Scattered/interspersed between bright sunlight and pitch darkness, are many a shades of grey. Some may prefer the lesser shades of grey as represented by the setting sun, perhaps because of the promise it holds for the romantically inclined. For me, sunset is a phenomenon that precedes darkness, and therefore symbolises despair and ignorance.
I have always favoured the brightness of the emerging sun as a new day dawns. For me, it brings hope that something good may happen as we leave the darkness behind. Does that make me a philosopher or a "morning" person? Well, I believe that it makes me a person with a positive mindset....someone who can see the silver lining in the midst of darkness. Thus, instead of accentuating the adverse impact of the economic meltdown that has engulfed the world in recent times, I would like to focus on some of the favourable aspects that the toughening of economic conditions might have triggered.
LESS ROOM TO SUSTAIN LOSSES MAKES US CAREFUL: In some ways, I am glad the meltdown happened. When times are good, there is often a tendency to lower the guards and venture into uncharted domains without an in-depth viability analysis. Almost everything seems to work when the external environment is buoyant and even half- baked ideas may often be put into practice.
Maybe the risks are not too high as the bottom line has the capacity to absorb the losses, should such an eventuality arise. Best practices, however, require that there be an effective screening process, and new concepts and ideas be thoroughly evaluated as they progressively move from the conceptual stage to complete the full cycle before they are implemented.
LESS HARASSMENT BY OVER-EAGER BANKERS: Again, in some respects, the meltdown has been welcomed by a segment of the population who now feel less harassed by overzealous bankers. We all witnessed the eagerness of banking institutions to issue credit cards and sanction other forms of consumer credit including car financing, to the unsuspecting public during the time when optimism was high.
This phenomenon prevailed not only in Pakistan but was definitely a widespread "flu" that could have hit anybody, anywhere, anytime. That is just a way of saying that consumer credit was almost an epidemic, as armies of tele-marketers and contractual sales teams literally chased ordinary people, offering good deals if they were willing to oblige by accepting to subscribe to credit cards or obtain car finance.
Consumer finance is not the only area where prudent banking principles were thrown out of the window. There can be many examples of similar reckless behaviour in other spheres of banking. This does not imply that good sense became non-existent either. There were many within the sector who felt over-exposed and were wary of the potential risks involved.
The purpose here is to highlight that a booming economy may throw otherwise rational bankers off the track, as they tread and trot and soon gain momentum to gallop, competing to outpace each other in their earnest to gain maximum customer patronage against all odds.
Now that the pursuit seems to have subdued and sanity seems to be creeping back, the depositors can heave a sigh of relief, thankful to the downturn, because after all, it was their hard earned savings which was ultimately at risk should the banking sector go bust.
Thanks to the effective regulation of the financial sector in Pakistan, we sleep better today, happy that for a country which frequently draws inspiration from the economic achievements of the West, we have our banking system intact, more or less, whereas over a 100 banks have gone down in the United States alone.
THE MARKET IS LESS TALENT STARVED:
The hiring of talent is another aspect where madness was rampant before the ride got bumpy. A high proportion of business entities registered accelerated growth during the period preceding 2008, not just in Pakistan but also globally. This fuelled demand for talent across sectors and almost all functional areas. The supply side, however, remained more or less stable as it takes a while for new graduates to enter the job market and gain experience.
In the short-term therefore, the market became resource starved and we saw a situation where too many employers competed to attract incumbents from the available talent pool. Retention became the key word for HR managers and CEOs, who struggled to align themselves with rapidly changing compensation structures which often became obsolete even before these could be fully implemented.
The cost of resource climbed at a rate which was hitherto unprecedented and soon the salary expectations became unrealistic. For many of us, this was a golden opportunity to make hay while the sun was shining. As employees we switched, hopped and jumped depending on the frequency and attractiveness of the offers received. The less privileged looked on with envy as others climbed the corporate ladder with a lot of pride, which was not always hard earned.
It appears that the economic slowdown has brought to the fore the stark reality that the job market, in Pakistan as well as in many other countries, did not have the depth to sustain much shock. In some cases, pampered employees are finding it hard to hold on to their jobs, while many employers have adopted measures to adjust the cost of resources by freezing and/or contracting/cutting salaries, downsizing, eliminating or adjusting variable pay elements and perks etc.
In Summary Economies the world over faced a number of distortions as a result of the buoyancy we experienced during the period preceding 2008. We are now going through a correction which is likely to benefit us in the long run as we become more careful, more vigilant, and cautious of our roles as managers and entrepreneurs.