If you follow the markets, then you know the last two weeks have been quite choppy as investors reacted to the June 19th speech made by the Federal Reserve Chairman, Ben Bernanke. In fact, the following day, once investors had a chance to dissect and reflect on his words, the S&P 500 lost -2.24%, the 2nd biggest daily lost thus far this year. Bond yields have since increased as well…the benchmark 10-year Treasury note closed on Tuesday June 25th at a 52-week high yield of 2.597%. Paradoxically, markets reacted to good news on the economy; the Federal Reserve, it seems, is bullish on medium term gross domestic product (GDP) growth and signaled that it could be in a position to ease up on its asset buying program that has keep long-term interest rates low, thereby stimulating the economy. Investors were spooked but only because the country has been living with this safety net for some time and now it may be time to remove the training wheels. According to the Fed, if everything goes according to plan, over the next year, the unemployment rate will continue to drop and GDP growth will accelerate. In essence, happier days could be on the horizon…and that is encouraging news for all of us.
Happy days, however, have a tendency to conceal the hard lessons learned in more difficult times. As we – hopefully – move into the next phase of economic expansion, taking the time to reflect on the lessons of this latest depression can not only help us fortify our current position but also ensure we are prepared for the next, inevitable, downturn. Here is a list of five lessons I observed during the recession that will prepare any organization for difficult times economically while also allowing it to thrive in the good times:
Diversify Your Customer Base
Whether your company is business-to-consumer or business-to-business, this lesson applies. Firms who relied too heavily on one or a few customers were caught short when they discovered that those customers were in financial trouble. As a result, some folded because they could not build new business fast enough when their dominant customer could not pay the bill. As you continue to ramp up your business or as you launch new ones, ensure that you are diversifying your customer base as much as possible.
Invest in Your Talent
The key to any successful organization lies in the abilities and enthusiasm of its people. World class firms have been monitoring the impact of changes made during the recession on their talent. How was the attrition rate affected? How is morale? Was the skillset of the talent pool downgraded or upgraded? Are employees in the right roles? These are the types of questions that organizations should be asking.
If you are an employee, ask yourself what you are doing to strengthen your skillset. If the organization is not investing in you, you should be investing in yourself. Take classes on your own; read books on the relevant topics; implement new skills in a volunteer capacity or as a personal interest if the opportunity does not exist at your current firm to sharpen your skillset.
Understanding your talent pool – or your own individual talent profile – and being able to effectively manage it is a competitive advantage that will benefit you at the best and worst of times.
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