Best wishes for the New Year! However, at the start of 2012 we know that another difficult year will be ahead of us with many uncertainties! Few know what is exactly is going to happen in 2012 and taking into account the worst case scenario with the possible collapse of the Euro a very difficult time could lay in front of us. This could affect both well run export companies and local companies servicing the Irish market. So as owner / managers and HR managers we need to ask us what actions do we need to take to be prepared for what might happen? What we need to what is a Contingency Strategy for the current climate. What themes should a Contingency Strategy contain? I will list a number of themes: –
- Contingency plan – In difficult times an organisation needs to plan how to survive. As there may be very volatile times ahead a contingency plan must be in place on what to do if the Euro collapses or if Ireland is forced to leave the Euro zone. We need to investigate a number of different scenarios such as Ireland leaving the Euro and devaluating by 20% or 40%. To get an understanding of what actions are needed we have to conduct a SWOT analysis. This will identify the Threats, Opportunities, Strengths and Weaknesses the organisation faces and will establish what needs to be done.
Special attention must be given to labour costs as this is for most companies the biggest component of their overall costs. If the actions require that savings have to be made immediately, then employees may have to be laid off or put on short time. The list of actions is not complete and other issues will need to be addressed, however it is essential that the organisation has developed a contingency plan which can be followed through.
- Flexibility – You need to make arrangements that people become more flexible, flexible in working hours, tasks, responsibilities and skills. Companies need to develop a culture of flexibility where employees understand why flexibility is important for the future of the company. Flexibility doesn’t have to be negative for employees as there can be important work life balance issues which can be resolved by creating flexible work arrangements which can serve both employers and employees.
- Communication – One of the most important things managers need to do in difficult times is to keep communicating with their employees. Tell them what the plan is for the year and make them aware that you have a plan and what they need to do to make it successful. Silence is golden but not in this area! If times are tough you can’t barricade yourself in your office, you need to mingle, give employees confidence, encouragement and explain what is expected from each staff member. Remember: ‘Where there is no vision, the people perish.’
- Performance Management – If this has not yet been done it is time to bring in a simple yet effective performance management system whereby staff member knows what his department has to achieve in the next 6 to12 months and what each employee has to achieve to keep his department and company successful. If you have a performance management system in place you need to review if it is still effective and if it is being used everywhere. Performance management is an important tool to get all employees focussed on what they need to do to make the company successful. Communication on what has proven to work and what doesn’t work is essential. During these difficult times it is crucial that repeated underperformers are weeded out of the organisation.
These are some practical ideas to prepare small & medium size companies for the difficult times ahead. Essentially this is the time to have a contingency plan, to put a SWOT analyses for your organisation in place and to distil what actions are essential for survival. If you want to talk to me regarding SWOT analysis and how to handle particular issues regarding these uncertain times don’t hesitate to give me a call at 065 7071933.