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You are here: Home / 4 Professional Arts / a Governing Skills / Management / The Wrong Way to Respond to a Recession

The Wrong Way to Respond to a Recession

March 17, 2009 by mattperman

Tom Peters writes:

I see far too many of my clients, good people with good motives, obsessing on pleasing Wall Street analysts, and taking actions that may well reduce their stock’s value two to three years out. They have slashed budgets on many longer-term strategies, such as research and development, talent retention and development, even preventive maintenance on their equipment. All of it in the name of improving margins and a short-term increase in share value (or so the analysts say).

In a recession, costs often do need to be cut. But do not make cuts that will put your organization in a worse position two or three years down the road. Do not sacrifice the long-term for the short-term. In other words, don’t sacrifice the important for the urgent.

One example that Peters gives is cutting back on leadership development. Leadership development yields important long-term results. But in the short term, cutting back on it is an easy way to improve margins.

Don’t be tricked. Making those cuts for the sake of the short term will result in a weaker organization in the long term, unable to maximize the opportunities that will exist when the economy turns (and, even more importantly, which still exist right now).

When you do need to make cuts in things, first make sure you are prioritizing right and then, second, figure out how to be creative in getting the same impact (or as much as possible) for less monetary investment.

He gives other examples which are also worth taking a look at.

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About Matt Perman

 

I am the director of career development at The King’s College NYC, co-founder of What’s Best Next, and the author of What’s Best Next: How the Gospel Transforms the Way You Get Things Done. This is my personal website where I blog on four of my favorite topics: theology, apologetics, culture, and living in New York City.

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