Recession And How To Prepare Your Business For It

Many economists predict we will enter a recession in the next few quarters if we’re not in one already. With many businesses still recovering from the effects of the pandemic and memories of the Great Recession of 2008 still fresh in most of our minds, many business owners are not prepared to face another economic recession.

What is a recession?

A recession is a prolonged period of an economic downturn that is both widespread and significant. A period of economic downturn often lasts at least six months or longer. For this reason, an economic recession is often recognized after a country’s gross domestic product declines for two consecutive quarters. According to this definition, the U.S. would currently be experiencing an economic recession.

However, as NPR reported, this is “not an official definition.” Many factors determine whether a country is in a recession, and due to job growth and foreign business investment, “The White House has pushed back against calling the current economy a recession,” NPR also said.

What does it mean to recession-proof your company?

There are two sides to recession-proofing your company. One that most employers are probably familiar with and one that’s too-rarely considered:

Recession-proofing your business is making your organisation economically resistant through actions traditionally thought to shield business during recessions: reducing expenses, scaling back ambitions, and monitoring cash flow to weather the coming storm.

Recession-proofing your workforce refers to maintaining employee morale, motivation and inspiration during economic downturn.

While most companies focus on their bottom line to survive a recession, research on how to help your business survive a recession by Great Place To Work has shown that focusing on employee engagement – particularly diversity and inclusion – helps companies thrive during a recession. In fact, our data shows that companies that value diversity and inclusion outperform other companies by as much as 400%.

1. Manage your cash flow

In easy or difficult economic times, cash is always king. Cash flow, the timing of when money flows into and out of your business, can make or break your company. When times are tough, however, cash flow challenges can be particularly difficult to overcome. With expenses higher than usual and revenue lower than usual, cash will be tight, and balancing your budget could start to feel a bit like a tightrope walk.

To get a handle on your company’s cash flow, look at your current cash flow statement daily, and start forecasting (if you aren’t already) with trailing three-, six- and 12-month cash flow forecast charts. These charts can help you anticipate times when cash is going to be tight, so you can implement strategies to prevent these challenges from occurring.

Additionally, create best- and worst-case scenario budgets that help you better prepare for unforeseen challenges or unexpected triumphs.

2. Proactively embrace your best customers

A recession is a perfect opportunity for you as CEO to strengthen your relationships with your biggest and most important customers. Remember they are feeling the threat of recession as well. Customers always want to meet the CEO of the company they have purchased from so this is an opportunity for you to hit the road, visit customers, and spend time with your salespeople. If you cannot have an in-person meeting, meet on Zoom. If you are uncomfortable selling, get over it.  I recently spoke to a founder/CEO with a technical background who told me he “learned to appreciate sales” even though he was uncomfortable selling at first. If you’ve historically thought your time was best spent on product, it’s time to reconsider: In a downturn, your best use of time is talking to customers and making sales.

Remember that it is easier and cheaper to sell more to existing customers than to land new customers. This is especially true in a recession as everyone is taking a second look at all expenses. If you are in a B2B business, visiting customers also gives you real insight into how happy your customers are and whether you are at risk of customer churn. If you run a B2C business, invest in rewards programs and other initiatives to make sure your best customers feel appreciated. Churn risk increases during recessions as companies prioritize their spending and pull back on new initiatives. High churn rates have a direct impact on company valuations. As a CEO you are in the unique position to lead by example and your employees will recognize your effort.

3. Embrace your best employees

Recessions force employees to re-think their career choices. If employees start to doubt the viability of the company, they will take the calls from larger firms in the market — regardless of their equity upside — that can pay more in current income, bonuses, and benefits.

Get ahead of this. Spend time with your best employees making sure you understand their mindset. Employees always assume their equity stake is based on the last round of funding, so down rounds create employee angst. Losing top talent will have a very negative impact on your company. Managing and maintaining your momentum is critical both in terms of retaining your top talent as well as recruiting new talent.

