While businesses generally suffer during a recession as demand decreases and overall uncertainty intensifies, there are a handful of outliers who manage to buck the trend and come out stronger after a major downturn. A report from Harvard Business Review studied recessions from 1980, 1990, and 2000 and found that around 9% of public companies flourished post-recession and outperformed their competitors by at least 10%.
Studies conducted after the 2008 recession by Bain and McKinsey also explored these outliers to understand what made these businesses successful. These studies found that the strongest businesses didn’t just switch into survival mode when a recession occurred. They also moved strategically across all business functions to make changes that would ensure longevity for the organization.
In the real estate industry, housing market ups and downs are inevitable and happen more frequently than in other industries. Many title & escrow experts have weathered their fair share of market volatility. We sat down with 2 tenured title executives, Chris Rieland, President & CEO of Pacific Northwest Title of Kitsap County, and Rick Cenname, Sr. Vice President Profit Center Manager at Equity Title of Nevada. They offered their perspectives on how leaders can examine their technology, people, and organizational structure to effect necessary change and come out of a recession stronger.
Spread out decision-making responsibilities and listen to employees
A study from Harvard and MIT found that during times of “macro shocks” such as a major downturn or recession, organizations that decentralized decision-making responsibilities fared better than those that centralized decision capabilities to a single entity or individual. This is because the uncertainty and unpredictability of a recession create a need for agile decision making which values local information and on-the-ground knowledge from multiple experts.
Even if the organization can’t support multiple decision-makers, the business can still aim to gather input from employees when making decisions. Rieland echoed this sentiment. After experiencing the housing market crash of 2008, she understood the value of transparency with employees and keeping an ear to the ground. “Be open about everything—finances, strategy, plans,” she urged. “Communicate, communicate, communicate. People are interested in these things, especially during challenging times.”
Rieland also agreed with the importance of eliminating single siloes of decision-making. “When you get busy, it’s fair to say one can tend to be siloed. When things slow down, that’s when we really need to come together to ask questions of our customers and meet their demands,” she said.
Prioritize innovation and growth
There is no better time to develop innovative processes and implement efficiency-enabling technology than when your team has the additional bandwidth to focus on it. While it may feel counterintuitive to put money towards technology when budgets are tight, implementing new systems and tools during a slow period is an investment that the studies show may actually save the business money in the long run.
A recent Harvard Business Review article emphasized this point, noting that when the economy is doing well, a company has “every incentive to produce as much as it can; if it diverts resources to invest in new technologies, it may be leaving money on the table.” Meanwhile, when business is slower, more resources are available to implement the technology and for teams to effectively adopt the functionality.
Cenname also noted that a singular mindset toward cutting costs will never make a business profitable in the long run. “Sustained growth is a must while reducing expenses,” he said. “With that said, title companies should invest in technology that their employees will support to make the process more efficient.”
Solutions that automate tasks to enable greater throughput are great options that eventually pay for themselves. These technologies also enable the business to better handle uncertainty through agile workflows that enable them to quickly shift gears as market conditions change.
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