Tuesday, February 24, 2009

Down the Slope and up Again

Down the Slope and Up Again:
Seven Strategies to Lead Your Team through the Recession
by Ian Cook & Scott Campbell

Wherever you look, news about the economy is bad.

Layoffs abound. Pfizer, a pharmaceutical giant, recently announced 8,000 job cuts. Home Depot, the biggest home improvement retailer in the U.S., said it will eliminate 7,000 jobs. Even the State of California is letting 20,000 go. The economy lost 2.6 million jobs last year, the most since 1945, and it shows no signs of improving in 2009.

Large companies are hemorrhaging. General Electric Co., a bastion of the economy, posted a 46 percent drop in fourth-quarter earnings. Aetna Inc., the third-largest U.S. health insurer, reported a 57 percent drop in profit. Coca Cola, American Express, and J.C. Penney…the list goes on.

Small businesses are similarly feeling the pain. So too are non-profits, where corporate and
individual charitable givings are down significantly while demand for services such as employment assistance, food banks, and shelters are growing.

It’s tough out there. For everyone.

Your employees, no doubt, are feeling the pressure along with you, adding to the challenges you face as a leader. At the very time when you need your people most focused, productive, and engaged, anxiety and stress preoccupy their attention.

Worried about their future with the organization, people gossip and commiserate around the “water cooler,” discussing “what’s really going on with the company,” reinforcing a downward spiral of negativity and pessimism. As job cuts become a real possibility, morale plummets and productivity declines. Following a layoff, those who remain are often overburdened with work and worried that they are next on the chopping block. Stress mounts, and people begin to forget facts and appointments, miss deadlines, and exhibit poorer judgment in their decisions.

What is a business leader to do?

The answer: provide highly effective leadership at all levels of the organization – leadership that keeps employees engaged, focused, and productive in the midst of turbulent times.

Here are seven leadership responses that will help you provide that kind of leadership:

Pay attention to the messages you are sending.
During high stress times, trust in your leadership is challenged. Your employees question your messages, wondering whether you are telling them the truth or have a hidden agenda. They monitor your level of confidence and your attitude towards the crisis. Even if you don’t express it out loud, what you believe and feel will leak out through your behavior. It is what you do, not what you say that employees tune in to.

So, take a good look at your own beliefs and feelings (anxiety, anger, fear, etc.) around the challenges your organization is facing. You may need to work hard at reframing your concerns and worries into positive talk and galvanizing action. Focus on a positive vision for the post-crisis world. Stress to your employees what is still working, highlight your company’s strengths, and proclaim your confidence in your people. Finally, remember that the decisions that senior leaders make must be perceived as fair to all. It is very difficult for employees to see co-workers let go while executives maintain their pay levels and perks. Pain needs to be shared between all in tough times – and it must be perceived as shared.

Make the tough decisions quickly but don’t just react.
Times of economic crisis do require tough decisions. Reducing the number of employees may be absolutely necessary. The same holds true for deep budget cuts, reducing spending, letting go of non-core parts of your business, or cutting back on training.

Once you make a tough call, announce and implement it as quickly as possible. Otherwise, the normal company grape vine will go into overdrive. Rumors will spread with lightning speed, with little concern for getting all the facts straight. Anxiety will spike, resentment build, commitment decline and that all-important trust will rapidly erode.

This said, pressure and worry can prompt us to “just do something.” The temptation is to go into reaction mode and not think about the long-term impact of our decisions.

This is particularly true with layoffs. Reducing head count as a first response to crisis undeniably saves money, but it can be costly in other ways, including:
the loss of good people
increased anxiety and resentment on the part of those still employed
greater stress from increased workloads
lower levels of service

Smart leaders use layoffs as a last resort. First, take a good look at alternative measures such as reduced work weeks or job sharing. This will boost employee goodwill, loyalty, and commitment – the very elements you need during an economic downturn.

Wise leaders act, they don’t react.

Focus on the vision.
The effective leader is able to pursue her vision in the midst of adversity. There are three key elements to this.First, she balances crisis-driven short-term decisions with her long-term, strategic objectives. This ensures that the organization both survives (in the short run) and is positioned to take advantage of better conditions when they arrive.

