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News: Idle Talk Costs...

Monday, January 21, 2008   

"We've decided not to go ahead with the appointments until this talk of recession dies down"

So said the HR director of a company that I'd been doing some employer brand development work for towards the end of last year.

When this was followed earlier this month with a comment from my 75 year-old father in-law, who'd overheard the tail-end of a recession-based conversation between two 'suits' at the golf club, it's obvious that there's an implied danger that the country might needlessly talk themselves into one. 

At the very least, organisations may damage their performance by delaying important decisions.

For the want of a decision.....

The company mentioned above had asked for my help because it was losing market share, solely due to its inability to attract top sales resources.  We'd successfully differentiated their employee proposition, the recruiters put this to good use and, as the comment suggests, the company was about to make a number of key appointments. 

You'll have read or heard them for yourselves, of course; financial commentators getting themselves in the media by talking up the impacts on the economy of the sub-prime crisis in America.  Well, so had the directors of this company - with the finance director winning the argument on caution, so everything in terms of the company's hiring plans went on hold at the start of December.

Too late

Experience tells me that, given another few months of declining sales, the firm will realise that it has to take positive steps if it's going to turn anything around anyway, and try to resurrect the deals.  That won't happen because, surprise surprise, the people have apparently either already gone elsewhere, or have lost interest in the company due to the way it has reacted.

Self fulfilling prophecy 

Roll the scenario out to its inevitable conclusion and that market share the company was so concerned about will be even lower, sales and profits will be significantly down by the end of the financial year in April, with a knock-on effect on share price, dividends and employee bonus payments. 

Increased churn

It can be virtually guaranteed that this will lead to some of the existing team moving on.  By being motivated by what they feared might happen, rather than their desire to improve market share, it seems likely that the company has significantly worsened their situation. 

All in the mind 

OK, so the technical definition of recession is two consecutive quarters of negative economic growth.  However, as anyone who has worked through a recession knows, its REAL definition  - the thing that worms its way into virtually everything we do and mucks things up for everyone - is a total breakdown of consumer confidence and a paralysis in organisational decision-making.

This isn't fed by 'joe public' reading economic journals, but a emotional response to people spreading needless fear.

  

Maybe what they REALLY mean is.....

The trend these days is to shout "recession" every time there's a change in a market which sees a drop in performance.  Perhaps its a reflection of the burgeoning blame culture, but that appears to be coming hand in hand with a shirking of responsibility in blaming recession for things going wrong for 'other reasons'.

Unless the UK manages to talk itself into one, there ISN'T a recession on the horizon.   The financial sector where the rumours are spreading from is still making hundreds of millions of pounds worth of profit.

All markets hit peaks and troughs, so maybe what these doom mongers are really saying is either:-

a). I kidded myself that this boom would last forever so didn't prepare.

or

b). I don't know what to do, but don't blame me!  

As an example, one company I know very well in the finance sector ignored all the warnings for the previous year coming from the USA of a likely collapse of the sub-prime mortgage market.  When it hit them, within weeks senior management were talking to me about a recession.  Truth is, it was just the end of a golden era for them.  Now they have to re-adjust which, to their credit, is exactly what the firm is doing.

Responsibility please!

As covered in the post about a recent CIPD press release, there needs to be an awareness of just how many people can be adversely affected by seemingly innocent comments about the state of the economy.

Blaming recession at the time of a localised or industry- specific downturn, is akin to spreading rumour of a major terrorist attack, when in fact a firework factory has exploded.  That explosion may be serious and with tragic consequences for some people directly connected, but there is no justification to set the rest of the country into a panic.

I have worked through a recession and it's terrible.  This current blip doesn't even come close.  But let's say for arguments sake that the headline-seeking doom-merchants are right; the one single thing that will take us away from it is people focussing on the positives and taking positive action.

So why not do it anway, starting right now?

There's great stuff happening - pass it on!

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The slightest delay in hiring decision-making can cost you a top candidate - and all the opportunity that goes with them!

 

 

 

 

 

 

 

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It's not even a decent bout of the 'sniffles' - unless we manage to convince ourselves otherwise!

 

 

 

 

 

 

 

 

 

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