Is Your Company Laying Off in 2023?

Executive Summary

• It is important for business leaders to make decisions that commit resources to the possibilities of tomorrow while remaining competitive during market chaos.
• When preparing for a downturn, there are three main objectives: reducing exposure, protecting financial fundamentals, and looking for opportunities that take advantage of less prepared rivals.
• To reduce costs and improve efficiencies, businesses should eliminate unneeded expenditures without diminishing core operations. This may be achieved by capitalizing on scale economies, adopting asset-sharing models, reorganizing departments that are not suitable in size, or keeping long-term success at the forefront while hacking away excess fat from the budget.
• To improve bench strength amid challenging economic times, employers should run an analysis based on performance benchmarking to determine which areas and staff members require restructuring - especially those within hybrid environments where workforce dynamics are constantly changing across different business settings.?
• Businesses should strive to maximize working capital and top-line cash position through innovative pricing strategies from suppliers. Today, asset strategies are being evaluated in the wake of COVID-19 - an essential step towards propelling their core business into recovery once the economy stabilizes.

Preparing Your Company for a Downturn in 2023

As owners and executives, we navigate a world of commerce where apprehension resonates like a drumbeat in an environment where corporate debt as a percentage of Canada's GDP at the end of 2022 will be 300%. In contrast, at the height of the Great Depression, corporate debt was 80%. So, yes, we have little choice other than to practice prudence. However, even in the face of uncertainty, the job of business leaders and managers is to make decisions that commit resources to the possibilities of tomorrow.

Forbes Rutherford - Talent scarcity and quality will remain top-of-mind threats in the Canadian real estate industry for 2023. See our LinkedIn Newsletter?HERE

It's no secret that an economic downtown is coming. No one can say when it will happen, but we know it's just a matter of time. Are you prepared for the downturn? Many businesses wait until the last minute to make changes; by then, it's often too late. This article will discuss how to prepare your business for uncertain times ahead. Transformation is vital - so read on to learn more!

Developing a strategic plan around tomorrow's possibilities while facing present-day political, economic, social, and technological disruption will tax the focus and imagination of most executive leadership teams. Notwithstanding a continuing post-COVID-19 malaise, there are certain best practices that owners and managers can apply to prepare for the opportunities found within the cracks of approaching chaos.

To remain competitive during market chaos, leaders and managers must comprehensively assess their firm's weaknesses before taking deliberate steps to reduce any found vulnerabilities. By doing so, they will be better placed to grasp beneficial opportunities that may present themselves as the economy recovers - such as investing in innovative services or expanding through strategic mergers.

Two Main Objectives When Preparing for a Downturn

There are two main objectives when preparing for a downturn.?

1. The first objective?is to understand your exposure, to stabilize the business (or your strategic business unit) by ensuring it has the liquidity to weather any crisis.?
2. The second objective?(to be executed only when you've completed the first step) is to look for opportunities that take advantage of less prepared rivals in the downturn.

Using the best available economic data and business intel, the first objective is to empirically understand the impact and appropriate response to three possible financial crises - a modest downturn, a more severe recession, and a full-blown depression. The empiricism requires the corporate team to game the effect of each scenario on the significant variables of the business. The company then determines the most likely outcome and executes a plan for reducing exposure and protecting financial fundamentals.

"Reducing Exposure & Protecting Financial Fundamentals"

During this period, shrewd cash management is essential. Executives must make educated assumptions regarding the decline's gravity to determine which expenses can be delayed or deferred. It should also be noted that mastery of forecasting insight is not a personality type common among all leaders and managers.

Reducing Costs & Improving Efficiencies

When the executive leadership team has ensured fiscal soundness, they must act boldly to trim costs and boost efficiencies. They must remain forward-thinking as economic climates shift: unneeded expenditures should be eliminated without diminishing core operations. Achieving this requires deft execution of time-tested cost-cutting practices such as capitalizing on scale economies, adopting asset-sharing models, reorganizing departments that are not suitable in size, and keeping long-term success at their forefront while hacking away excess fat from the budget.

Reduction of Headcount

Executive Leadership must carefully consider each layoff decision and avoid a one-size-fits-all approach. A system that evaluates employee potential to meet or exceed organizational expectations is essential for implementing effective downsizing strategies, as opposed to Last In, First Out (LIFO) techniques which overlook the value in retaining individuals who demonstrate high contributions relative to their peers.

Forbes Rutherford - We can benchmark the future performance potential of your staff and offer?transition counselling ?to laid-off workers using a success-based fee structure.

Improving Your Bench Strength

Amidst challenging economic times, it is wise for employers to explore ways to improve bench strength. High-performing individuals may often choose to exit their current roles due to poor management, whilst low performers with limited potential can be encouraged by specialized severance packages- this will help reduce the risk of critical employee loss. Employers should run an analysis based on performance benchmarking to determine which areas and staff members require restructuring- especially those within hybrid environments where workforce dynamics are constantly changing across different business settings.

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Supplier & Procurement Review

Businesses should strive to maximize working capital and top-line cash position through innovative pricing strategies from suppliers. At Rutherford International, we offer a "results-based" fee structure for our talent acquisition services that can be blended and extended over the candidate's warranty period. The unintended consequences of remote work have allowed for near-shoring or offshoring of administrative, accounting, marketing and analytical expertise through our?Consultant-on-Demand ?service– all geared towards reducing downward pressure on revenues.

Asset Portfolio Management & Pricing Strategy

Today, asset strategies are being reevaluated in the wake of COVID-19. Preceding this pandemic were two management generations which begrudgingly allowed "work from home" under certain conditions: Gen-X and Boomer managerial classes. Their determination to maintain the traditional workforce was constantly stressed by a countervailing workplace concept promoted by digitally astute Gen Y and Z employees – one which distributed its workforce beyond traditional office boundaries. Had it not been for mandated lockdowns these past three years, such an aesthetic would have taken at least fifteen more years to become widely accepted. Yet, we find ourselves on the precipice of significant organizational change – with many older executives struggling to accept concepts their mentors could never fathom before 2020. "A Pre-COVID Occupier Strategy is Moot"

As we edge closer to a potential recession, Asset Managers face the challenge of finding creative pricing and financing strategies to enable workable transactions. They must identify tenants' needs, preferences and spending patterns to allocate capital effectively in this climate. In anticipation of changing economic conditions ahead, it may be necessary for businesses involved with asset managing property and operations to dispose of non-core assets or poor-performing divisions - an essential step towards propelling their core business into recovery once the economy stabilizes.

"Pivot Back to Competitive Opportunities"

The structural loss of institutional knowledge can be a real issue for businesses, large and small. The unforeseen loss of Boomer and early-stage Gen-X demographics to retirements, coupled with the talent scarcity and quality issues over the next two years, is something that all businesses need to plan for. Succession planning processes become particularly important at this time, enabling firms to fill new positions and ensure a smooth transition when roles are made redundant through rationalizing processes. Suppose you need help with succession planning or any other element of strategic HR. In that case, Rutherford International offers onboarding advice, leadership profiling, career development strategies and succession planning guidance for individuals or corporate clients – allowing us to create a tailored roadmap for optimum performance potential. Contact us today to learn more about how we could help your business weather the current climate.

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