I’ve spent 3 episodes teaching you what a recession is and what economic indicators you should be watching to signal danger. I’ve tried convincing you that we’re on the verge of another one, and that it’ll be worse than the previous “Great Recession”.
You should certainly care about recessions because they have a very real impact on your business. You might have forgotten the pain caused by the last one. You might not have been in business back then, or maybe you weren’t even in the labor market. You might have been in school and oblivious to the effects.
You might not like this subject or even believe we’re on the verge of another, more serious one.
Regardless, recessions are a reality, and another one will happen. In fact, if we are still in the post Great Recession expansion, then its the third longest expansion in our history. Only two other times have we gone this long between recessions.
About 9 million people lost their jobs in the Great Recession, and over 150,000 businesses shutdown.
So, you should have a plan for dealing with it before it happens. That way, when it does, and it will, you’ll know what to do. Whatever you do, don’t stick your head in the sand and wait for reality to punch you in the face.
Just since the last episode, an article in Schiffgold dated July 26th says:
“We have reported extensively on the stock market bubble, the student loan bubble, and the auto bubble. We even told you about a shoe bubble. But there is one bubble that is bigger and potentially more threatening than any of these.
The massive debt bubble.”
And the CEO of US Global Investors, Frank Holmes, writes in a July 25th article in Business Insider, that some people are calling it the “mother of all bubbles”.
He goes on to say that the Institute of International Finance (IIF), puts global debt at an astronomical $217 trillion as of the first quarter of 2017. That’s 327% of what the entire world produces in a year.
Global debt was “only” around $150 trillion back in 2008, and now, it’s at $217 trillion. So, in 10 years, the world has added about $120 trillion. That’s mind numbing!
Schiffgold reports that we Americans have racked up more than $1 trillion in credit card debt, and as of the end of 2016, the average credit card debt per American household was $8,377.
Consider this. If you add up the national debt, national unfunded liabilities and personal debt, that would be $446,540 per citizen! And if you took all the personal and business assets and sold them, each citizen would still be left owing over $38,000.
So… all this debt, has consequences.
Here’s how you should prepare for the next recession from an HR standpoint.
First, update your organizational chart, and keep it current. You should be reviewing and updating it monthly. You’ve gotta have a clear picture of the positions within your company, the hierarchy, and who’s working each one.
Then, update or create a detailed job description for each position. I go over how to create a job description in episode 2. Job descriptions are overlooked or neglected in most small businesses. The roles and responsibilities of positions in small businesses often change, and that’s one of the reasons why they aren’t maintained. It’s also one the reasons why they’re so important.
But don’t let that discourage you. If you review and update them monthly you’ll be surprised how helpful they are. They’ll help you know when it’s time to add new positions, change titles, and reassign the duties. At a minimum studying the job descriptions, as part of any change, will give you valuable insight.
Make sure you have recent performance evaluations and that whatever your employee review policy is, you’re following it. Check out episode 90 for the 411 on performance reviews.
Dust off your company’s operating procedures and update them. These will be worth their weight in gold when you have to reduce the workforce and redistribute the workload. You’ve got to get those processes out of everyone’s head and into one centralized location accessible to everyone.
You can use a software app like SweetProcess to create some amazing documentation, complete with videos… now that’s sweet!
Cross-train employees so important tasks can be done by more than one person. This has many other benefits, like:
Make sure you have a system for keeping track of all the software applications being used, who has accounts and what their passwords are. You can use a program like Passpack which will give both you and your employees a centralized location which you can managed.
Develop an action plan for reducing the size of your staff. Go department by department and consider which positions will be affected the most by a loss of business. This includes a plan for how you’ll go about the actual termination. You need to pay close attention here so you’re not creating any undue discrimination liability.
Remember to focus on positions and job duties, not individuals.
Consider what you can do without, what can be outsourced for a lower cost, and what could be automated. This will help you reorganize, consolidate and eliminate positions.
And finally, my recommendation is that you be open with your employees about what’s happening. Once you know it’s time to take action and you’ve developed your plan, let everyone in the company know what’s going on. The last thing you want to do is create company-wide panic and have the rumor monger running wild.
This is part of the business cycle… part of life, and it can make your company stronger if you’re prepared. Companies large and small are affected so you’re definitely not alone. Only government can ignore reality… although, not forever!