Second, she uses her vision to be alert to opportunities that may arise in the midst of the crisis. For example, if delivering an outstanding customer experience has been part of her competitive strategy, diverting precious limited resources to maintaining that level during the downturn will garner even deeper customer loyalty, securing her competitive advantage in the long-term.

Third, she and her leadership team provide direction and hope to her employees by continuing to emphasize the vision. This frees up workers psychologically to focus their energy on the work that needs to be done today.

Keep people informed.
Based on a genuine desire to protect your people from anxiety and keep them focused on their tasks, it is tempting to hold back information about what difficult decisions you are planning on making, or on how the firm is really doing, or who will be impacted by your decisions.Yet, communicating openly, frequently, and as candidly as possible has never been more important. During difficult circumstances, employees want and need to feel a closer connection to their leaders. People prefer difficult news to no news.So, ramp up the degree and frequency of communication. And make sure it’s two-way! Here are a few suggestions:

Increase your leadership team’s visibility and accessibility. Walk around more than usual.
Use email, company intranets, newsletters, and other means to keep people in the loop.
Hold town-hall meetings, department meetings, and lunch discussions to provide a format for people to ask questions and have their emotions and concerns heard.

Acknowledge, without minimizing, what you hear about what they are feeling.
When people grossly exaggerate the likelihood of a negative outcome, calmly suggest that the possibility is very remote.

Involve people with today.
The busier people can be, the less they will be inclined to dwell on worries and “what if” thinking.

So keep a shorter term focus than normal:
Recognize and celebrate small victories and accomplishments, even completed pieces of a larger project. It builds morale and creates a sense of momentum and progress.

Place special emphasis on places where people touch the customer.

Encourage employees to look for opportunities everywhere to do things more efficiently or try something new. This keeps everyone thinking about “what’s possible, instead of “what’s wrong.”
When you hear someone complaining about something, gently reframe their thinking by first acknowledging, “Yes, it is frustrating.” Then, ask them, “what can you do about it?” You are refocusing them on things they can either influence or control. This builds their sense of empowerment.

Demonstrate caring – even when letting people go.In global research conducted by the Towers Perrin group, the number one driver of high employee engagement is a sense that the leaders of the company genuinely care about the well-being of their employees.

When you must lay employees off, how they are treated is crucial. Those who remain will respond to the thoughtfulness and caring demonstrated in your downsizing process with increased commitment to your organization. People know tough times require tough actions, but they want to know that their former colleagues have been treated with as much consideration as possible.

Invest in your leaders and key players.
It is easy to ignore your best performers during tough times, relying on them to do their jobs while you focus on managing the crisis. This is a mistake. If your A-players feel ignored or taken for granted, they may consider greener pastures elsewhere, either during the downturn or certainly when times are good and competitors come calling.

Make sure that you stay connected to these individuals, keeping them enthused about their prospects with your company and about the organization’s future. Due to their professionalism, top performers may not complain to you, but rest assured, they experience the same anxiety and doubts as your other employees do.

As for your top leadership team, spend some time, perhaps in a low-profile retreat meeting, to build cohesion so that team members address their own fears, affirm their belief in the enterprise, speak with one voice and together commit to successfully bringing the organization through the dark times to a brighter future ahead.

Coach your mid-level managers and supervisors on how to talk to their direct reports when negativity, resentment and despair arise.

Taking care of your leaders and your top talent will give your organization an immediate and enduring edge over your competition – who may well be floundering, searching frantically for a tactical solution to turn things around in the short run.

In Conclusion

Tough times do end. That’s the good news.
But until they do, effective leadership is one of the few keys you have to surviving and ultimately thriving.

These seven leadership responses offer a roadmap to navigating this tumultuous environment and arriving at the best possible destination on the other side.
1 Towers Perrin White Paper, Managing Amid Market Turmoil: Top Priorities for Business and HR Leaders.
(1636 words)

Ian Cook, presenter and consultant, works with managers who want to increase their effectiveness as a leader and build a stronger team.

Scott Campbell is an accomplished speaker, trainer, and author, with clients throughout the world. He is the President and founder of Personalities At Work, a leadership development consortium.

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