Managing in tough economic times By Craig Donaldson
WITH CONCERNS about a global economic decline, organisational leaders and managers are facing tough questions and difficult choices, but a recent research report has identified 10 actions successful leaders take during economic downturns to settle an organisation, keep it headed in the right direction, and emerge on top.
“Some of the actions are unique to tough economic conditions, while others are simply good management practices that take on added importance in a down economy,” said Ed Boswell, CEO of The Forum Corp, a global leadership consulting firm which released the research report.
Financials
1. Move quickly to reduce costs and control spending by narrowing focus. Winners in a downturn focus on a few critical priorities where they can develop a clear lead, and they walk away from bad business. Losers chase unprofitable sales in an attempt to hold their top line.
2. Refrain from across-the-board cutbacks, being sure to preserve areas that customers value most. Businesses that uniformly cut costs often find that they end up damaging their press release ability to sell and deliver their products and services. How do you find out what customers value most? Ask them.
3. Consider alternatives to layoffs. Downsizing tends to bolster the bottom line and stock price in the short term, but often creates long-term negative repercussions. Alternative strategies include cutting management bonuses, freezing salaries, and reducing compensation options. It’s critical to clearly communicate the rationale and impact to employees.
4. Invest in opportunity. A bad economy can present bargains, both in new assets and in new talent. Good areas to invest in are research and development, marketing, and customer-perceived quality. By contrast, investing in working capital, manufacturing, and administration doesn’t pay off as well.
People
5. Retain and develop top talent. High-impact workers are often more susceptible to being poached by a competitor in a downturn. Organisations that provide development experiences and rotational assignments have better employee retention rates.
6. Make sure everyone’s on the same page. When alignment on key goals is absent, performance suffers, according to studies on strategy execution. Top leaders frame an agenda and meet with key stakeholders to gain support and build commitment to overarching goals and values. Ineffective leaders let inter-office politics fester and hidden agendas dominate.
7. Encourage questions and new ideas by making it safe for employees to raise them. Leaders who admit they don’t have all the answers and ask for input empower their people to contribute their best ideas.
Climate
8. Manage the heat. Leaders are often tempted in difficult times to relieve the organisation’s stress by making unilateral, tough decisions. That’s often a mistake. Leadership by dictate often doesn’t take because it lacks a broad base of support, and it often eliminates constructive conflicts that challenge the status quo and fuel good decision-making.
9. Communicate authentically. Strong leaders acknowledge the challenges they struggle with and, by doing so, build trust among followers. Rather than being a sign of weakness, it’s a sign of strength.
10.Create a positive vision and attitude that acknowledges reality. Businesses at the top of their markets often fall while “sleeper” companies sometimes jump to the top in a tough economy. When leaders exercise discipline and focus by mobilising employees to respond to customers’ interests and values, they increase the chance that, when the downturn ends, they’ll come out on top.
