Bermuda’s businesses need to raise their level of service and provide better value for money while slashing costs during the current tough economic times.

That is what delegates were told by Doug Soares, a partner at Expertise Ltd., who was speaking at a conference entitled ‘Readying your Organisation for Tough Economic Times’ held at the Fairmont Hamilton Princess hotel yesterday.

Mr. Soares tackled everything from why traditional cost cutting measures were often counter-productive and establishing high-impact cost-cutting strategies to meet the unique circumstances of a company to managing people in times of economic uncertainty and how to build employee engagement in hard financial times.

He said that the Island had experienced growth in its economy for a long period of time, but in today’s economic turmoil firms needed to prepare themselves with sound business principles and good management.

“Recessionary times are a foreign concept in Bermuda for a lot of businesses, because we have had it good for an awfully long time,” he said.

“It is a huge dilemma for businesses, not just in Bermuda, but worldwide - you have a situation in tough economic times where organisations are extremely pressed to provide extraordinary value so that they can retain business.

“At the same time, in order to preserve the business in tough economic times there is going to be huge pressure on costs and slashing costs, especially people costs in Bermuda.”

Mr. Soares said that fear was the biggest factor affecting staff during uncertain times such as these, from investors causing panic in the financial markets reflected in the drop in value of the Dow Jones Index to poor decision-making by normally level-headed managers.

“There is no question that fear is the most powerful emotion felt by absolutely everyone - it actually drives businesses crazy,” he said.

He went on to talk about the potential negative impact of salary and hiring freezes, with workers performing productively not being rewarded and those who are working below the required level becoming complacent if their wages did not increase.

Mr. Soares also spoke about being wary of job safety guarantees, using training to the best effect and taking advantage of opportunities during these tough economic times.

“You need a cool calm approach - the right type of thinking that will get you going where you want to go,” he said.

“You need to identify where these opportunities lie and we have an opportunity to correct all of the issues that we have been complaining about for years.”

The financial downturn offered the chance to cool down an overheating economy, as well as presenting an employer’s market where they can pick the best talent and a lower cost of office space and housing costs. He cited a range of positive scenarios, from the re/insurance industry taking on more business and rates hardening as buyers look to mitigate their risk, to supermarkets offering to cut the grocery bill with special deals on food and nurseries seeing an upturn in vegetable plant sales as more people grow their own.

Mr. Soares said there were three key areas for businesses to focus on - rethinking demand for what they sell and value they provide, reforming their processes and cost of doing business, and retooling their organisation for future success.

Among the main factors driving the rethinking process were demand, value, opportunity, risk, competition, suppliers and cash, while reform constituted new processes, cost implications, productivity analysis, taking action and reducing labour costs, and hiring, technology, property and supplies constituted retooling, he said.

“If you can plan and focus ahead and say ‘What are we going to look like as an organisation at the end of the recession?’ and ‘Are we going to survive and thrive?’, then you should think about what you are going to do to enjoy the good times again,” he said.

Mr. Soares said there were three options available to employers if their companies were suffering in today’s economic climate - to make redundancies, train their staff up effectively and performance management, in addition to cost cutting measures, including reducing labour costs (cancelling Christmas parties to protect bonuses), deferment of capital, and use of temporary staff and part-time employees, which all needed to be taken into consideration.

“With the strength of leadership and how you are going to think about this element of fear in people that you are seeing, it is absolutely essential that you consider the impact of fear on every single person in your organisation,” he said.

“What you have to do is restore confidence and above all know what you are sure about, make sure you are sure about it and communicate it.

“The biggest problems you are going to face with employees in tough economic times is the lack of communication and how it is going to impact your business and every employee. Communication is so critical because when you do not communicate the absence of information that is left in the mind of your employees gets filled with fear and rumour.

“You should have meeting with your employees at least to get them to think about how this recession is going to impact your business and if you expect your business to survive and thrive after the recession tell them that.”