Proven Tips, Tools and Tactics To Survive an Economic Slowdown

Having worked most of my career in production environments, I have observed first hand, the high cost and inefficiency associated with economic down turns.

When business experience a slow down, the employees slow down. Not necessarily on purpose, it just happens. For the employee as things get slow, the remaining work fills the vacuum. There is something very psychologically uncomfortable about seeing work come to an end and I think we all experience some time distortion. What once was easy to accomplish in an hour can easily fill 2, 3, 4 or more hours and we convince ourselves how busy we are.

In a production company, it is often said, there is cost, delivery and quality . . . Pick two. In other words, you can have it fast and cheap but quality will suffer. Or you can have quality and delivery, but it is going to cost.

Fulfillment and delivery is a cornerstone of a production environment. So when employees slow down for fear of running out of work, delivery suffers and customer satisfaction falls. This can be a death nail for any company that has competitors.

To Survive in a Slow Economy, You MUST Deliver Better than Expected Quality, On-time
With the additional pressure on delivery, how do you keep employees focused on getting the job done quickly? Here are some things that have seen work in the past.

1. Focus on Productivity not Hours
   In one shop where I was the CNC Programmer / Dept Supervisor, the owner held brief meetings every day to keep us informed. In essence he said, “regardless of when work runs out, you will be paid until the end of the week. If however you are not productive, you will be laid off.” Our job was to get quality product out the door as on or before schedule. If we ran out of work on Wednesday, we would still be paid through Friday. And Ed always found us something to do. Clean the machines, repaint the safety lines on the floor or whatever.
   
   Interestingly, somehow work always trickled in and I think it was due in large part to our ability to deliver on time.
2. It is NOT Busy Work if it is Important
   Too often, with good intentions, managers and supervisors assign busy work to employees with out making the work important. People need to feel that their work is important and contributing. When just handed a broom, they are often offended, see it as stupid, do the task with low quality, and go home frustrated.
   
   Find ways to communicate how important the busy work is. Cleaning, painting, etc make the work environment more enjoyable, and more safe. Ideally, if you see a slow down coming in the future, start people on the alternate activities while still busy, stress the importance of it. Then when the slow down hits, put more people on tasks all the while “thanking” the slow down as an opportunity to complete these important tasks.
3. Don’t Let Quality Suffer
   One bad side effect of a slow down is quality often suffers, when by all accounts it should improve. Here is an example from my own experience.I worked my way through my first few years of college working at pizza places. And, if you have ever worked in a restaurant, you know you have peak and slow periods almost every day.
   
   In my experience as an employee and as a customer, food and service quality typically suffer during the slow periods.
   
   Well one very slow night at the Western Drive In in Denver, someone came in and ordered an 18″ anchovy pizza. I hopped right on it and then got distracted talking to my coworkers who were standing around. I burned the Pizza and had to remake it. Then I made the same stupid mistake and burned the second pizza. Finally the 3rd pizza was successfully prepared, but it was so late we gave it to the customer for free and the delivery boy, my best friend, did not receive a tip.

    That was my first experience of the high cost of slow business.

4. Invest in Training for the People you Hope to Retain
   Don’t get me wrong. When things are slow, cash flow and profitability suffer. So sending star employees around the country to train may be out of reach. But the best employees are typically the ones with the greatest understanding of the entire operations.
   
   Here are some things you can do that give employees better overall understanding of your company, gives them some great training and gives them a real sense of value: 
    
   • Bring them into the office an train them on the front office operations, filing, billing, accounting, etc.
   • Train them in the basic business that are important to your success. Teach them about Cash Flow, Break Even, Contribution Margins, Operating cost, etc.
   • Bring them into the office and involve them in a SWOT analysis. Find out how they perceive the company, you will learn a lot, if you are open minded.
   • Take employees on sales calls, show them how hard it is to get new business and help them realize the importance of cost, delivery, and quality.
   • Give them responsibility and accountability for their “busy work’ tasks. For example, If you bring customers through, introduce them to the employee and say “This is Joe he is responsible for” . . . shop cleanliness, painting or whatever.
5. Remember, it is an end result you are paying for, not hours.
   This is hard for a lot of business owners and managers, but you are not buying hours. You want X amount of quality widgets, a Y response to marketing efforts, audit proof bookkeeping or whatever. Why get hung up on the perceived hourly wage if you get the results you need at a fair price?
   
   If your people improve, get more efficient and get the tasks done faster and better, don’t punish them. Encourage them for their great work and help them find other interesting things to do in the company that utilize their talents.

Even Though Profits May Be Small or Non-Existent
Depending on the nature of your operations you must keep in mind contribution margin. If you have a large capital expense or fixed cost, you have to do everything you can to cover that cost. I have seen companies turn down jobs because they could not make a profit or the price does not cover their “burden rate”. That is understandable, but consider this.

Suppose you have fixed costs of $10,000 per month. Doesn’t it make sense to accept a job that covers variable cost plus some % of gross margin? Every dollar earned in excess of variable expense contributes towards paying fixed costs. That can mean keeping key employees productive and the doors open.

Economic slowdowns are painful enough with out losing control of motivation, production and quality. And slowdown happen, smart managers anticipate an plan for them and turn them into opportunities for business improvement.

When business is slow for an industry, competition gets fierce, your survival will depend upon keeping customers happy with outstanding delivery, exceptional quality and competitive pricing . . .customers will demand all three, not just two.