Before you downsize.

How could you grow out of this?

As UK businesses begin to consider whether to keep staff furloughed beyond 31st July as costs begin to taper back in, many will inevitably be looking at downsizing and redundancies. But before you make that call, let me put a couple of things on your consideration list.

The first is that downsizing is not the same as efficiency. Efficiency is closely linked to scale, so simply reducing scale will inevitably reduce efficiency. Plus, on the other side of this, when you start adding people back, you’ll be no more efficient and no better off than you were before all this started. It doesn’t have to be that way though.

The second is that you can't cut your way to growth. And since this recovery looks like it will take some time, neither can we rely on a booming bounce-back to deliver new growth for us. Businesses will have to make it happen themselves, by finding new sources of profitable income. And to do that, we’re going to need good people; people who can innovate, make, market, and sell stuff.

Efficiency will always be a prerequisite of long-term success, and it should be pursued now more than ever. But good efficiencies invariably require investment to achieve – sustainable savings emerge from investment, not from cutting back to the bone.

And we all know the research. Businesses that invest in innovation and marketing during the toughest phases of the economic cycle, come out fastest and strongest. And those that don't, those that cut back and retrench, often don't make it out of the cycle at all.

So, before you take that red pen to your organisational structure, take a pause to think about how you want to come through this recession. Smaller, or more efficient? Rebuilding what you lost or creating something newer, bigger, better?

The decisions you make now will live with you for a long time, because beneath all the rhetoric and rationalisation, growth is the lifeblood of any business. Just as nobody goes to work to do a bad job, nobody aspires to work in a diminishing organisation, managing a decline, and hoping merely for the return of a more glorious past. Some of the dying parts of your business will have to go, for sure, but unless you’re actively cultivating the new green shoots at the same time, the rot will only spread.

For some organisations, there may genuinely be no alternative to large scale redundancies, but the reason for that is invariably because so few new seeds have been sown; there are not enough green shoots into which to direct the energy and resource that the storm-damaged part of the business can no longer support. It is in these moments, in times of severe market stress, that the chronic underinvestment in innovation, the historic lack of entrepreneurialism, the slow petrification of an organisation, become painfully exposed.

Repurposing, redeploying and reinvention are not throwaway bits of management jargon, they are calls to action for all of the entrepreneurs, creators and thinkers within the business, to come up with and rapidly develop new routes to new markets, new products and new models for businesses, to replace old trade with new, healthy, profitable growth.

The best time to plant a tree is twenty years ago, but the second-best time is right now. How do you want your organisation to emerge from this recession? And what can you do right now to enable your people to start planting the seeds and nurturing the green shoots of its future growth?