The Eagle Blog

Does the Recession Act Like the Hockey Trade Deadline?

The National Hockey League (NHL) has 30 hockey teams who all play something like 80 games in a regular season. At the end of that season 16 teams will battle for the ultimate prize, the Stanley Cup.

Every team, whether it is a hockey team or a business team needs its players to deliver to a high standard and if you get the opportunity to strengthen your team then you take it!

A few weeks ago was the trade deadline for the National Hockey league, teams jockeyed and negotiated and traded players and “futures” with the intention of closing the season with the strongest possible team they could. Those teams who are not going to be “contenders” this year might reluctantly give up a “star” here and there, with the hope that they can rebuild their team to do better next year. The top teams will “tweak” a little, add some grit perhaps, or a goal scorer … maybe even a backup goalie to bolster their chances of lifting that cup.

In business we try to find talented individuals to add to our teams, so that we can get better, grow and prosper. Typically however there is no trade deadline and it is very hard to find those “great players” who are willing to move.

Enter the recession … and maybe this is our trade deadline!

Good companies will survive the recession, perhaps because they are well diversified, their clients are strong and they have a good team. But they can always get better! The other thing that happens during a recession is that good people sometimes realise they are on a struggling team, and so they suddenly become “available”, also some companies are forced to let good people go, so they too become available.

All of a sudden companies looking for talent are faced with some choices … “I already have a team, but if I cut my weaker players and brought in the strong players would my team be better”? Probably!

We have seen many companies around the world lay off 5% to 10% of their staff, citing economic reasons. Well really those economic reasons are that the company can very probably “trade up” and increase their productivity, profitability and return to shareholders! They might not even need as many people to replace the “bottom 10%”.

So … recessions actually help strong companies to get stronger. In addition to taking the opportunity to buy weaker competitors at a time when valuations are low, the strong players also improve the quality of their team! Its no wonder that the strong players keep getting better!

So … if you are a company, are you growing or are you shrinking?

If you are an employee, are you close to the bottom 10%? I wouldn’t want to be one of those. Of course your destiny is in often in your own hands, just make sure that you are not one of the bottom 10%. As the old saying goes … you don’t need to out-run the Grizzly Bear, just your friend next to you!!!

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