failures as those that have done so take new leadership positions – as has been the case following every previous recession. The difference this time being, of course, that the recession was far deeper than any we’ve seen in a couple of generations, so the post-recession fall-out is likely to be worse, too.
Perhaps some companies can still save themselves by moving quickly to position for the upswing – taking on top-performing staff, embarking on aggressive training and taking advantage of the opportunities for mergers and acquisitions – but they can’t afford to wait any longer. Investors, too, are likely to severely punish those companies they see as being unprepared for the upswing.
The question now is whether your company will be one of the new leaders or will fail to survive?
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The recession is more or less over in Asia and the GCC. But in the US and Europe it will take a long time before things start improving.
But I agree with you that companies in the Gulf should now position themselves for growth and position themselves for the upswing.
problem is as companies here are still cutting jobs and salaries they will lose qaulity employees, it will cost them more to replace lost talent. I do not think there is prior nor proper planning in the middle east , companies will suffer the impact and the ecomomy will suffer . Investing in your people is the number one key factor.
Thanks, Leena – I agree that there has been a woeful lack of planning in the region but, to be fair, it’s not really been through a proper recession before, so I guess they’ve not been sure how to handle it.
What’s worse is how the companies (large and small) in countries that have experienced many recessions reacted: short-term focused decisions that could well leave them vulnerable.
They should have known better and set the example.
Thanks, Catarina – I’m also seeing a slow upturn in the US and a couple of parts of Europe.
Now’s definitely the time for companies globally to position themselves strongly before it’s too late and they get left behind…
Guy Your words of wisdom are very much appreciated