Three students from the Lausanne Hotel School (Laura, Céline and Laure) walked into my office today and asked me about the impact of the recession. How do I explain them that we are forecasting a growth, that we will be acquiring companies and opening new offices, and that we are hiring staff? Probably by balancing this with the message that we are also cutting some costs or at least delaying expenditure on non-essential items, and that we are very focused on cash and that when we hire people, we hire just the right people for the right jobs.
And that’s what it’s probably all about: choices. The Hanover Research Council published a study some 4 months ago which explained how companies may take advantage of a recession. Many consultancies emphasize the possibilities open to companies in a downturn, they say. A Bain & Company study found that “more than a fifth of companies in the bottom quartile in their industries jumped to the top quartile during the last (1990-91) recession”. Wow. And more than 70% sustained those gains through the next boom cycle. And a study of the 2000-2001 recession by Boston Consulting Group found that “30% of the companies that had been among the top 10 players in their respective sectors dropped off that list, and fewer than 10% of those that dropped off ever made it back”. So whereas a rising tide lifts all boats, when the tables turn some companies just know better how to make the most of it, and how to hold on to that advantage. And although different companies do this in different ways, the common denominator seems to be that they all seem to focus on determining exactly what it is they are good at (and what not), and then act on this and set absolute priorities. They definitely don’t try to do everything at once, and high on the list are actions that create value quickly. But they stay flexible, and don’t persist on just one chosen strategy which may seem OK in the short turn: they re-evaluate and re-adapt.
“Do you have to lower your prices?” asked Laure. “We heard that at the moment there is a lot more price pressure than usual”, she said. It is undoubtedly true that quite a few clients don’t have the usual budgets at their disposal, and so this may seem like a logical reaction. But here again it is largely a matter of choice: we have learned to buy better and so the pressure from the client procurement departments is largely passed on to the next level. And although price pressure is certainly a fact in the commodity section, services with an added value or specifically designed & tailored for a client resist much better to these pressures. So as long as you are absolutely clear on what you are good at and then sell that, you can earn your money.
“Are you hiring?” Laura asked carefully… “Yes we do”, I said. “But for specific positions in specific sectors; we focus on confirmed projects and we are careful not to spend money before we earn it”. I explained that we had seen a nice pick-up on business recently, but with short lead times so our visibility for the middle- and longer term remains uncertain. “But please do send me your CV’s”, I said with a big smile. After all, the tide may turn before you know it and those companies ready to act immediately will have an advantage. And I just met three very smart and promising talents, so I want to be ready: they just might be the right people for the right jobs…
Jurriaen Sleijster
Executive Vice President
