Crisis reaches make or break point for business leaders

The next two years is a make or break period for companies, and the way
managers’ respond to the downturn will determine winners and losers for the next
decade, a Deloitte study has predicted.

Company performance is far more variable during recessions. The study
analysed the extent to which FTSE 100 companies annualised shareholder returns
were spread around the average. Variability was as high as 27% during a
recession but only 8% during an economic boom.

During the recession in the early 2000s, the variance of returns doubled from
14% in the 10 years leading up to the recession to 29% during the recession.

The study concluded that the spread of returns was so wide during recessions
is reinforced by decisions taken by managers during difficult periods. Managers
that focussed on securing financing, managing cash and controlling costs were
able to effectively shepherd their organisations out of danger.

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