In the early 1990s, I was working at an architectural design company, one of the biggest in Finland. The recession that started in Finland in 1990 hit the construction industry hard. In 1994 the unemployment rate in the industry was a staggering 36.7 percent. Our company had to lay off staff, and we desperately needed new ideas.
Before the recession, our company had a steady flow of new projects. The company had good connections with leading clients and contractors, which meant that we did not need to do much marketing to keep the staff occupied. The recession quickly changed that situation.
One of the challenges of an economic downturn is to keep the talent in the company. Even if you lay people off temporarily, some may be tempted to look around and perhaps never come back. That’s why company owners must not make hasty decisions, even if the economic situation is excruciating. Motivating top talent to stay is possible, but it requires creative solutions.
The economic situation of our company was not bad at first, and I guess it stayed sound due to decisive actions to reduce the number of staff early on. We had also been actively searching for new business opportunities before the downturn.
Based on the lessons learned during our ordeal, here are some tactics for coping with a recession and holding on to your top talent:
1) Collaborate with other companies in the value chain
Since a recession hits almost every company in an industry hard, it is advisable to look for opportunities to collaborate. Our architectural firm collaborated with a contractor that bid for large export projects. A risk-sharing scheme makes the collaboration even more appealing to potential partners.
2) Find clients that go against the current
Smart clients build during a recession because the price level is down. Municipal and government clients (and some corporations) see a recession as an opportunity to build when the price level is down. Unfortunately, though, there’s much competition for these projects.
3) Serve the user
We noticed that facility managers, who represent user organizations, were underserved. Designers and builders had little interest in serving the actual user of the premises once the construction project was over. Therefore we decided to create services for the user organization, including relocation planning, workplace consulting, and post-occupancy services.
4) Develop concepts and projects
If your traditional clients are not buying, why not become the client yourself? Finding suitable locations, developing a concept, and identifying companies to offer the concept is a viable business model. It does not necessarily require an upfront investment.
5) Participate in competitions
Some clients organize design or design-and-build competitions during downturns. They can become hugely popular, which lowers the possibility of winning. Our company took part in a competition and won. That had a positive financial effect, but also a massive impact on the staff’s morale.
The best way to fight the downturn is to be proactive, rather than reactive. If you have to be reactive, act as quickly as possible, and don’t be afraid to go outside your comfort zone. Sometimes a crisis can open up new ways of doing business.