Proactive Approach to Recession

Need for Permanent Solution

Many recessionary cycles have come and gone creating social and economic havoc and they keep coming back again and again to create the insurmountable problems. Nobody seems to have found a permanent solution for this. It is high time that the people who are responsible to prevent them from the root level to recur get together and put their heads together to find permanent solutions. Is it really that difficult? The answer is plain "no". But it requires the missionary zeal to tackle this Himalayan task. There is a need to adopt a proactive approach.
It's no good then just to think and find solutions on papers but implementation and actions will only bring about the desired positive results.

Read the “inside” stories of the corporate sector at: (Management Anecdotes) http://management-anecdotes.blogspot.com/

Who Bells the Cat in Recessionary Times?

Who to Initiate and What to Initiate?

Perhaps, everyone. But someone has to initiate. Governments and the corporate sector are the ones who should take the lead to tackle the issues related to recession. Both should try and generate employment as the first step. Both, in fact, have peoples' money. It's people in general, the public who fund the governments and corporate sector by way of various taxes and investments. Public has the real claim on that money. This is the occasion when saving/providing/generating employment should be the first and foremost priority of the governments and the corporate sector. It is best done by starting new projects which will need purchasing goods and services from various organizations and people. The economy gets put into the first gear now. It will need lots of torque though- lots of efforts, lots of will power, lots of missionary zeal, lots of spirituality (nothing to do with religions or gods). And that can alone start the engine of progress once more.

These new projects will provide large degrees of employment to people as direct, contracted and temporary employees in them. Also, these projects will need lots of goods and services from the goods manufacturers and service providers. They, in turn, will once more get into action and will be capable of retaining their existing employees and perhaps, may need to employ more people to cope up with new orders. They may need additional financial support which will give work to banks and financial institutions. This whole cranking of the economic system will give more purchasing power to the public in general and to various organizations in corporate, governments and other sectors. Once more the places will start humming with hopeful activities.

In all this, the governments who are the elected/appointed servants of the public in general and who have to work for the people in general, will have to take the lead role in pumping the new life, by way of not only initiating the new projects but also by supporting the deserving banks/financial institutions and the industries. However, governments will also have to learn to exercise stricter non-corrupt governance over the organizations to whom they will advance the revival money. Also, governments will have to dramatically curtail their own non-value adding, nonessential expenditure. This whole process may give opportunities to some anti-social elements in every organization, including the governments to squander the public money now being used for new projects and as revival packages to banks/financial institutions and the industries. Governments, auditors, justice departments, media and the public will have to keep a great watch on these kinds of corrupt people and will have to deal with them with severe penalties if these people do indulge in such corrupt practices. They will have to ensure that the money being pumped in for revival of economy is utilized effectively and efficiently.

Read the “inside” stories of the corporate sector at: (Management Anecdotes) http://management-anecdotes.blogspot.com/

Solution to Recession is Not Throwing People from Their Jobs

Lay-off is Not Combating the Recession

Rather, it is cowardice.

Try to reason out as to who are the culprits of the world wide slow down/recession? The answer is: the decisions and actions of the people at the helm of the affairs of all kinds of organizations, companies, institutions and governments. The answer is: the greed, profiteering, irresponsible behavior towards the customers, abnormally (forced) high prices of lands/construction/buildings/houses/education/health care/all kinds of products, artificially jacked up stock prices, corruption/scams/frauds etc. It is the top management everywhere of every organization (including governments), that is the real culprit.

As an extreme statement, any Tom, Dick and Harry can run the organizations in good times. It is during bad times, they need to really run the organizations. It is then that their mettle can be tested.

Running the organization in such bad times does not mean chucking out people of the organization as the first and the easiest of all the solutions. And yet, how many organizations throw out their top management guys? Perhaps none.

The business sense will tell any fool that we need people to buy things. If you throw out a large numbers of people from their jobs, the purchasing power dips further which is one major cause of recession or slow down. Apart from that, you are putting millions of people and their families under the traumatic experiences without jobs. Families after families get uprooted when you throw them out of jobs during recession or slow down and many people have committed suicide due to the trauma of job loss and loss of earnings for the family.

Better solution will be to reduce the salaries of every one in the organizations and not lay off any one.

More salary cuts should be for the top guys of various organizations (including the ones in the governments) since their salaries are abnormally high in general and they are the ones who made horrendous mistakes and drove everyone to this disaster called recession. There have been numerous instances when despite recession and despite employees being laid off, the company top bosses distributed huge bonuses to themselves. And then, these same top bosses go to the governments (in other words, to the same public whom they are chucking out from their jobs) with the begging bowls for the bail-out money. More steep salary cuts of the top brass of the companies and moderate/reasonable salary cuts of other employees will bring down the salary costs of the organizations dramatically.

