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Prosperity & Austerity

Prosperity is usually seen as a state of success and good fortune, and that’s a pretty good definition. It’s a wonderful state in which to find your company and yourself. Of course, as this is written there aren’t too many of us feeling terribly prosperous—yet, we can remember when we felt so.

Prosperous times will return, but, lacking a crystal ball, there’s no way to say exactly when. This country is strong, vibrant and resilient. We recovered from the Great Depression, and this Great Recession will one day be but a memory. During these times, austerity is forced on us. When good times return and we’re knee deep in clover, it will behoove us to remember how tough things were during this recession and how quickly we found ourselves there.

The single greatest problem of continued prosperity is that it begins to seem as if it will always be that way despite what happened in the not so long ago. Our rearview mirror is clouded or ignored. As Mexican philosopher George Santayana said, “Those who cannot remember the past are condemned to repeat it.” Let that not be us!

When things go awry most of us respond by examining the situation and asking ourselves what went wrong, all with an eye to avoiding the same problem in the future. However, when things go right and continue to go right, we don’t take the time to examine how success was achieved. Why? Because for many of us it becomes too easy to believe that our success is completely our own doing. Believe me, it ain’t.

Given that we might fall into these traps, what can we do to protect our success and survival? The answer: Austerity in times of Prosperity!

This doesn’t mean that, when prosperity returns, you must maintain the strictest of rules and practices forced on us by a troubled economy. There comes a time in a recovery when key areas have to be reactivated for when we do have to spend and invest in the future. But it is critical that we conserve some of that prosperity by requiring any significant spending to be justified beyond “We’ve got the money!”

Once, in the long ago, I was COO of a vibrant, growing and profitable company. As part of preparing the next year’s budget (my first with the company), the executive group laid out a plan for 19 new hires for the coming year; keep in mind we had only about 80 employees at the time, so the request equaled about a 24 percent increase in staff, salaries and expenses.

Austerity came to the forefront when I made my first executive decision and announced that in the coming year there would be no new hires. This was followed by gasps, looks of incomprehension and of greatest interest, and by a year in which we enjoyed even more rapid growth and, yes, prosperity. Oh, by the way, we did hire two people that year—two who were truly needed.

L. Douglas Mault is president of Executive Advisory Institute, Portland, Ore. The website is; he can be reached at (888) 428.3331.

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