How to lead a business through a recession

When faced with the collapse of his recruitment company, James Reed had to make some difficult decisions.

by Stephen Jones
Last Updated: 13 Mar 2019

No matter how clean you keep your house, you can’t control the fact that a rabble of squabbling toddlers might come along and throw paint on the walls.

For business this is no different, and there inevitably comes a time when factors beyond their control mean that even the most ambitious boss has to batten down the hatches, let the storm pass and limit the damage.

James Reed, CEO of the global recruitment group REED, can relate to this. The most challenging period of his career came during the 2008 financial crisis, when, having swerved from the near collapse of the company’s two primary banks, he was faced with the agonising decision of dramatically reducing his workforce or seeing the business face ruin.

"Our permanent recruitment revenues dropped by 65 per cent over a 15 month period. To survive we had to cut our workforce by 25 per cent, so I was faced with having to let 1,000 people go within six months.

"I'd been CEO for 11 years and had never had to deal with anything close to a recession, so I was unsure how I would fair as a leader. It was painful personally as well as practically because some of these people had been with the company for over 20 years.

"Because they were difficult and disruptive decisions, I realised it was important to be really clear about what we were trying to do and why, so that everyone could understand.

"I wrote three key principles that we would continue to apply in running the business throughout the recession.

"The first was that we wouldn't seek to make a profit, but we would seek to break even to keep the company going. The second was not to cut bonuses or commissions for people who were being successful, so if you were a consultant making a good return we would continue to support that. The third was to seek to preserve as many jobs as possible.

"When I made that clear people understood that we weren't cutting jobs to make money, it was to save the company and they respected that, no matter how painful it was. I'm still connected to a lot of the people that left.

"We got through it and I think the business emerged stronger in the end."

Further reading

Image credits: 66North/gettyimages


Find this article useful?

Get more great articles like this in your inbox every lunchtime

“Millions isn’t enough, I need billions for the lifestyle I want”

5 bizarre business lessons to take from The Apprentice.

Will the global corporate tax deal really level the playing field?

MT Asks: Global leaders have agreed on a minimum corporate tax rate, but how will...

What leaders can learn from James Bond

Shaken and stirred: after the turmoil of Covid, is Bond a hero to channel or...

Time to end the culture of blame?

Should managers pursue a policy of no-blame, or is finding the source of mistakes only...

“They try to get a reaction – we don’t give it to them” ...

Jamal Tahlil and Edgar Chibaka, crowned Business Persons of the Year at last week’s Black...