How to Prepare Your Company for an Economic Slowdown in 2020 – Podcast | S2:E9

by Versique

As we prepare for an economic slowdown in 2020, we will discuss strategies and tactics to prepare your company today. Analyzing your company’s current position and where you can make smart investments will be critical when preparing for an anticipated slowdown. Whether your company shows no signs of slowing down or your company may be heavily affected, we will present solutions for both scenarios.

This episode was based off a recent presentation that we attended at the Vistage Summit in September. Alex Chausovsky – Director of Speaking Services – ITR Economics spoke to 350+ business owners and executives about the economic slowdown and how to prepare during 2019.

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Podcast Transcription – S2:E9

 

[00:00:02] ANNOUNCER Get ready for your weekly dose of talent, strategies, and tactics from industry leaders to attract, select, and retain your top talent. You’re listening to Versique’s Inside Executive Search with Steve Yakesh and Scott Peterson.
[00:00:30] SY Hello and welcome to the Inside Executive Search Podcast. My name is Steve Yakesh and this podcast is for business owners, executives, and board members seeking strategies and tactics to attract, select, and retain the very best. If you’re not feeling a hundred percent confident that you have a plan to do just that, keep listening. This podcast will help you get there. That said, I’d like to welcome in the Navy SEAL of all executive recruiting, Scott Peterson.
[00:00:56] SP Wow, that’s pretty descriptive isn’t it? I feel like I should go do some burpees now or something.
[00:01:03] SY You act like a Navy SEAL though when you do your job. You’re precise. Precision. Sometimes stealth-like.
[00:01:09] SP Wow, we should just get at it then.
[00:01:13] SY Okay. So, set the stage for today’s podcast. We did a recap of an event that we went to, the Vistage Summit and one of the areas inside of that conference we attended was Alex from ITR giving a kind of forecast of the economy moving forward. We got a lot of questions back from some of the listeners saying, “Well, what do we do?” You know, “Thanks for telling us.”
[00:01:38] SP Yeah, “What do we do with this information?” Right?
[00:01:41] SY We’re going to give you a quick recap of what the ITR forecast was and then some strategies and tactics to analyze your position and how do you react to that when it comes to investments and obviously, one of the main investments in anybody’s company is people.
[00:01:59] SP Right. I think it’s important to start thinking about this now in anticipation of a slowdown. Everyone’s been talking about it long enough. It’s about time for it to hit us and we’ll talk about that here in some more detail.
[00:02:13] SY Absolutely. So, quick recap. ITR, again, they have projected out kind of where the economy is going to ebb and flow to like a 97, 98% accuracy last five years. We’re going to go with that as kind of a source of truth. They’ve been pretty dang good the last five years. So what they had said is the remainder of this year and into the first half of 2020, there’s going to be a slowdown, and then second half of 2020, all the way through, call it 2022, growth was going to happen again, correct?
[00:02:49] SP Right, even though the first half of 2020 is going to be slower, it’s not going to be anywhere close to 2008, 2009 so take that under, into consideration as well so it’s not going to be as deep of a trough as it was then so as we talk about the strategies and where you have an opportunity to be aggressive, know that the trough is going to be not as deep and not as long.
[00:03:14] SY Yeah, which was super encouraging and I think everybody in that room – there was what? 350 executives in that room. I think everybody kind of left feeling a lot better, knowing that, “Yeah, we’re going to hit a slowdown but it’s not going to be nearly as deep and we’re going to come out of it so much faster than last time around.” All right Scott, so we were sitting here, call it March, April of 2020, what ITR predicted is actually happening and everything’s kind of slowing down. What advice would you give to executives running a business?
[00:03:46] SP Well, the advice I’m going to give today is really to analyze it today. If we’re looking, if we’re talking about the people side of it, and that’s what we do here, so we’re going to talk about people specifically, we’ll touch on a couple other topics that we’re not experts at but we’ll frankly give our opinion, but on the people side, you know, as you look at your business into 2020, you know kind of today based on your internal KPI’s, what things that you look at to really analyze the health of your business, if you’re in a healthy position, this is the time to get it – get those hires done, right? Don’t get conservative just because we’re going to have a trough and an economic slowdown.
