Recession? Fear Not!

"Recession? Fear Not!"

My Job Here is Done™ Transcript (for general use only, machine-generated and it may not be accurate.) 

Language Disclaimer (00:00) This episode contains colorful language which may not be appropriate in all situations. Shhhh ... Turn it down a bit.

Dave (00:08) I want to read something from Mark Zuckerberg to his employees at Meta, which includes Facebook and Instagram, this is from the New York Times on July 1 of 2022.

Kelli (00:19) My sense you're going to rip into something.

Dave (00:22) Yeah, hold tight. First, the headline in the Times is Mark Zuckerberg prepares Meta employees for a tougher 2022. Think to yourself, yes, a downturn, maybe a recession is either here or coming, but I still have a business to run or a department to lead. I need to talk to my team and get them ready for some changes. Here's how Zuckerman handled it. According to the New York Times article, he told about 77,800 workers that they should prepare to do more with fewer resources and that their performance would be graded more intensely than previous.

Kelli (01:04) This gets worse, doesn't it?

Dave (01:05) Yeah. He goes on to say, I think some of you might decide that this place isn't for you and that self-selection is okay with me.

Kelli (01:15) Oh, boy.

Dave (01:16) Realistically, there are probably a bunch of people in this company who shouldn't be here.

Kelli (01:22) Suddenly they shouldn't be there?

Dave (01:23) Exactly. Elon Musk tells Tesla and SpaceX employees to get back to the office or be fired based on his quote, unquote, super bad feeling about the economy, and then announces large-scale staff reductions, as reported by Business Insider. They say Tesla workers who started their jobs only months or even weeks ago have been let go while others have had offers withdrawn as the company begins to impose cuts announced by Elon Musk.

Kelli (01:55) But wait a second. I'm used to hearing that panic from leadership back in 2000 and 2001 during the "dot bubble."

Dave (02:02) The dot bubble? (Laughing) Or the dot com bubble?

Kelli (02:04) The dot com bubble, actually, the dot come bubble

Dave (02:07) when that exploded?

Kelli (02:08) When that exploded!

Dave (02:09) Right, when else?

Kelli (02:11) 2008. During the banking lending crisis and all through COVID.

Dave (02:15) Sure.

Kelli (02:16) Here we go again. What's different now?

Dave (02:18) Yeah. Kelli, I think the tone and messaging for one. Get back to the office or go f**k yourself.

Kelli (02:23) Hey, come on, that's a great message.

Dave (02:25) Reputation management for another. Hey, welcome to Tesla. We attracted you from your other job where you were safely having a nice life to come to work for us. You're excited to start. Your first day is tomorrow. Sorry, just kidding.

Kelli (02:39) Yeah.

Dave (02:40) The recession is coming, folks. Take cover.

Kelli (02:43) This is bad business. And if you think stuff like this was unavoidable at Meta, Tesla, and lots of other businesses, and you want to blame the CEO's comments and actions on the recession,

Dave (02:57) Then go right ahead.

Kelli (02:58) Go ahead. But all of this was completely avoidable.

Intro (03:03) Hi, I'm Dave, and I've been starting and running businesses all my life. And I'm Kelli,  working for the man like a dog for decades. And you are YOU! The driven career professional, clawing your way up the ladder of success. Maybe running your own business. The next 20 minutes or so is just for you.  Welcome to ... My Job Here Is Done.

Dave (03:26) Welcome and thanks a lot for taking a break to give us about 20 minutes of your time. I am Dave.

Kelli (03:32) And I'm Kelli and we talk about career success and entrepreneurial business growth on this podcast. Subscribe or follow us on your favorite app. We don't want you to miss any new episodes.

Dave (03:43) And you can interact with Kelli and me personally at our website My Job Here is Done.com and on social media at My Job podcast.

Kelli (03:51) We're going to talk about poor planning, overreacting, and long-term damage to your business today. All because a recession is coming.

Dave (04:00) All because the recession is coming. First, a little bit about recessions, and this is important for the context in today's story. Depending upon how old you are, you only remember the recessions you went through personally in your career and likely have no history to reference on the dozens of large-scale recessions that have happened over the last few hundred years.

Kelli (04:23) As an example, my kids who are working and in their thirties now, they haven't experienced a single recession that would alter their careers or cause them to have sudden life-changing events.

Kelli (04:35) The last wide-scale event was centered around 2008, and they were too young in their careers and lives to have it affect them at all. If we're going to experience a major business affecting recession in 2022, as some predict, many of your leadership team, those new managers and directors, literally have no reference or experience to what they're about to go through.

