The roller-coaster stock market is just one sign that the economy will probably remain sluggish for a long time.
Don’t buy into the dread. By playing its cards right, your company can emerge from these hard economic times in even better shape than it was before.
HR pros have an important role to play. Whether sitting in on C-Suite meetings, offering one-on-one counsel to decision-makers or training employees, you need to know about the strategies successful companies use to survive and thrive in tough economic times.
Here are six pieces of financial advice from the American Institute of Certified Public Accountants to help businesses manage through tough times. Know them, and you’ll be able to position HR as a key player over the coming months and years.
1. Focus on the balance sheet. Businesses love to talk about sales, but your focus should be on your organization’s balance sheet. Make sure you’re managing your cash flow well. Within the HR function, keep an eye on costs.
It’s something you should be doing all the time but it’s even more critical in a recessionary environment, because there’s just that much less cash floating around. If the going is still good, smart managers try to put cash aside to build a war chest.
2. Diversify and launch. Economic downturns give companies the opportunity to step back, rethink and review all sectors. We’ve all had plenty of time for that, right? Your top brass may now be considering launching a new product or service. The plan: Use this time to diversify so there aren’t too many eggs in one sinking basket.
Also, while it seems counterintuitive, great companies expand during slowdowns. They don’t retreat. Some of your competitors may have already gone out of business or dropped a product line—you want to be ready to pounce to fill that hole.
3. Review accounts receivable and accounts payable. Employers must keep a sharp eye on customers who owe quite a bit. If they go under and cash is tight, that could have a huge impact on your business. HR pros should review agreements with suppliers. Maybe you don’t have to pay in 30 days; maybe you can pay in 45.
4. Review discretionary spending. Take whatever steps you can to reduce debt. HR should be prepared to suggest labor and timesaving technology to reduce business costs. More effective use of the Internet can save on travel, training, administration and operating costs.
5. Feel your customers’ pain. Your customers are suffering the slowdown, too, and have to make decisions on where to spend. Look at your organization from their perspective. Encourage employees to take nothing for granted and go the extra mile for customers, especially for the most profitable ones. Revisit dormant customers and think of ways to bring them back into the fold. Sometimes, it just takes asking.
6. Retool your marketing. Savvy managers will use this time to determine what sets the business apart from the competition and market it like crazy. They know that new business doesn’t have to come from new customers. Established relationships mean you don’t have to spend time and money cultivating that trust.
If you suspect that your firm’s senior management has sometimes viewed HR as little more than a cost center, now’s the time to prove your worth. Start by making it known that you understand the current business climate. Then be ready to follow through with your own business strategies that align with broader company goals.
