Economic Situation: Stagnation and the Need for a New Mindset
According to the government’s latest macroeconomic forecast, GDP growth in 2025 is expected to be only 1%, far below the previously anticipated 2.5% [1]. After stagnation in the first half of the year, growth in the second half is likely to reach only 1–2%. In this environment, mere cost and headcount reductions are not enough — true competitive advantage comes from reviewing, improving, and adapting the company’s efficiency and business model to changed market circumstances.
The National Bank of Hungary’s inflation report notes that employment has so far remained relatively stable, but future demand for labour now depends mainly on economic performance. Should growth fall short of expectations, demand for labour may decrease significantly.[2].
At the same time, signals are already apparent at the organizational level: wage dynamics are slowing, organizational tension is increasing, and “quiet departures” have begun. The latter is especially typical among the most valuable employees, who are less inclined to wait in uncertain times. This uncertainty is affecting the entire labour market: employment is decreasing, the number of open positions has dropped, especially in manufacturing and market services. The first and frequent reaction to uncertain circumstances is to lay off contract workers, which has a particularly strong impact on manufacturing locally. Latest public data shows that in Q1, employment dropped by about 32,000 compared to the previous year, nearly 30,000 of these in manufacturing.[3].
Persistent stagnation calls for a new approach: companies must make operational efficiency, business processes, and strategic agility top priorities — mere cost-cutting is no longer sufficient.
Leadership Dilemma: It’s Time to Act, but How?
In a slowing economy, leaders need to decide on more than just downsizing; the situation has become a strategic operational risk. Leaders must answer questions such as: Where does the organization waste resources? Which business units create real value? How can capacities be reallocated or new revenue streams explored?
Downsizing alone delivers quick results, but if it is not aligned with a thoughtful, performance-based, and strategic direction, it will only erode morale and efficiency, and risk the loss of critical competencies.
For long-term success, companies cannot afford a “HR-lawnmower” approach. The real solution is to optimize the entire business and operating model and actively search for sustainable growth opportunities — even in a stagnant market.
Sustainable Operations as a Competitive Edge
Successful companies not only cut costs in the short term, but also transform their processes, rationalize resource use, and develop a sustainable operating model (Target Operating Model, TOM) that is adaptable for future market conditions. Key steps include:
- A comprehensive organizational and business model audit, covering processes, costs, revenue streams, and identification of critical competencies.
- Development of a sustainable, flexible operating model, enabling the organization to respond more efficiently and rapidly to market changes with fewer resources.
- Targeted development initiatives. This is not just about downsizing, but a combination of digital transformation, exploring new business directions, and deliberate resource allocation.
- Tailored selection and reallocation methodologies to ensure key personnel and critical knowledge remain within the organization.
- Clear communication with internal and external stakeholders. Transformation is successful only if the process is transparent, credible, and consistent — both inside and outside the company.
How We Can Help
Our team of experts does not only analyze HR strategies, but reviews the entire organization and business model for sustainability. We help:
- Audit processes and cost structures to identify areas for development,
- Map critical knowledge and competencies: where to develop, reallocate, or manage resources differently,
- Develop a sustainable, agile operating model (TOM) that is optimal from strategic, financial, and human perspectives,
- Support transformation communications, as trust, transparency and exemplary leadership are now critical within any organization
- Manage the execution of the transformation, implement the necessary changes.
Closing Thoughts: The New Normal — Strategic Operations
Change is inevitable — but how a company responds makes all the difference.
Downsizing is not the goal, only a tactical tool; what matters is that the business becomes sustainable, efficient, and adaptable for the long term. A well-planned organizational and operational transformation not only provides a path for survival, but creates genuine competitive advantage in the domestic market. This is the road to future success — even in a stagnant economic climate.
[1]Melyet a nemzetgazdasági miniszter egy július 29-ei sajtóháttérbeszélgetésen ismertetett.
[2]Magyar Nemzeti Bank: Inflációs jelentés – 2025. június
[3]KSH – Gyorstájékoztató: Foglalkoztatottság, 2025. február–április
