2. Act responsibly towards your customers and clients
The same point about respect holds true when we’re thinking about the ways that organisations engage with clients during a recession. In the pursuit of balancing the books, many businesses can find it tempting to reduce the quality of the products or services that they offer to their customers, clawing back some profit from their ever-squeezed margins. At the same time, they don’t necessarily reduce their prices. In some cases, they even put them up.
This shows an obvious lack of respect towards the customers and clients that they serve.
The UK economy, now in the grip of a cost-of-living crisis with record high inflation and interest rates, is currently experiencing a situation like this, with many commentators and politicians accusing organisations like supermarkets and petrol stations of profiteering: making an excessive and unfair profit at the expense of consumers.
Whether or not there is truth to the accusations, it’s clear that the reputations of many organisations have been damaged by the way that consumers perceive their actions during the current situation. Arguably, a more open and honest approach to corporate and social responsibility could have helped them to respond appropriately and protect their reputations.
A corporate and social responsibility policy isn’t just for the good times and it’s not something that can be jettisoned as soon as times turn tough: it’s something that defines the core operating philosophy of a company and how we treat the people that we serve. Without it, a company loses an essential part of what makes it a responsible business.
3. Don’t lose sight of the long-term goal
As this fascinating blog by the Harvard Business School explores, short-termist thinking is ultimately driven by
As an economic system, capitalism is particularly prone to boom-and-bust cycles: periods of growth, followed by periods of contraction. Recessions are periods of time where the economy ‘contracts’ and gets smaller and they can have huge effects on the health and stability of businesses and the wider economy.
In terms of businesses and organisations, recessions limit confidence, investment and lead to companies actively tightening the purse strings by reducing their expenditure. They often lead to unprofitable businesses folding. The obvious lack of investment that’s triggered by a recession can have long lasting, structural effects on the economy as a whole, limiting future growth and depressing supply and demand.
In terms of employees, customers and wider society, recessions actively threaten jobs, lead to widespread poverty and cause massive social problems across society. The damage caused by recessions is often long-term. For example, the IMF has found that the effects of the 2008 global financial crash are still with us today, with lingering problems in economies worldwide that have been caused and exacerbated by the recessions that followed.
All of this should be a clear reason as to why sticking to your corporate and social responsibility policy during a recession – taking the long view – is so essential. Recessions are times when organisations can prove that they are committed to the common good and are willing to give back to society rather than just profit from it. If living up to the spirit of your corporate and social responsibility policy means taking a short-term hit, shoulder it – the long term rewards in terms of being known as an organisation that lives up to its values are more than worth a short period of economic pain.