Several times in my career I got ahead of this issue by offering additional stock option grants to top employees to make sure they did not even take the recruitment calls. It works. It’s far easier to get ahead of retaining top talent than it is to try to counter-offer once your employees are entertaining other options.

Recessions are a natural part of the business cycles and companies of all sizes must weather them or wither. Startups face a unique challenge because until they become profitable, they rely on outside capital to fund their growth and evolution to maturity. To make it through and emerge even stronger, conserve cash, and pay close attention to your customers, investors, employees, and culture.

Given our current situation knowing that your colleagues or employees are best suited for this new scenario we find ourselves in. Finding the right talent, the best fit for the job and your organisation can be a very challenging task. It is now important to find out whether your managers or your team is well-equipped of working together from various locations. It requires deep knowledge of their personalities, strengths, weaknesses, interests, work style and other characteristics. Our technology and solutions will do the work for you, helping you discover if your people are resilient during times of hardship, if they are autonomous, if they are team players, without actual human contact. Given that our platform is cloud-based, everyone can use it from home as well. Humanity finds itself at a crossroad for various reasons now, why not help people discover and develop themselves from the comfort of their own homes?

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The Disadvantages of Business Ethics Worldwide

Ethical compliance within an organisation is done for the benefit of the company and the employees. A well-crafted ethical compliance policy will help you and your employees make day-to-day decisions that advance your business goals without venturing over to the “dark side.” The use of ethical standards can both reduce the chances of a workplace lawsuit and help to create a positive work environment.

Reputation is one of the most valuable assets a firm can have. Leaders, managers, and employees care about their social reputation: They want to be seen as competent, generous, efficient, honest, and fair. However, an emerging body of research suggests that focusing too much on reputation can sometimes have a negative effect: Attempts to maintain the appearance of doing what’s morally right can lead decision makers to engage in various wrongs.

Take, for example, the Hallmark Channel’s stance on an advertisement it recently ran, featuring two brides kissing at the altar. After receiving public pressure from an advocacy group, Hallmark decided to stop running the ad because the brand did not wish to be “divisive” or “generate controversy.” However, this desire to appear impartial and stay out of the fray conflicted with the organisation’s stated value of “helping all people connect.” In an attempt to preserve its reputation for inclusivity, Hallmark ended up creating division.

Another example is represented by the events that led up to the great economic recession in 2008 and 2009 have placed a renewed emphasis on business ethics. Questionable financial reporting, inflated executive compensation and worthless public assurances undermined consumer and investor confidence and reignited the debate about whose interests a business should serve. While it seems that only good things should arise from business ethics, a business may be restricted in its freedom to maximise profit.

Companies increasingly recognise the need to commit to business ethics and measure their success by more than just profitability. This has led to the introduction of the triple bottom line, also known as “people, planet, profit.” Companies report on their financial, social and environmental performance. The Dow Jones Sustainability Index benchmarks companies who report their performance based on the triple bottom line. This type of performance reporting acknowledges that companies must make a profit to survive, but encourages ethical and sustainable business conduct.

Overall Management Strategy

One of the disadvantages of an ethical compliance program is that it requires the comprehensive support of management to be effective. If members of the management team decide to apply their own version of corporate ethics to the way they manage their departments, then this clash of principles can cause confusion in the workplace.

For example, a manager who tends to look the other way when his employees are committing sexual harassment sets a precedent that can start to undermine the entire corporate culture. As the ‘MeToo’ movement has made crystal clear, even with detailed policies in place, senior managers all too often act as if the rules do not apply to them.

Lack of Profit Maximisation

Developing, implementing and maintaining an ethics compliance program within your organization can be expensive and time-consuming. Ethics policies need to be continually updated to reflect changes in workplace laws and changes in your company culture as the organisation grows.

Proper administration of an ethics program often requires the hiring of an ethics officer and the commitment of company financial and personnel resources. Companies with international activities not only have to adhere to domestic laws in the United States, but have to monitor compliance with the laws and norms of behaviour in other legal systems and other cultures.

