Business Transformations During Recessive Times


By Sonia Clayton

So the price of oil continues to slide down and now what? Get ready for Change.

In the midst of a global-transformation scenario, with a major slowdown in Western economies, significant shifts and organizational transformations in all major US based multi-national are taking place. However, 75% of U.S. CEOs seem very comfortable with their current business model, because their corporations have initiated the implementation of new business transformation strategies. These new strategies call for the realization of optimum value and cost control.  But, what is happening with their providers or smaller co-dependent organizations?

The new norm is CHANGE and the triggers for transformation are industry and customer dependent. Hence, the important task lays on identifying new business-operating models, with the purpose of embedding new applicable economic and value added changes in the organizational culture, while focusing strategically on a holistic execution process.

The objective of these new transformations is to successfully link the business’s strategic objectives with the core capabilities necessary to deliver the results. Following are some strategic actions to be considered during these difficult times.

Step 1

Schedule meetings with your employees to discuss challenges the organization is facing as a result of the recession. Make sure to have ready a clear communication plan, with straightforward communication and possible answers to employees’ questions. Be specific and explain what measures the company will have to take in order to stay in business during a recession. Make these meetings small in size so questions can be asked and answers can be provided in a casual and less stressful environment.

Step 2

Allow for open-honest communication. Give frank and honest answers to employees’ questions. However, be careful to answer questions where your word may become compromised. It is better to say “I don’t know” than to face a problematic situation latter.

Step 3

Keep your highest-paid executives informed through private meetings. Discuss with them the effects of the recession and impact in the organization. Ask the same leaders to volunteer to take a pay cuts. Factor the money you save on executives’ salaries in your calculations on how to reduce labor costs for the remaining staff.

Step 4

Reduce executive labor cost first then consider the implementation of a minimum percentage of an across-the-board wage reduction and determine how many employees will be affected by the wage cuts. Focus your salary-reduction scenarios on higher-paid employees instead of low-wage employees, who are likely to feel the most negative impact of a recession.

Step 5

Keep employees informed on what activities the company is considering for reducing labor costs. If terminations have to happen, make sure to be professional, caring and kind. Keep in mind you are cutting their livelihood, impacting each individual and their respective families.

Consider using an expert professional firm or consultant for this type of work. A third party negotiator will be professional without necessarily being attached to each individual situation.

About the Author:

Sonia Clayton is the President and CEO of VIRTUAL INTELLIGENCE PROVIDERS, LLC ( She is also a Certified Harvard Business School Strategic Negotiator and was named Hispanic Woman of the Year and Woman of Distinction 2015.  She is also an American Entrepreneur and Philanthropist.


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