[00:04:27] SY Let me back up there. This kind of opposite thinking. Things are tightening up, things are slowing down, you’re saying, “Be aggressive, go after it.”
[00:04:34] SP Yeah, and the reason why I say that is if your company is already strong and you got a good cash position that you – and a good cash flow position that your company is, you can take advantage of that and let’s say your competitors aren’t as strong from a financial standpoint as you are. They’re going to stop hiring or slow way down. This gives you an opportunity to get your team right sized and the right talent onboard so when that trough starts heading back north, you could take advantage of the growth.
[00:05:04] SY Let’s say you’re not in a great cash position. Things are slowing down. Who are you hiring? Are you hiring at all? What guidance do you give?
[00:05:14] SP Well, clearly, as we talked today, most companies are sitting with a certain number of open positions in their company and they’re struggling to fill them now. If you were on a position where, “Hey, the economy is going to slow down, I’m going to get a little more conservative.” Our recommendation is then, those that you do hire have to be great. You can’t settle for just filling a seat. You need to fill it with the perfect best talent you can find, again, so they can help you weather that short-term storm.
[00:05:47] SY Yup. So, the type of positions, you know, in a tight economy, things are slowing down, are you still hiring basically just all the growth like positions?
[00:05:59] SP Yeah, you still, as you look at sales positions, things that really help drive revenue and you know that there’s a certain length of time it takes to get a sales person into what we would consider a profitable sales person, right? The ramp-up time. Again, considering those, doing those hires now, we’ve got some clients here that have moved all of their sales hires to 2019. Why do they do that? Well, they want to get them prepped to be ready for that trough but more importantly, ready to take advantage of the increasing economy after the trough’s over. But they know they need about six to nine months to do the training, to get them up to speed, to really have them become effective sales people. So they’re moving everything till now which is really a telling story but again, you have to analyze your own position. Are you in a cash position to be able to do that, right? Not everybody can move all, we’ll call it 50 or a hundred hires to 2019 and earlier. You know, so you just have, again, have to really look at your individual position but again, back to don’t settle on your hiring no matter when you do it, whether it’s a bad economy or a good economy but really in a bad economy and your company is tight with resources, make sure you’re hiring great so that they can affect your company.
[00:07:20] SY Yup. And obviously, analyze which hires are going to provide growth and the biggest impact on your organization and then to your point, which I think is probably one of the more important, understand that let them ramp up during the slow down and if ITR is accurate, you have a six month window, let them get ramped up but more importantly, think of all the hundreds of conversations that they’re having when their competition isn’t. So when the economy does pick up, people start to buy whatever your product or service is, they’re – you got a six to nine month head start, and now, think of it as if you’re competitors are just hiring in the second half. I mean, you could have a 12 to 18 month advantage on your competitors if you hire now and more importantly hire for great not just good.
[00:08:12] SP Right, when you think about how if the hiring is tough today, when we come out of the short term trough, you have already got all the great people. Who are your competitors going to get. They are going to get the ones that aren’t great and you are still going to be in a wonderful position from an opportunity standpoint. You know a couple other things that you have an advantage over. If you are in a great position financially, when the economy tightens, companies get nervous. They become for sale. Lower multiples. So that might be a time to buy a competitor or two and then integrate them in especially if they got a product that you can leverage with your existing sales force, etcetera. So there is lots of different opportunities that exist out there when the economy does take a blip. So everybody has to analyze their own situation but I say go aggressive and frankly the ITR guy said, “Those that are in the best financial position should go aggressive,” and because it has been shown that they come out faster than the competitors that don’t.
[00:09:11] SY Absolutely. Well, and too, and maybe getting back to some of the hiring strategies as well is things do tighten and again, look at what your competitors are forecast, what you think your competitors are going to do. If they are going to tighten things up, well now is a better time to maybe recruit out of your competitors because the talent pool might loosen up just a little bit if you are investing in the organization and you are recruiting and like we’ve said in the past, so you are going after those passive candidates. If you are going after the passive candidates within your competitors, things are tight, you know mojo is down, culture is down a little bit in that first half.