Another example in this category is, having factories in developing countries can reduce costs. This is because companies can have practices in place, such as child labour and low wages, which help to maximise profit. But although these practices are legal in those countries, they’re also incredibly unethical and will obviously never be tolerated by a company following ethical practices.

Improvements in working conditions, such as providing workers with living wage and having proper health and safety standards in place, are ethical but raises the amount it costs to run these factories. This, in turn, reduces profit which might not be an issue for large companies who can afford to allocate costs. But it can be an issue for small businesses, especially if they’re evolving.

Luckily, there are many different ways to operate ethically so companies can choose the ethical practices and approaches that best suit them. For example, advertising can considerably boost a company’s brand awareness. If you choose an outdoor print solution from a print specialist who can produce these products ethically, you can boost your reputation among your target audience even more.

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What are the leaders of today truly made of?

There’s been a long debate whether great leaders are born or made… As pointed out in an article on Forbes, it turns out that both parties are right. A definition of leadership, as suggested by researchers, would be a mixture of some genetics and of a whole lot more hard work and persistence. In fact, one study from The Leadership Quarterly on heritability (that is, the innate skills you bring to the table) and human development (what you learn along the way) estimated that leadership is 24%  genetic and 76 percent learned.

However, some people strongly believe that you are brought into this world as a leader – and you cannot do anything about it.

Well, this stands true for a small percentage of the population. As a matter of fact, over the course of history,  there were some people that undeniably had the leadership gene imprinted in their DNA. It is the case of those who gained followers due to their sheer presence and charisma: Abraham Lincoln, Martin Luther King Jr. and Mahatma Gandhi are just a few of them. People with a similar kind of gifts are born every day, even if they don’t have the same impact.

Research show that there are two innate traits that are common to the majority of successful leaders: extroversion and conscientiousness.

According to a meta-analysis led by Timothy Judge, Ph.D., a professor at the Mendoza College of Business at the University of Notre Dame, extroversion is the best predictor of leadership effectiveness, followed closely by conscientiousness.

As it is mentioned in an article from Business Insider,  “psychologists define extroversion as sociability and enthusiasm, while conscientiousness refers to your organization and work ethic. More recent research has found that conscientiousness is the only major personality trait that consistently predicts success, largely because highly conscientious individuals are good at setting and working toward goals.”

What does this mean for the aspiring leaders? Well, if conscientiousness and extroversion are the only innate traits that commonly predict leadership effectiveness – and even those can be worked upon – then all you have to do is to improve and develop your other skills and behaviours that would make you a great leader. Aside from the well known qualities that have defined great leaders since the beginning of time – the ability to communicate effectively, fairness, foresight and inspiration – the dynamics of today’s business world require leaders to develop a whole new set of skills and abilities if they want to thrive in the VUCA environment that we live in (Volatility, Uncertainty, Complexity, Ambiguity).

Great People Inside through a&dc’ LIVED® model puts forward five elements that leaders need to focus on, in order to deliver tangible business results and shine in the VUCA world: Learning, Intellect, Values, Emotions and Drive. By mastering each of these five dimensions, the leaders will be fully equipped to face the challenges of an increasingly fast paced world of work.

Learning – Willing and able to adapt to new environments and challenges by drawing on learning and feedback from previous experiences.

Intellect – Thinks incisively, deals effectively with complex and ambiguous information, sees issues in the broader context and takes sound decisions based on this analysis.

Values – Acts in an authentic and consistent way, inspires trust and demonstrates integrity, courage and respect for others.

Emotions – Manages own emotions effectively, builds positive relationships and uses emotions to influence and inspire others.

Drive – Sets challenging goals, takes an action oriented approach and shows passion and determination to overcome obstacles, act decisively and achieve results.

These are all aspects that you can improve, and while some people are born with the innate traits that will make their leadership journey easier, none of them will prevail in today’s complex and unpredictable business world without working hard to constantly develop their abilities and without a insatiable hunger for learning.



We have an impressive assessment library with hundreds of dimensions that can be leveraged in creating a custom skills-based assessment that supports your organisation’s specific competencies and unique vision. Please contact us if you need to assess and develop the leaders in your company.