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In 2001 our economy experienced the brunt of two important events. The first was the recession that started in March of 2001 led to the bursting of the dot-com bubble that rocked the technology industry, literally causing many companies to suddenly shut down operations or go through multiple sessions of layoffs just to stay afloat. The second event, which totally changed our outlook on security, was the September 11 terrorists attack on the World Trade Center in New York. Both of these occurrences left indelible impressions on our society and have made them mandatory additions in economic and history books for future generations to learn from.

Though many companies could not ride out the recession till its end, how did the companies that did survive make it through those rough times? Let’s look at some of the best practices that helped companies survive during post 9/11.

One best practice during rough economic times is to continually improve processes to work more efficiently. In 1994, Goodrich, a leading global supplier of systems and services to the aerospace and defense industry, implemented a program called Lean Manufacturing. According to their website, Lean Manufacturing “is a systematic and structured approach to the elimination of waste within the production system; it is an unwavering focus on the Value Stream and the constant pursuit of the Least Waste Way of operating.” Team members from all levels of the organization get together and provide input for a Kaizen (a Japanese method for continuous improvement) meeting where everyone critically analyzes a process and eliminates anything that would inhibit productivity. They also try to identify areas of opportunity where the can improve quality or save money. A few companies that I worked for had similar programs. Ingram Micro had the Partners in Excellence (PIE) philosophy, Nextel Partners practiced the Good to Great concepts from Jim Collins, and finally HCA Patient Account Services taught the Gung Ho methodology by Ken Blanchard and Sheldon Bowles. The one common theme that is stressed in these types of programs is teamwork, creative problem solving, and empowerment to help the organizations react quickly in changing economic times.

Another obvious best practice during the post 9/11 economic downturn is to eliminate unnecessary costs. For example, when I worked at Macromedia before the recession that caused the dot com bubble to burst, our fifty member engineering team had free weekly 20 minute massages, free cappuccino, soda, and juice, subsidized parking and daycare, and many other benefits. When the recession hit, all of the things that we enjoyed quickly disappeared and nothing was free anymore. Even though I was disappointed we no longer had these items, I did understand from a business perspective that the company would save quite a bit of money. Macromedia was trying to cut anything that was not essential to company operations and productivity to ride the recession. Unfortunately, eliminating all unnecessary items does not always satisfy the goals and objectives of an organization and more drastic measures need to be taken. The practice to eliminate wasteful spending can be seen in all levels of society, from your personal finances to the small business to the major corporations and the federal government. It ultimately boils down to common sense spending.

Lastly, after a company has eliminated all unnecessary costs and still needs to cut a lot more, layoffs help a company to both quickly and directly affect their bottom line, and it is a core cost control technique for many organizations. For many companies, labor is usually the most significant and easily controlled cost. There are other options that can be implemented prior to layoffs, such as controlling the hiring frequency or choosing not to hire at all. Also, replacements might not be hired when an employee leaves. Work hours can be reduced and overtime denied, or there might be no raises or bonuses. If these alternatives fail to meet the organizational objectives, layoffs are usually the next viable option to help a company get back on its feet financially. Of the three companies that I have worked for in the last decade, all of them have had layoffs to reach certain financial goals.

Some of the best practices that were reviewed include continuous improvement, eliminating costs, and layoffs. These practices are easily applied to the airline industry. According to Fiscal Notes for December 2001, many airlines planned to layoffs to stay afloat during this time of economic turmoil. American Airlines has stated that it planed to layoff 20,000 employees, while Continental prepared to shave 12,000. The statements of these two companies solidify that layoff are an effective way to save money.

Supporting the practice of eliminating costs, the airlines trimmed back on many of its services. Some of these cutbacks include reduced flight schedules, no in-flight meals, discount coach fairs, and greatly minimized their advertising budgets. And as mentioned earlier, these are just a few examples of common sense cost-cutting techniques in times of economic downturn.

Reference:
Value Based Management
http://www.valuebasedmanagement.net/methods_kaizen.html

Goodrich
http://www.aerostructures.goodrich.com/html/lean.asp

Fiscal Notes
http://www.window.state.tx.us/comptrol/fnotes/fn0112/slump.html