[00:09:47] SP They may be taking benefits away, they might be adjusting their –
[00:09:50] SY And now you are hiring and investing? Now you got a shot at these guys. To bring them on board and you know the other piece, I think, whether you are in a great cash position or not depending on your situation, every company has to focus inward on retention. We have talked about retention.
[00:10:08] SP Yeah don’t forget those retention strategies that we talked about, that you can – you can read about them all day long but if you are not actually living them at your company you are going to lose people.
[00:10:18] SY Because if you are in one of those tight cash positions as an organization and maybe you don’t have the luxury to double down and invest aggressively in people or technologies or whatever the investment may be, you got to focus in and retain your key people. Because if you are in that tight position, guess what your competition that’s not, they are going to do the same thing to you. They are going to start recruiting out of your company and you got to – that is devastating if you lose two or three key hires, especially during what this should be as a short, call it six to nine-month window of slow down. It would be a shame to lose.
[00:10:53] SP If you can invest now for potential growth at the end of 2020, you’d better hope, not just hope, you better have a plan to retain who you have so that again, you can at least come out in that growth phase with a solid group of employees that are great. Now, you may be short of employees but you’re not short of new employees and you’re not short of existing employees because that would be a really bad position to be in to take advantage of the economic upturn.
[00:11:22] SY Yeah, I mean, to that point, if you lose two, three key people, you lose your plant manager or your operations leader and you’re coming out, well now you’re growing, now you have a rookie our somebody that’s stepping into that role that isn’t familiar with all 25% lift in manufacturing needs or your sales person is getting ramped up and you’re losing out on those opportunities. Your marketer – You can go across the organization. I mean, that just sets a company back. If you can’t invest in new people and those critical hires, you better invest in retention. Yeah.
[00:11:58] SP I mean, again, I’ll just step back to the earlier part of this podcast and really, you know, we’re sitting almost at the doorstep of November 1st of 2019. If the downturn’s happening, it’s going to happen in the next three to five months, right? You really need to start really looking at your business now if you don’t already. It’d be shocking if you don’t look at your business this way, you can’t look at it just one month in advance, you have to look out further and really, make those critical decisions on, “Yup, we’re going to keep forging through and make these hires because we’re financially ready to do it. Because we know it’s going to be a short downturn.” But really, just have a plan in place. We’ve talked about that from a hiring perspective and from a retention perspective. So again, have a plan in place and really go after the market.
[00:12:45] SY Absolutely. Well cool. Well, that wraps up season two, episode nine, and we’ll be back next week. But if you ever want to get a hold of Scott, as always, you can look him up on LinkedIn or versique.com, all his contact information is out there and if you like what you hear, feel free to go out to your favorite podcast channel and search for Inside Executive Search and we’d love for you to subscribe to the podcast.
[00:13:12] SP Great, we’ll see you and you will hear us next week.
[00:13:16] SY Sounds good. Thanks Scott.
[00:17:45] SP That’s the accountability piece.
[00:17:46] WS That’s the accountability. Most of the time, it went as we expected. Thank you very much. Sometimes, it’s let’s rework part of this and so forth. Sometimes, it didn’t work at all. Sometimes, we don’t have all the answers.
[00:17:58] SP It didn’t work at all. Thanks, guys.
[00:17:59] WS Yeah. Thanks, guys. Do better next time. Then one other kind of opportunity that was presented to one of my groups, an organization was in the agricultural industry, and he wanted to diversify their company. They wanted to join Vistage, because they were around agricultural leaders. They wanted to join leaders that weren’t in the agricultural industry to find out how do they think, because I only have one perspective. So they actually joined the group, brought two or three new opportunities that they were vetting to diversify their business portfolio. Actually took the advice and went one of the directions and shut down the portion of their current agricultural portfolio and exploded into a non-agricultural industry and are very, very successful now. But they used Vistage members and some other that we had available to help them kind of figure that out.