Dave (04:58) Yeah, and then some of us who are a bit older remember all too well what it was like in 2007 and the next 18 months or so where some businesses, but not all, were severely affected by the banking crash. We learned in that recession about what we could do better in the next to prepare for something like this in the future.

Kelli (05:19) Further back in 2001, we had the great dot com bubble burst where tech stocks took a huge beating.

Dave (05:27) Tech wreck. Yeah, it was nasty.

Kelli (05:29) Right! But most other businesses were okay. And this recession, as memorable as it is made out to be in the press, officially only lasted six months.

Dave (05:38) When you look at recessions, they're not all equal. And there are economic triggers that officially start and stop recessions or depressions. They usually don't last all that long.

Dave (05:51) In fact, for those who remember the 1980s with Jimmy Carter as the United States President, that recession saw interest rates in the 20% range.

Kelli (06:00) I wish I didn't remember.

Dave (06:01) Oh man. Cars, houses.

Kelli (06:04) Horrible!

Dave (06:04) It was horrible. It affected a lot of businesses, but the recession only lasted a little over a year.

Kelli (06:12) In fact, if you look at the last 13 US. Recessions, those back to the early 1930s, after the Great Depression of 1929, the average length of all the recent recessions is only eleven months, and most of them less than nine months.

Dave (06:28) Plus, since recessions historically don't hurt all businesses, actually helping some, is it really necessary to scream fire in the movie theater? Do we have to be dramatic with our scary messaging and panic-filled sound bites from celebrity CEOs?

Kelli (06:44) Before we get into that, let's talk about simply having a bad year in business. We don't need an official recession to have a bad year in business. It happens all the time. Even in good times, businesses see changes to their landscape anytime and either correct their course or not.

Kelli (07:00) The smart leaders anticipate the possibility of a negative effect, any negative effect, and they're prepared for it should it happen.

Dave (07:08) So when Mark Zuckerberg suddenly uses language like," I think some of you might decide that this place isn't for you and that self-selection is okay with me," it sounds like he's panicking. And he is.

Dave (07:23) It sends a horrible message through his 78,000-plus employee base. As Kelli was saying earlier, few people in his employ intrinsically know why the word recession might be causing his sudden panicking, and it makes him look weak.

Dave (07:38) Elon Musk saying, I have a "super bad feeling" about the economy and then mandating people to come back to the office or be fired is so reactionary that it actually is panic. And it's uncharacteristic panic from a leader who is always so chill. The message he's sending is shocking and damaging, and it makes him appear weak as well.

Kelli (08:00) Wait, you might say that it's his right to run his company any way he wants, and if he wants people back in the office, then so be it. Well, Dave and I both agree with that.

Dave (08:10) We do.

Kelli (08:10) What we find "super bad" is the way it was delivered. And further proof it was reactionary was the reported problems that it caused employees because the company was not prepared for the return of people. Some had no place to work, no supplies, no tools.

Dave (08:27) Reportedly there was a big mess. People didn't even know where to go when they came into the office. So very poor planning.

Dave (08:34) Zuckerberg said to all of the employees in a live address, "realistically, there are probably a bunch of people in the company who shouldn't be here," right?

Kelli (08:44) First, probably? Aren't you sure, Mark?

Dave (08:47) Yeah. Of your approximate 78,000 employees, Mark, realistically, 20% to 30% of them shouldn't be there, maybe even more. But why all of a sudden is that true? Here's why. Poor planning and leadership that is panicking while they try to appear to prepare for a recession.

Dave (09:07) Is there something different about this coming or even maybe here now recession that is causing company leaders to react this way?

Kelli (09:14) Probably not. Statistically, if there's going to be a recession, it's going to last about eleven months. It's like having a bad year in business.

Dave (09:22) Yeah, but it could be worse. It could be the worst thing in history. But to plan for that by panic, sound bites, threats of mass layoffs, and unreasonable shifts back to the workplace just in case, is a bit unnerving and likely irresponsible of leadership.

Dave (09:38) Am I pissing anybody off yet?

Kelli (09:41) I'm quite sure you are.

Dave (09:42) I'm actually not trying to piss anyone off.

Dave (09:45) I'm simply asking all of us as leaders to sit back and think about this as a business problem first, not a recession problem. If you think about it as a recession, it's just too easy to pass the blame elsewhere. It's like giving leadership a golf mulligan or a get-out-of-jail-free card.

Dave (10:03) For instance, you say to your employees, I have to lay off 10% of the workplace because of the recession. Well, that's easier to announce than saying, I have to lay off 10% of the workforce because we, your leadership team, made some mistakes over the last few years and we didn't prepare very well.

