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The past few weeks and months have created an economic environment that has been less than helpful to small business owners’ psyches. Granted that the economic situation is real and dire, the greatest impact appears to be on the willingness of small business owners to adapt rather than panic.

From our internal observation, there are two different small business owners: those that were naturally prepared for turmoil and those that were not.  Our initial assumption that larger companies were in a better position to absorb and adapt to turmoil turns out to be wrong.

After extensive analysis of hard data and behavioral observation, it turns out that those companies that appear in a better position to deal with the current situation have one major factor in common; mainly their respective human resources and talent management.

We looked at dozen companies with extensive human resource operations and compared them to another dozen small businesses without an effective HR program. The results were astonishing. The latter had substantially more difficulties in coping with the psychological issues of the economic downturn as opposed to the first group.

Granted, it is too early to judge the actual outcome in terms of success during a downturn period. However, one may hypothesize as to why the preliminary result point to such different results. It is rather simple to point to the ability of the management via the appropriate talent, but the question of ability may not be the appropriate indicator.

In any case, we will continue our study and observations and report back.

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