Secret to surviving business cycles

The rate of job losses has slowed, the decline in industrial output has stabilised to a steady state and business executives are less pessimistic about the future.
There is little doubt among economists that the world’s gravest economic slump in 20 years has slackened.
These green shoots have also put a broad smile on African countries and emerging markets all over again, as these recession-battered markets were weighing heavily on their own recovery.
The widely-accepted reason for the upturn appears to be that the economies are responding well to frantic fire-fighting measures, particularly “quantitative easing” for financial markets and other sector-focused state bail-outs.
But Shawn Achor, a US business consultant who has worked with some of the largest corporations around the globe during the crisis, cautions that this hypothesis is oversimplified. It does not adequately explain why some made it as others went under. The results of his researches and his interactions with Wall Street analysts, wealth managers and business leaders in the US and Europe show that, after the apparent failure of most of their trusted business models, an increasing number of business organisations decided to give primacy to psychological issues, particularly those that emphasised positive transformation.
Despite losing more than half of their balance sheet strength to the global crisis, firms paradoxically increased spending on productivity initiatives and strategies to raise performance. Programmes to “make workers happy” have been found to induce commitment, promote innovation, raise the rate of output per worker and restrain employees from developing counter-goals, which may undermine corporate image and compromise service standards.
“I would have expected that because of the global economic crisis there would be no money for doing training for positive motivation. But companies actually increased spending on this because they realised that it would cost them more to risk high staff turnover and loss of productivity. These would ripple out to clients as well,” Achor said.
“All the banks that I have worked with so far have survived the crisis partly due  to changes in leadership when they realised that their behaviour (workers) mattered”.
These include American Express, Swiss largest insurer/lender UBS and French lender Credit Suisse.
Shawn is in the country to address Young People’s Organisation, a group of young entrepreneurs on how to inculcate positive psychology to tackle crises such as business cycles.
“In Zimbabwe, the opposite is what has happened. There have been cutbacks in salaries and staff numbers. But you’ll find that the companies that have remained competitive are those that have also remained competitive in terms of rewards and training and development, those that have not shied away from proper recruitment,” Takawira Maswiswi, African Sun Group Human resources director, said.
“Ultimately the one tool that a company needs to recover is human resource. If you trim it to the bone, you’ll deprive yourself of a vital survival tool to fight a crisis. Poor rewards have the same effect”.
Financial reports by many companies say staff costs on average accounted for over 70 percent of operating costs, as human resources assumed a central role in driving recovery.
Under the present scenario, the only financial variable that can move is revenue, and to turn in more dollars, firms will have to push volumes as opposed to high margins, which requires a motivated workforce.
Tony Hawkins, a local trainer of business leaders, has warned business executives that the economy has entered a new era characterised by competitiveness, which naturally demands the attraction and retention of skills through the “restructuring of remuneration systems”.
“There is no more scope in the post-crisis Zim-babwe economy for companies to continue to pay nothing in wages. In a dollarised economy, labour is much more expensive than under a Zimbabwe dollar regime and firms have got to realise that.
“In the post-crisis Zimbabwe economy, companies will only survive if they take issues of productivity and skills seriously.
“And this requires the restructuring of remuneration systems, including bonuses and retrenchment packages. With high competition for skills after a long period of brain drain, firms cannot afford to pay nothing anymore”.
The upsurge in brain drain and high staff turnover in the civil service and the current wage crisis in the textile industry provide a clear illustration of what will happen if remuneration systems are neglected for too long.
The loss of skilled employees in the civil service is coming at the country’s most critical juncture in its economic history as, more than ever before, it needs technical planners and implementers.
The Zimbabwe Textile Manufacturers Association  has also had to appeal to the government to intervene in the wage dispute that erupted in the industry after the Employment Council statutorily ruled to increase wages after noting that employers were reluctant to do so.
But the government itself is not amused.
“We have been discussing the issue of wage adjustments within the Ministry and have also engaged the Ministry of Labour after the crisis in the clothing and textile industry,” says Welshman Ncube, Minister of Industry and International Trade.
“But we have also noted the gap between the salaries of top executives and what shop-floor workers earn. The concerns of workers are legitimate and we are looking into that as well”.
Gravest economic slump ending? “We have been discussing the issue of wage adjustments within the Ministry and have also engaged the Ministry of Labour after the crisis in the clothing and textile industry,” says Welshman Ncube, Minister of Industry and International Trade.
“But we have also noted the gap between the salaries of top executives and what shop-floor workers earn. The concerns of workers are legitimate and we are looking into that as well”.