Attention is drawn to a comment from Fed Chairman Jerome Powell about curbing inflation1… “ We won’t stop until the job is done.”
Powell was, and is, serious.
Even though some of this commentary was shared in the fall of 2022, it might be relevant this year, next year, or a decade from now.
That is, whether the government uses monetary-restraint policy as a preventive measure or whether inflation just festers on its own, the recession is considered an unavoidable outcome of either course, according to Forbes2. And it has happened before (it’ll happen again).
So, no matter when (or how often) recession rears its head, the following guidelines help marketing agency owners lead their troops through it.
Going Through It? Keep Going.
Here are some recommended leadership pathways to follow:
- Conserve cash. In a related article, Drew McLellan of the Agency Management Institute cautions that keeping too much cash on hand can result in too much staff on hand (if the going gets rough). Don’t let the checkbook balance cloud objectivity.
- Bring down your break-even by (including but not limited to) decreasing fixed costs (consider outsourcing) and raising prices (reviewing client contracts and hourly rates).
- Innovation is value, innovation is productivity, and innovation justifies price increases (digitally transform business for your agency and for clients).
That’s cash, break-even, and innovation. Three solid areas of focus in a down cycle.
As Always, Surround Yourself With Smart people
Ram Charan, world-renowned business advisor and author of more than 25 books (including Wall Street Journal bestsellers), says to take a close look at human capital3. He has pointed out before that it is just very few people who make up very much of the impact on your business. Make sure you know who they are, nurture them, and have them nurture their co-workers.
Be a leader in this regard. There will be rumblings in the media about layoffs. Competitors will try to poach your best people, or your people may be thinking about it. Get your core staff to continue focusing on intelligence, strategy, and creative ideas. Focus on what comes next, post-recession.
It adds up to: have a plan for human capital.
Chief Executive has been the independent voice of the CEO community since 1977, helping America’s business leaders tackle their most pressing issues and plan for future growth. As listed on its ChiefExecutive.net website, membership resources include events, publications, networks, research, leadership essentials.
Information from its Sept 23, 2022, CEO Briefing newsletter cited or paraphrased in this article, in part.1
Leverage the Core, Flex the Spokes
Consider outsourcing the distracting, commoditized tasks of production out of the agency, off-site. Retain the core or hub of the agency on-site. And the spokes radiating outward from the core are support staff that can be added flexibly, only as needed.
Going back to the “innovation” example above, web development and SaaS teams are good examples. All of those programmers and developers and sysadmins, etc., can be handled by one single outsource provider. Taken off the shelf and put back on as needed. A variable wholesale cost. At 100 percent productivity. None of the hassles, none of the overhead.
It lowers the cost of full-time staffing, which lowers that break-even. While also pursuing the innovation that is meanwhile essential in these times.
For example: What if a proprietary new app or digital tool helped you or your clients perform certain business functions more efficiently? Or served end-customers better? An outsource can help make that happen. Your core staff shepherds the big idea. Then, the off-site production engine brings it to life. The agency owner realizes an entirely new revenue stream off of the result.
The economy and inflation bring changes to how we operate.
And how we handle the workforce is part of it.
— John Kenneth Galbraith, economist, diplomat, Harvard faculty
Economics is extremely useful as a form of employment for economists.
- Powell’s Not Kidding: A Playbook For What’s Next, Chief Executive CEO Briefing, https://news.chiefexecutive.net/acton/rif/39684/s-09f6-2209/-/l-0249:299bf/l-0249/showPreparedMessage?sid=TV2:zn7dslLmU, Sep 23, 2022.
- M. Ezrati, Inflation Will Lead Inexorably To Recession, Forbes.com,
https://www.forbes.com/sites/miltonezrati/2022/05/22/inflation-will-lead-inexecrable-to-recession/?sh=6d35f7ab7ef8, May 22, 2022
- R. Charan, Leading Through Inflation: Human Capital And The CHRO,
https://chiefexecutive.net/leading-through-inflation-human-capital-and-the-chro/, 2022 (data pulled Oct. 25, 2022).