Then having achieved this, motivate all the people in the organizations to apply their minds towards further cost cutting. As a result, organizations will be in position to reduce the prices of land, construction, buildings, houses, education, health care and all kinds of products. As the prices become reasonably low and realistic and within the reach of people, they will start buying the things and investing in things. The whole resurrection will be absolutely painless.

Also, devise and implement stricter controls over the governance of the organizations (including those of external auditors and justice departments) so that the scams/frauds/corruption are brought down to minimum and ultimately eliminated.

Read the “inside” stories of the corporate sector at: (Management Anecdotes) http://management-anecdotes.blogspot.com/

Fundamentals That Should Be Strictly Followed ALL the Times to Avert Global Recession

On November 19, 2008, we published a post titled:

When The Fundamentals Are Massacred, Global Recession Is Born

Sine then, we received a large number of requests to suggest as to what those fundamentals could be. We give below some of them. If all kinds of organizations and people in general follow them all the times (even in good times), recession can be eliminated, averted and tackled.

• No one should try to exploit the general public in any way.
• No one should try to exploit the customers in any way.
• Prices of lands, buildings, goods and services (particularly education and health care) as well as share (stock) prices should not be artificially inflated. If need be, there should be a non-corrupt state control over the prices of land, houses, essential food stuff, health care and education.
• Buyers should not take loans to buy the things needed by them. They should try to buy what they can afford without taking loans. If at all they wish to take some loans, the loan amount should be absolute minimum which they can return very easily within their income levels.
• Propelling the economy by way of promoting easy and unsubstantiated loans to individuals and corporations by any financial institution or government is never the sound and lasting way of bringing up economy.
• Jacking up the motivation among people and corporations for purchases/demands of goods and services artificially and in un-natural ways will never build up strong permanent economy.
• Profit margins should not be draconically out of proportions.
• Prices of goods should be an outcome of free economy based on sound principles of supply and demand and healthy competition and should not be an outcome of lobbying and cartels (there should be a strict curb on it by the law).
• Corruption of various kinds in corporate- public and private sectors and governments should be eliminated. Corrupt people at all the levels should be severely punished.
• Real competent (competence includes ethics obviously) people should be put at the helm of affairs of various important and vital organizations like government, banks, financial institutions, life and general insurance companies and even in the corporate- industrial and business sectors etc.
• The organizations should be run at the highest effectiveness and efficiency levels all the time.
• All kinds of non-value adding expenses should be controlled; cost management should be at its peak all the time.
• The salaries, perquisites and profit sharing percentages of people particularly, the promoters of companies, CEOs, directors and other top/senior managers of various organizations, politicians, ministers and top/senior bureaucrats should be decided in proportion, based on their likely long term as well as short term contributions and not out of their greed.
• The bonuses/profit sharing, particularly to the top brass of all the organizations of any type and even to the other employees, should not be distributed as cash but can be given in the form of the shares of that organization and there must be some controls over the period (number of years) during which they can not be sold/traded. It will put responsibility on the top brass to look after the health of the companies they run on a longer term basis.
• Rather than removing the people from their jobs in the times of down-trends of the organizations under the notorious garb of downsizing and right sizing, the salaries of the people particularly at the levels where they are paid astronomically high salaries in a lop- sided manner should be curtailed. Thus, people will not be out of employment and this will retain the purchasing power in the system at reasonably stable and good levels so as not to upset the economy and create recession.

There may be some more fundamentals which are not listed here. Readers are requested to add them in the comments column of this write-up.

Read the “inside” stories of the corporate sector at: (Management Anecdotes) http://management-anecdotes.blogspot.com/

When The Fundamentals Are Massacred, Global Recession Is Born

Fundamentals Slaughtered: Global Recession (2008) Is The Outcome

Wrong exploiting practices bordering on cheating the general public led by the ever increasing greed adopted by the corporations, the industrialists, directors of the board of companies, CEOs, promoters of businesses, banks and bankers, financial institutions, builders and property dealers, the governments, politicians and bureaucrats, life and other insurance companies, credit card joints and value-flouting professionals have all finally culminated in the dangerous world wide recession (2008).

And the funniest part is, they are all asking for help from the governments who in fact collect the money, in the form of taxes from the very public (the gullible public) who are ultimately the suckers, the same very people who have been duped by the recession. So, the culprits are begging for their existence from the same very people whom they have looted in the first place. Where from this public who is losing their earnings and jobs in millions will pay taxes to the governments and where from the governments will pay these losing corporations?

Utter paradox and contradictions!! It's a full foul circle or more correctly put, negatively increasing spiral- damn difficult to break in. Only way to break in it and cut into it to convert it into a positively increasing spiral is: Start following the FUNDAMENTALS and Don't Fool With.

Read the “inside” stories of the corporate sector at: (Management Anecdotes) http://management-anecdotes.blogspot.com/