Recession Rx for Business

In good times, running a company is exhilarating. Money is flowing, customers are happy, employees have a spring in their step. In not-so-good times, like now, the very same job can feel like scaling Mt. Everest in a snowstorm while wearing a knapsack filled with bricks and suffering from a bad case of the flu.

All reports indicate that a recession is coming and you suspect the next few years will be rough. You know there’s no "magic pill" for business success, but you do wish someone would at least give you a guidebook to healthy habits.

But there is something you can do to fortify your company for the future: create an organizational culture that develops great leaders today and instills the mechanisms and the mindset that will continue to foster great leadership tomorrow.

"Great leadership is everything," said Quint Studer, president of the Studer Group, a Florida-based think tank. "All other elements of success flow from it. Companies with mediocre leadership can skate by when the economy is booming, but in tough times they really suffer. Your leadership must be top-notch. If it isn’t, you may not be around five years from now."

So what can you do to get through the recession? Well, creating a culture of sustainable leadership doesn’t happen overnight, but there are steps you can take right now that will yield quick wins and get your organization on the right path:

* Develop a get-through-the-recession plan. Sit down with senior-level management and go through your business plan with a fine-toothed comb. Figure out which objectives you are meeting, which ones need more emphasis, and which ones you should rethink. Make sure goals are aligned across every part of your company. At the same time, scrutinize your expenses and cut anything that’s not absolutely necessary. And (here’s where many companies drop the ball) communicate your plan to all employees.

"Upper-level managers are notorious for figuring out a plan and failing to let people know what’s going on," Studer said. "Remember: If your front-line employees don’t know you have a get-through-the-recession plan, you don’t have a get-through-the-recession plan. Everyone needs to understand the plan and buy in to it."

* Address the tough issues with straight talk and transparency. Chronic secretive behavior from leaders and lots of behind-closed-door meetings harm morale in any economy, says Studer. Rumor and gossip thrive in a vacuum. But when you’re making changes in response to an economic downturn, transparency is especially important. If employees can tell you are hiding something—and nine times out of 10 they can—they’ll assume the worst. They know tough times are at hand and they probably lie awake worrying as often as you do.

"Don’t candy-coat the truth or act like nothing’s wrong," advises Studer. "It’s insulting to employees and it erodes trust. They deserve and expect to be treated like adults. Pretend everything’s rosy when it’s clearly not and you might scare your best people into running for the hills."

* Equip supervisors to answer employee questions. Let’s say Worker Walt approaches Manager Mike to ask if the rumor he heard—that the Duluth division is on the verge of closing down—is true. Mike responds with a deer-in-the-headlights stare and a vague stammered comment that the company is doing its best to avoid any closings. He knows the Duluth shut-down is off the table, but isn’t sure how much he’s empowered to say. Walt draws his own grim conclusions and starts spreading "the bad news." The rumor mill kicks up a notch and morale plummets. To avoid such scenarios, train managers on exactly what to say regarding timely issues—and how to say it.

"Be very specific," said Studer. "Mike didn’t say anything that wasn’t true. He just failed to say it clearly, concisely, and confidently. You can prevent these kinds of misunderstandings by telling managers exactly what to say when employees ask questions about the company’s future. Write a ‘script’ of sorts so that everyone is speaking in the same voice."

* Nix the negative self-talk. OK, leaders, truth time: Do you sit around chewing your nails and dreaming up terrible scenarios? What if our biggest customer pulls out? What if the market for our services dries up? What if our top district manager gets spooked and goes to work for a competitor? If this sounds like you, stop it right now, Studer said. When you exist in a constant state of worry, your state of mind infects everyone. Self-confidence plunges. Creativity ceases. Forward motion halts. And besides, 99% of the disasters you agonize over probably won’t come to fruition.

* Don’t permit fear to get a foothold in your company. When you allow free-floating anxiety to permeate your company, he says, you’re basically giving it your stamp of approval. If an employee expresses worry about the bad economy, don’t just clap her on the shoulder and say, "Yeah, I know it’s rough; hang in there!" That lends credibility to her anxiety and indicates that you share it. Plus, empty consolation is supremely unhelpful.

* Stay connected. Employees really need you right now. One way to make a real connection with employees—daily—is to practice what Studer calls "rounding for outcomes." In the same way that a doctor makes rounds to check on patients, a leader makes rounds to check on employees. The technique allows you and your managers to regularly touch base with employees, make personal connections, recognize success, find out what’s going well, and determine where improvements are needed.

Get rid of low performers. Yes, now is the time. Low performers suck up a disproportionate amount of managers’ time, tick off customers, squash morale, and drive away high performers. When business was booming, you may well have let their bad behavior slide. Now, said Studer, the day of reckoning is here. You should be spending 92% of your time with high and middle performers and only 8% with the people who don’t really want to be there. If you’re not, you must take steps to remedy that now.

* Look for creative ways to hang onto top performers. In uncertain times, it would be disastrous to lose your best employees. But at the same time, it may be unrealistic to pony up a big raise right now. That’s okay, said Studer. You can offer your people perks that don’t cost the company a lot of money. Think about ways you can make their lives easier—flex time, partial work-from-home schedules (much appreciated in these times of exorbitant gas prices), access to a "chore runner" to pick up dry cleaning and stop by the supermarket—and implement them.

* Put your best face forward with a Standards of Behavior contract. How should employees answer the phone? Should they knock before entering a coworker’s office? Steer clear of controversial topics like politics and religion? Keep cell phones turned off? You may never have given serious consideration to such questions, but Studer said you should. He suggests creating a Standards of Behavior contract that employees help craft, then sign.

* Always manage up your organization. Insist that employees do the same. A recession (or downturn if you’re not willing to use the R-word) is simply a national confidence problem, usually exacerbated by lots of negative talk. The same dynamic exists in your own sphere of business. That’s why you should say only great things about your company and its staff, whether you’re talking to outsiders, clients or employees themselves.

* Shine a 1,000-watt spotlight on customer service. This one may seem obvious, but it can’t be said too often. When pressure to stay competitive is at an all-time high, you must be absolutely certain your customers are getting what they want and need from your company. Don’t assume that just because they’re not complaining, they’re happy.

There is a very big positive that comes out of downturns, said Studer. "It sharpens our survival instincts and shows us what we’re really made of. Instead of just coasting along on the wave of an economic boom, we’re forced to get focused and get serious."

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