This is not the time to freak out. It’s a time of reflection and introspection for companies and individuals. It’s a great time to ask, “why are we here?” Are we in the right market? Are our customers delighted with our products and services? It’s a great time to do research and design, and it’s a great time to start something new.

If your company spends most of its efforts reducing costs, it might not survive. Granted, reducing costs and keeping them in line with income is a sound business practice. As long as you’re not creating a stressful workplace for what’s left of your employees. Cutting costs is a short-term fix. It will help that quarter’s earnings, but it will not make or break the company in the long run.

So what things can a company do now to get through the recession? How about hiring some fantastic folks? With so many people unemployed, talented folks are looking for work. Hire them and find something interesting for them to do. It seems counterintuitive to hire in a down market, and it certainly won’t lower expenses in the short term, though it’s a hirer’s market, now is a great time to find new talent. Getting the right folks on the bus is just as crucial as getting the wrong ones off the bus. One great way to do this is to institute a Results Only Work Environment (ROWE). Doing this will increase productivity and employee engagement while dramatically reducing turnover. Yes, this works for sales organizations as well. One of the hallmarks of a ROWE is that it becomes readily apparent who the performers/nonperformers are. Results measure everyone.

Invest in R&D. Right now. You should be positioning yourself for what happens when the market goes back up. INNOVATE! What better way to motivate those new hires than to roll out 20% time? Let your employees work on whatever they want 20% of the time as long as it’s unrelated to their normal jobs. At least consider 5% or 10% time. This is where the Post-It Note and Gmail came from.

The importance of transparency cannot be overstated. Uncertainty about one’s fate is stressful. Let your employees know what’s happening with the company and encourage them to participate in challenges. Semco, a Brazilian company, let’s the workers they plan to lay off participate in the process. This increases employee loyalty and decreases stress around layoffs. According to Victor Frankl in his book Man’s Search for Meaning, the most harmful thing to concentration camp victims’ hope was not knowing when their captivity would end. It’s more stressful to show up to work every day wondering if this is the day I get the ax than to know I have six weeks until my job ends. I went through the layoff saga 18 months ago, and it was hell.

So stop spinning, take stock and make changes that help your company and customers. Prepare for the next upcycle, and don’t lose sight of your employees' importance. Don’t make the mistake of thinking you have a captive audience, so you don’t have to make an effort. If you do, you might find your retention bottoms out when the economy recovers.