Kelli (10:22) You bet. If you're going to use the recession as an excuse to clean up your business, I guess that's your choice. But realize it's an excuse.

Kelli (10:31) To continue picking on Zuckerberg's remarks that there are probably a bunch of people at the company who shouldn't be here. Well, Mark, you're right. But those same people shouldn't have been there yesterday or last year. You're talking about your C players here, the ones that don't work hard, that don't care as much as the A and B players, the ones that suck the life out of the other good employees.

Dave (10:55) these people should have been identified by operational leadership, as they became known as C players, and then given appropriate coaching, put on a performance plan or something to maybe elevate them by offering a little help, or failing that, firing them when it was clear they didn't fit.

Dave (11:12) If you would have done that proactively, your whole organization would have been much more efficient. And maybe it would have been the key to weathering through a bad year or a recession.

Kelli (11:24) You know when you need loyal, dedicated, hardworking people who trust leadership and will fight for your company under the worst conditions?

Dave (11:30) When?

Kelli (11:31) It's during a real recession, that's when!

Kelli (11:34) I've lived through a few recessions that affected business adversely. But for some people, many actually, the next recession will be their first rodeo.

Kelli (11:44) You need good team members when you head into a bad year. And no matter what, if the business treated the team fairly over the previous years when that business was in trouble, me and the other dedicated team members had no trouble doubling down to get the business through the tough times.

Dave (12:00) Yeah, the tough times that could be just a bad year, one that affects your business, but not all businesses. Or as we've shown, a recession which may hurt your business, but not all businesses. You prepare for both exactly the same way, and panicking is not the answer. It's simple preplanning.

Kelli (12:19) So let's plan for the recession. Over the last 100 years, they come along on average every 5.6 years, so we have plenty of time to get ready. What are some of the things you as owners and leaders can do to not be caught off guard and give your businesses a healthy chance to weather the storm?

Dave (12:37) And remember, the average recession over the last 100 years lasted only eleven months.  So if you look at this, it's like having a bad year once every five years or so. And we've all had that and not panicked.

Dave (12:51) First, back to Zuckerberg's panic message, let's turn it around and use it as sage advice for all businesses. It is, "realistically there are probably a bunch of people at the company who shouldn't be here." That's his quote.

Kelli (13:03) Don't let yourself ever say those words.

Kelli (13:05) If you know this, fix it right now and never let it happen. A recession or a bad year is never the time to clean up. Do this continuously and always have a team of A and B players so that your workforce is at top performance at all times.

Dave (13:21) Every leader in the business should be watching for C players and then give them the benefit of the doubt by offering them some honest feedback, which is tough to do at times, but necessary, and then giving them goals to reach to see if they can improve to whatever your B or A criteria are.

Dave (13:37) If they can't do that in a reasonable period of time, let them go find another job and one that's more suitable for them.

Kelli (13:44) Your A and B team players will thank you. Trust me, they know who the losers are before leadership, sadly, and they're waiting for you to do something. You'll get huge points for getting rid of C players.

Dave (13:56) Leadership knows that employee costs are normally the largest percentage of the P&L by far.

Dave (14:02) They often add new employees way too quickly in anticipation of future growth. We suggest that you staff your business for half of what you expect you'll need based on next year's projections. In other words, only bring in enough new talent to meet half of your anticipated needs.

Dave (14:19) History shows us that in budgeting and growth prediction that we tend to overestimate and then underperform. You'll be making a large investment in people as you grow. Needing to get rid of them because you reacted too quickly is very, very expensive, and extremely disruptive to the team members, and the long-term performance of the business.

Kelli (14:39) Outsource where you can. Look at this carefully. For a long time, businesses felt that they had more control by doing everything internally with their own people. This isn't a flawed process, but it's not an absolute one either.

Kelli (14:53) Due to the pandemic and even before, more and more specialty businesses emerged, including a whole industry of gig work, which we talked about in our episode, Working For Yourself.

Dave (15:03) Yeah. Go listen to that one. Good background there. I've always had great luck outsourcing, and it saves time and money for the business when done correctly. It also helps keep your team employed when cuts must be made across the board, such as when you have a bad year or maybe during a recession.

Dave (15:19) So what can you outsource? Just about anything, if you think about it. But only you can tell what will work in your business. Every business is different, so you need to really take a good look at this.

Dave (15:31) I ask that you take a fresh look if you haven't in a while. And I know you've probably looked at it before and sort of ruled it out, it's hard. It'll be easier for you to have employees but rethink this.

