I have worked through several bad economies. The average company will immediately put in cost-cutting measures. By this, I mean that they will limit things like travel and office expenses. Every company I have worked for has done this. Most companies don’t look for ways to grow during an economic downturn. One company I worked for did. They acquired another business, which really payed dividends when the economy turned around. This type of thinking is more the exception than the rule. Many bosses will simply look to cut cost as opposed to looking for ways to grow.
If things continue to go bad, leadership will look towards layoffs. I’m not sure what is in the executive’s playbook, but I can assure you that it usually goes cost-cutting and then layoffs. They will look to eliminate positions that are more non-critical. For example, some companies will layoff personnel in sales. The reason being that other companies won’t be buying as much, so it makes sense to reduce the number of people who are selling; however, this can vary from company to company.
I would like to point out that I have never been layed off. Part of the reason for this is that I’m one of the lowest paid for my position. If you’re high on the salary totem pole (or low in seniority) and not an executive you need to understand that you could be let go and replaced by someone far cheaper. Another thing they will do is eliminate positions and start doubling up the responsibilities for the remaining employees. One Fortune 500 I worked for loved to do this. Just be ready if it starts happening at your workplace.
Another point that I would like to make about myself is that both my wife and I are employed. If one of us were to get laid off, the other’s salary could easily support our lifestyle. We live well below our means, something I don’t think most Americans do. Sure, most of our money is in the stock market and we’re taking a beating just like everyone else. We’re not retiring anytime soon though, and we really don’t care about taking a short-term loss. We have plenty of time to recover our losses. Unlike most employees, I also look for ways to take advantage of the current economic environment to make more money.
One of the ways I take advantage of a weak market is to buy stocks when everyone else is panicking. We keep a fairly large sum of money in an online account that receives an interest rate comparable to many bonds. We simply move this money out of savings and into the market when everything is low. We did this when the markets tanked after 9/11, and I am currently in the process of doing this right now. Again, we are able to take advantage of the economy because we live so far below our means.
In times of economic turmoil, be prepared to act on opportunities when you see them. Yeah, you could get laid off, but if you’ve prepared yourself properly, it really shouldn’t be a big deal. In the end, you might even find a better job later on down the road. Just make sure that you have your personal finances in order to weather the storm.