Downsizing won’t save your firm. What will?

Downsizing won’t save your firm. What will?

We all knew the U.S. economic growth couldn’t continue forever. But we didn’t expect to experience a downturn that happened so quickly or was so steep. Now we’re left to figure out the best way to steer through this time of tremendous uncertainty. Our inspiration can come from other’s anecdotes, or we can look at the facts. For data on what works, we can turn to a study performed by three professors from the Harvard and Northwestern business schools. They studied how businesses fared through the last three economic downturns. *

The Facts About Surviving a Downturn

Survival Rates
The results are startling. Seventeen percent of the companies didn’t survive a recession. About 80% of the survivors had not reached their pre-recession growth rates three years later. Only 9% flourished after a slowdown, exceeding their pre-slowdown levels by at least 10% in sales and profits growth.

What to Avoid
Firms that cut costs faster and deeper than rivals have the lowest chance—21%—of pulling ahead of the competition when times get better. Businesses that invest more than their competitors during a recession enjoy only a 26% chance of becoming leaders after a downturn.

And the Winners Are…
Companies that master the balance between cutting costs and investing in growth do the best after a recession. Those who use a specific combination of defensive and offensive moves have the highest probability—37%—of breaking away.

Research shows that “winners” attend to improving operational efficiency compared to those that focus on reducing the number of employees. They develop new business opportunities by making more significant investments than their rivals do in R&D, marketing, plants, and machinery.

Figuring out which Post-COVID operational efficiencies and investments you need will most likely require different skill sets than those your team used before. Therefore, the most successful companies emerging from this crisis will take time now to reassess and realign their talent to execute on the new strategies successfully.

What Talent Do You Need?
Adapting your business strategy is essential, but execution is what determines success or failure. Which people are behaviorally suited to the new direction? Who may struggle to perform while trying to execute the revised strategic priorities?

You may be tempted to assess the team based on gut instincts. But once again, it is better to rely on facts. Behavioral data leads to an understanding of which activities, roles, and responsibilities individuals are naturally suited for. Using tools like the Predictive Index Behavioral Assessment™, you can identify an individual’s behavioral drives and needs—an objective way to determine how natural of a fit they are for a given role.

Also, strategic alignment tools like the Predictive Index Strategy Assessment™ will visually map the native behaviors of a team to a strategy. This way, you can see how naturally-suited your leaders are to execute your strategy—and where there are gaps.

Where to Turn?
Talent Suite empowers organizations to achieve their potential through people using proven and validated methodology and data analytics. We help companies put certainty around complex people issues by assessing and bench-marking talent. We also train organizations on how to hire and inspire people to high performance and increasing results.

Talent Suite helps organizations build more productive workplaces. Whether getting the right people in the right seats, reducing operational friction while improving honest communication, or identifying and coaching-up your high potentials, we focus on the talent optimization part of your business strategy.

Let Talent Suite help!
If you’d like to learn more about Talent Suite and Predictive Index and how we can help your organization understand your talent and how they can help your business survive and thrive, contact us.

*Gulati, Ranjay. Nohria, Nitin. Wohlgezogen, Franz. “Roaring Out of Recession.” Harvard Business Review, March 2010,