How Organisations Gain Strength in an Economic Downturn

With trade tensions between China and the United States threatening to become even more pervasive, the global economic growth outlook is on the decline. Economic activity is slowing down, industrial production is decreasing, and trade growth has decelerated sharply over the past year as a recent briefing of the United Nations states (United Nations, 2019). 

Organisations can leverage this downturn cycle to up-skill their workforce and prepare to bounce back when the economy swings up again.

Lessons From Past Downturns

The nature of an economic crisis is unpredictable, demanding organisations to develop flexible, agile and adaptive structures to be able to respond when the business environment changes. While some organisations may have to consider downsizing to survive the economic cycle, stronger ones can focus on preparing the workforce to shift to the next cycle, emerging with increased productivity and profitability for the upcoming economic boost (Mitsakis, 2014). 

Studying economic crisis and business life cycles, Mitsakis found that organisations that invest in maintaining employee engagement, strengthening leadership capability and providing training to learn new skills emerge from the crisis with improved organisational effectiveness. 

Taking into account past experiences, how can organisations gain strength in this economic downturn?

How to Gain Strength for the Next Upswing

The key to emerging stronger from an economic downturn is the mindset shift from perceiving the crisis as a threat to welcoming it as an opportunity. Facing challenges with a "Yes we can!" attitude leads to more ambitious effort, optimism and faith, which in turn increases the chances of success exponentially. 

With an optimistic mindset, these are the key areas organisations should consider for gaining strength:

Dealing With Uncertainty

When faced with uncertainty, our brains are wired to react with fear. This natural response has it's benefits when it comes to avoiding danger and getting out of threatening situations. However, organisations can only gain strength when their leaders and people embrace the unpredictable, take risks and strive towards an unknown future with their heads held high.

Building Resilience

As German philosopher Nietsche once said: "That which does not kill us, makes us stronger.". In challenging times people gain experiences that build resilience. Keeping things in perspective, accepting change and taking decisive actions towards overcoming challenges is key to achieving the competence to quickly recover when things get tough.

Unlearning, Learning and Relearning

The average life expectancy of a skill is five years (Deloitte, 2017); after this time, it is likely to be irrelevant. Organisations need to encourage continuous learning of skills and growing of competencies, especially in times of crisis. Why? A workforce that is made up of a diverse set of skills and knowledge - one that unlearns the irrelevant, learns the new and relearns to keep up to date - can help boost the organisations business (Kenton, 2019). 

Investing in Longterm Growth

Keeping things in perspective entails recognising that short term growth might not be feasible in this economic downturn, whereas business leaders shouldn't neglect long-term growth. The study by Reeves et al. (2019) shows, organisations that invest in development and innovation while business is down, have the best chance to sustain longterm growth.

Transforming for the Better

Hard times are like spotlights on the organisation's health, where vulnerabilities and issues are revealed that might have been unnoticed in better times (Reeves et al., 2019). With a heightened sense of urgency that comes along with an economic downturn, leaders can use this as an opportunity to drive necessary transformations to heal the organisation for future success.


In short, organisations can gain strength by reframing the crisis as an opportunity in which the workforce can be trained to deal with uncertainty, build resilience and unlearn, learn and relearn. Together with investing in longterm growth, transforming vulnerabilities into strengths and issues into solutions, these are the key areas that need special attention in tough times. The aim should be not to survive the economic cycle merely, but to emerge from it as a stronger organisation.

What can you do this week to embrace this cycle as an opportunity, rather than a threat?

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