[00:18:56] SP That’s great.
[00:18:58] SY So I know you have a couple different types of groups. The vast majority of Vistage groups are true business owner CEO groups, but you also have some key leadership groups. As Scott mentioned in a earlier podcast, we really talked about some of these key leader peer groups as a really great retention tool is a CEOs bringing in a CFO as an example. They want to make them the best CEO possible. These key executive groups are a great mechanism for that. Can you talk about is there any differences in the key executives versus the CEO groups?
[00:19:31] WS Yeah. A great question. In fact, we have a few more groups beyond those two. Starting with, we have our CEO groups, which are comprised of the business owner and president or CEO. Typically, those organizations that have leadership teams are reformed, and they’re someplace in that 5 to 25 employees at the base and then on up to hundreds or thousands of employees actually. The other group that is really well-known and we have a lot of numbers in what we know is our key executive group, which is a group of VPs. It could be VP HR or ops, finance, etc. They work for the business owner. So they come together on a monthly basis just like owners do. The one key difference is that we do not have a one-on-one coaching session with those key executive. So it’s a once a month. They’re tied into exactly the same type of Vistage speakers as their owners are. Sometimes, they here the same one, so they can actually collaborate off-line in terms with what to do with that content and so forth. The other groups that we have and what we now have is an emerging leader program, which I’m proud to say I just launched the first one in the State of Minnesota. So we have 30 members in that group, and this group is targeted at mid-level managers or high performers within an organization that have aspirations that have been kind of targeted to take on leadership roles in the future. So it’s based around leadership topics. So we have 12 core topics that are taught over the course of the two-year period, and it’s really based around that curriculum, and the managers have an opportunity then to network with each other during that period of time to kind of deeper dive into that content and to work at best practice and so forth. So we know that is our emerging program. The other popular program is we have a program called Vistage Inside. So larger companies oftentimes want to bring the Vistage experience to their leadership team, so we bring it inside the organization. So they have their entire executive team part that monthly meeting.
[00:21:46] SP So very focused on their company, their leaders.
[00:21:48] WS It’s their company and their company only. Exactly. Typically, they go a year or two years while they kind of cement the leadership team. Sometimes, they continue beyond that as well. So those are the four main areas of Vistage group that we have. Vistage is doing a wonderful job at corporate level. We’re headquartered out in San Diego to continue to look at what are those opportunities that business owners are experiencing and helping them as Vistage help them become better in terms of leadership and growing companies.
[00:22:23] SP Awesome.
[00:22:23] WS Yeah.
[00:22:24] SY Well, Wayne, we appreciate you coming in. This has been some very good insight. As Scott and I alluded to, I mean, we’re big fans of peer groups, both in part of them over the years and know the power of them. So it’s great to get the insider addition of peer groups from you. So that will wrap up this podcast. As always, if you want to get a hold of Scott, you can look him up on versique.com or on LinkedIn and same thing for Wayne. I’m sure you – I know you’re vistage\minnesota is the website to find you.
[00:22:55] WS Actually, a little different. vminnesota.com.
[00:22:58] SY vminnesota.com. Or you can find him out on the corporate website and/or LinkedIn. As always, if you like what you hear, go to all the major podcast channels and subscribe to us, and you get a weekly dose of Mr. Scott Peterson and I.
[00:23:15] SP And an occasional guest.
[00:23:16] SY And an occasional guest [inaudible 00:23:17].
[00:23:17] WS Thank you for having me.
[00:23:19] SP Which we’re very thankful for, because it helps kind of just diversify what we’re providing out to the marketplace in terms of different aspects of that process that we talked about Inside Executive Search. But it goes even beyond that for retention and helping companies grow.
[00:23:34] SY Absolutely. Well, thanks again for coming, Wayne.
[00:23:36] WS Thank you. My pleasure.
[00:23:37] SY We will talk to everybody next week.
[00:23:39] SP Sounds great.

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