And they gathered data on which industries were hardest hit by the Great Recession. They also found that the benefits of decentralization faded as economic conditions improved—a sign that delegation has particular value during uncertain times. Why did decentralization help? Because decentralized firms delegated decision making further down the hierarchy, they were better able to adapt to changing conditions. For example, they were more aggressive in adjusting their product offerings in response to changes in demand. But the uncertainty of a recession necessitates experimentation, which requires that decisions be made throughout the organization.
Even if companies decide not to decentralize, they can try to do a better job of gathering input from employees at all levels when making key decisions. Some layoffs are inevitable in a downturn; during the Great Recession, 2. However, the companies that emerged from the crisis in the strongest shape relied less on layoffs to cut costs and leaned more on operational improvements, Ranjay Gulati and his colleagues found in their study of public companies. Hiring and training are expensive, so companies prefer not to have to rehire when the economy picks back up, particularly if they think the downturn will be brief.
Layoffs can also hurt morale, dampening productivity at a time when companies can ill afford it. Companies should consider hour reductions, furloughs, and performance pay.
So when the Great Recession hit, in , the company took a different approach, as Sandra J. That saved an estimated 20, jobs. Honeywell emerged from the Great Recession in better shape than it did the recession in terms of sales, net income, and cash flow, despite the fact that the downturn was much more severe. Firms invest in IT during recessions because their opportunity cost is lower. In some parts of the world, policy makers encourage shorter hours as an alternative to layoffs. Many countries and more than half the states in the U.
In a discussion paper for the European think tank Centre for Economic Policy Research, Pierre Cahuc, Francis Kramarz, and Sandra Nevoux found that companies that took advantage of the short-time work program laid off fewer workers and were more likely to survive during the Great Recession. The effect was most significant among the companies most severely hit by the recession and those with the highest levels of debt. According to the researchers, the short-time work approach allowed vulnerable companies to hold on to more of their workforce.
Absent the subsidies, they most likely would have had to lay off more employees, making it more difficult to recover after the recession or causing them to go out of business altogether. The researchers estimate that for every five workers on short-time work, one job was saved. And they estimate that the cost per job saved was less than that of comparable programs; since the alternative was paying unemployment, the program actually saved the French government money.
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One appealing thing about both furloughs and short-time work is that, as with layoffs, companies have discretion over which workers are affected. By contrast, across-the-board pay cuts or hiring freezes that fail to consider employee productivity can backfire, damaging morale and driving away the most productive employees. Similarly, hiring freezes affect every department indiscriminately, without weighing the value of various potential hires. Performance pay—compensation based on some measure of productivity or business outcome—is another way to control labor costs without hurting productivity.
There is a long-running debate about performance pay, for executives and frontline workers, and plenty of evidence for and against the management tool on both sides. Bureau of Labor Statistics documents an important fact. Using responses to the National Compensation Survey from to , the study shows that U. However, downturns actually appear to encourage the adoption of new technologies. Kahn of the University of Rochester compared more than million online job listings posted from to with economic data to see how the Great Recession affected the types of skills employers were looking for.
They found that the U. Their study found that the demand for tech skills returns to more normal levels once the labor market improves. In those hard-hit areas of the United States, companies also increased their investment in information technology, driving the surge in IT skill requirements in their job postings.
Why do companies invest in technology during a recession when money is tight? When the economy is in great shape, a company has every incentive to produce as much as it can; if it diverts resources to invest in new technologies, it may be leaving money on the table. For that reason, adopting technology costs less, in a sense, during a recession. Technology can make your business more transparent, more flexible, and more efficient.
The second reason is that digital technology can help cut costs. The third reason is that IT investments make companies more agile and therefore better able to handle the uncertainty and rapid change that come with a recession.
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By: Kiersten Warner I once walked along the sand, A beach that stretched through a magic land. On the sand there swelled a tide,. Dil Lga Rakha Tha. Uss larki ko roz dekhnay mn jo maza rakha tha. Tha Husan ka pujari wrna kya rakha tha Thukra diya kai baar aur waja sy b mazrat. Zmanay sy maloom hua koi pyar paal rakha tha It was a place always there to be found.
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