Recession Session

A layoff is often a first response to declining sales. It's also one of the hardest because it disappoints people who depended on you and can demoralize those who remain. When you face layoffs or rumors of layoffs, talk to people and reassure them. "You need presence so that people have faith in you," says Kinnear.

What shouldn't you say? "It's easy during a recession to point your finger at others," Hoffman says. "But strong leadership says all fingers point one way." Accept all responsibility and distribute credit generously.

If you're aggressive, tough times can be the best for hiring good people and developing current employees. "There are more good resumes on the street right now than I've seen in at least a decade," says Kinnear. Lok says his employees are less demanding when it comes to perks and pay hikes, too. Gauger believes now is a good time to spend money on training. "People are not as likely to jump ship," he notes. "You have an opportunity to build on a stronger level of loyalty."

Online Exclusive

The University of Michigan is holding a seminar called "Leading In Difficult Times" that addresses questions such as: How do you console your employees and be more caring, while at the same time contemplating downsizing and layoffs due to the economic slowdown? The three-day program costs $600. Learn more at www.bus.umich.edu/execed or by calling 734-763-1000. The SBA has collected "14 Survival Tips For Managing During Economic Downturns" on its Web site. You'll find tips ranging from advice on gaining market share to making best use of employees during a recession.

This article was originally published in the March 2002 print edition of Entrepreneur with the headline: Recession Session.