It’s hard to find a more cyclical beast than the global economy. Throughout modern history, seasons of expansion and growth have been inevitably displaced by relatively shorter periods of contraction and recession. How well organisations survive these weaker times has much to do with how they react - from a people perspective - to the ups and downs of the economic environment. Survival depends on maximising competitive advantage, and the first step is to look at your human assets.

A live example of the cyclonic economy is Starbucks. Its competitive wages and generous benefits had made frontline recruiting as smooth as a latte. But with explosive worldwide growth, the Seattle coffee giant is facing a tremendous challenge. On 30 July the Australian Financial Review reported that the Starbucks Corp was cutting 1000 support jobs and eliminating the post of Chief Operating Officer in a move to give founder and CEO Howard Schultz a direct line of sight into the company’s business. In recent weeks, Starbucks has announced the closing of 600 US stores and it said it would close 61 of the 84 stores in Australia.

“Obviously a decision like this is a very difficult decision for any company to make and really more so from a Starbucks perspective because of the impact that we have our people” said president of Starbucks Asia Pacific, John Culver. The company has set up employee assistance lines, offering counselling to its employees who they referred to as ‘partners’ and redundancy packages would be offered to all full-time and casual staff.

The reason behind the dramatic closures and restructuring of its “underperforming” locations was made “to concentrate its attention and resources on profitable growth, operational efficiencies and an enhanced experience for customers and partners globally.”

From an Australian businesses perspective, this example is a timely and live reminder of the importance of effective strategy execution, culture alignment and people management to create competitive advantage, in times of a tough and challenging economy. How well organisations survive weaker times has much to do with how they react from a people perspective to the ups and downs of the economic environment. Survival depends on maximising competitive advantage, and the first step is to look at your human assets.