The recession and HR

Just had lunch with an entrepreneur who has been around the traps such a long time that he numbers the recessions he has been through.

Anyway, he says that by 1993 – at the end of THAT big recession, – he had a major problem.

He had expanded very quickly through the 1980s and then laid off staff during the early 1990s. But by the end of 1993, just as that recession was ending, he had very different HR issues.

“My staff were really burnt out because I had worked them so hard for two years,” he told me. “We had no hierarchy so the management team worked at peak capacity. When there are excess orders, everyone puts their shoulder to the wheel and in bad times everyone had to push that much harder.”

His staff also pushed for really big pay rises as they had no increases for two years. They also felt they had made a lot of sacrifices to assist the business and demanded equity and other benefits. At the same time, some began to get tempting job offers because they had a good track record of managing a company through difficult times.

So even while confidence was creeping back, he had no cash and demanding employees to contend with.

“Tell your entrepreneurs to factor that into the way they deal with employees in the next few years and factor it into their business plans,” he says.