December 15, 2022
A recent suite of polls designed to ascertain from ‘on-the-ground’ executives like you if there will be an economic downturn; which departments are most likely to suffer; when it’s anticipated to take place; and whether outside help would be sought to compensate for reduced headcount revealed some startling data:
Not only is there broad consensus that a negative economic event is on the horizon, but that it is coming soon (first quarter); marketing will suffer the deepest cuts and no help will be brought on to fill in gaps from headcount reductions. Yikes!
But is the bottom really ready to fall out or are companies over-reacting? The Great Recession caught so many unprepared – and it is far from forgotten. Are business leaders working overtime to bulwark their enterprise from a downtown? That would fall in line with a recent Conference Board survey that found 91% of CEOs expect a recession next year, while Bank of America’s strategists agree with you: it’s coming within 10 to 12 weeks by their estimates.
As Alan Berg says, “You cannot save your way to a profit.”
The 2008 ‘Great Recession’ taught us that deep, swift cuts to headcount meant almost instant re-hiring of those same people under a 1099 option (turning a “payroll/headcount expense” into a simple “business expense”).
The Great Resignation (Re-shuffle, Return, etc.) showed that people seek fulfillment not just employment. Think of the difference from March to October 2022; from “we can’t get people to come back to work!” to “we can’t afford to pay these sign-on bonuses.” to “inflation? What’s happening to sales?” and now look where we are.
Frankly, a broad recession will not come as a surprise to anyone. When it arrives, it will be the most telegraphed downturn in history.
Which raises bigger questions, like How do we hire? What are our values? And How do we Survive?
Harvard Business Review offers insight that may seem counter-intuitive:
“Companies that have bounced back most strongly from previous recessions usually did not cut their marketing spend, *and in many cases actually increased it*.”
HBR could have saved the study: this exact result was produced by the Japanese decades ago. After taking on Deming & Juran’s quality theory, the nation’s top businesses restricted output during economic downturns but kept marketing at the same level – building pent-up demand for their products while restricting supply. When the inevitable rebound unfolded, they could more readily increase supply to meet that demand than start trying to build it all over again.
If you are looking for ways to keep your team connected, on mission and your brand on purpose, we can help. Unconventional strategy (like HBR touts) is our hallmark.
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