Dave (15:44) Some of the areas that you should be thinking about are marketing, HR, financial reporting, event planning, customer support, and lead generation - just about everything can be outsourced.

Kelli (15:56) The key to this success is that they have good internal talent on staff to run, audit, and guide the outsourced services.

Kelli (16:04) We've taken a team in marketing down from twelve to two by outsourcing and saved the business over 40% of the costs while increasing the effectiveness of the marketing and PR. This also made marketing more agile. We could decrease the investment if we needed to without affecting staff or morale.

Dave (16:22) Right. Another example I recently outsourced all of the staffing maintenance and day-to-day operation of a number of data centers. It's not only improving the reliability of the facilities and by a great amount, like 100%, but the company saved a bunch of money through staff reductions and better repair costs. Customer satisfaction was also increased and it made a significant difference.

Dave (16:44) Outsourcing is a powerful way to hedge against a downturn in the business. Please think carefully about this option.

Kelli (16:52) ABC Always

Dave (16:54) (singing) d-e-f-g-h

Kelli (16:59) No, we're not going to sing the alphabet.  It stands for Always Be Cultivating Closing and Cutting.

Dave (17:06) Wow, you mixed all of those together.

Kelli (17:10) A bunch of C's.

Dave (17:11) A bunch of C's.

Kelli (17:12) Hey, they're all important. If you actually put those into goals and assign them to leadership and your teams, you'll automatically do a lot of right things to make the business operate efficiently all of the time, not just when you're scared.

Dave (17:24) So ABC Always Be Cultivating, means that everyone is looking for new ways to improve everything about the business. Those in Customer Support will be cultivating new ways to service and delight customers. Those in product will be looking for new ways to add features and benefits. Those in the C suite may be looking for new ways to add business through M&A or partnerships.

Kelli (17:48) ABC Always Be Closing may sound like it's just for the sales team.

Dave (17:52) I think that's where it came from originally.

Kelli (17:55) Right, Always Be Closing sales. But it's deeper than that if you make it so.

Kelli (17:59) Always Be Closing also means finishing work that was started, don't leave things open, finish and document projects quickly, close down unnecessary meetings, delete anything that's found to be inefficient

Dave (18:11) ABC always be cutting. Cutting costs, cutting unneeded positions, cutting wasteful spending, cutting debt, cutting out literally anything and everything that does not accrete to growth, sustainability, and positive morale.

Dave (18:27) Hey, this is not rocket science, Elon. This is common sense. But too often, leadership waits until an external force like the rumors of a recession forces them to act.

Dave (18:38) I'm usually pretty much an Elon fan. So are you? Right.

Kelli (18:41) Yeah, I am.

Dave (18:42) But I was shocked by his lack of leadership lately. Just ordering people back, en masse, to the office or else. After what all these people have done for you and how they've worked and anticipated and adapted to the new norm. I bet they kept Tesla alive during the pandemic and just being reactionary like this is a morale killer.

Kelli (19:06) Yeah. We also picked on Mark Zuckerberg pretty hard, so we may be guilty of using sound bites ourselves to make a point, but let's not shoot ourselves - our businesses - in the foot.

Kelli (19:18) Statistically recessions are very survivable. They're short, averaging only eleven months, and they can be just like having a bad year.

Dave (19:27) One of the things that's important to remember is most businesses come out of recessions more healthy. That's because they did the things that they should have done before the recession.

Kelli (19:37) Right. They've been doing them all along.

Dave (19:39) And it just made it, just so much worse, when they did it during the recession or during the bad times.

Kelli (19:45) Right. If leadership uses the threat of a recession to cut staff like Zuckerberg and Musk have done in a very public panicky and thoughtless way, then they both needed to cut staff well before anyone hinted about a possible recession.

Dave (20:00) Folks, is a recession coming? Is it here? If so, it might get really bad, but history says no, and personally, we doubt it.

Dave (20:10) Work now, to correct the inefficiencies you have in your business, add the ABCs and appreciate this closing quote from an unknown author. Do not make recession your obsession. Just remember to forget it and you'll be okay.

Kelli (20:26) Thanks very much for listening today. We hope you enjoyed our story we call Recession, Fear Not. More and more people listen each week just because of you spreading the word about our My Job Here Is Done podcast. So thank you very much for telling a friend about us.

Dave (20:40) Thank you, thank you, and please tell your friend they can follow us anywhere and everywhere. Podcasts are available using their favorite app or at our website. My Job Here is Done dot com.

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