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How to lead in an economic downturn

How to lead in an economic downturn

By Cath Murphy, partner, ChangeMaker International

Where should Leaders put their focus when the temptation is to “heave-to” and ride out the storm?

The glaring headlights of economic downturn can dazzle businesses into inactivity. Leaders can be stultified, not sure which way to move – only to be run-down by the very thing they should be trying to avoid. All too often the human aspects of the situation are ignored and rather than continuing to be “your finest asset” your employees seem to get in the way; they cost too much, they are not motivated and they don’t contribute to improving results.

The Leader’s role is to build direction and a sense of belonging and this cannot be achieved where trust is missing.  A behaviour strategy enables Leaders to think strategically while addressing people’s concerns; to communicate effectively and implement actions that empower individuals and teams to engage their efforts enthusiastically for optimum performance.

Re-visit your organisation’s strategy: Is it still relevant or do you need a new strategy? What opportunities were dismissed before that might be relevant now? Look for any new revenue opportunities that may arise and consider that this might be the time to steal a march on your competitors who may not be able to react as swiftly or creatively to the economic situation as you can.

Provide clarity of business direction: Once the strategy is agreed and the plan is in place ensure everyone understands the business plan, objectives and measures of success. Provide milestones so people can see how the company and their division or function is progressing.

Have a back-up plan: Anticipate ongoing deterioration in the economy and have a back-up plan. This might involve reducing expenses including a reduction in staffing levels. Look for ways to increase efficiency and effectiveness, which may reduce costs. Redirect resources to critical priorities and put the ‘nice to haves’ on the back burner or remove altogether.

Keep your talent: Identify the competencies that will be needed moving forward. Assess your internal talent and invest in looking outside. Use this as an opportunity to let poor performers go and invest now in discovering and developing the talent you will need for the future.

Find remedies for skill gaps that may exist in the team, particularly where staff may not have experienced difficult economic conditions. Help people anticipate the ramifications and build requisite skills. This helps to reduce fear and uncertainty and set people up for success.

Get agile: Look to the future to anticipate consequences and trends accurately. This is one of the principal competencies of successful leaders in a changing environment and is needed when times are tough.

Manage expectations: Talk through with staff the possible ramifications of a downturn, from mild through to severe and the plans for anticipating and responding to increasingly difficult times.

Address personal concerns: Don’t wait for people to voice concerns about redundancies or lack of career opportunities – raise the issues head on. Generally people aren’t listening to the rest of the messages if they are concerned about personal security.

Involve staff: Ensure all staff are clear about their roles and responsibilities, their priorities and how these fit with the overall business strategy. Keep people focused upon what they can achieve and deliver rather than on the negatives – however also be there to listen, understand fears and provide support.

Relentlessly communicate: Communicate with staff in a wide variety of ways, including presentations, team meetings, brainstorm sessions and one to ones. Be with your teams to know what their issues are, have a good feel for morale and be able to respond accordingly. While e-mails and the intranet convey information quickly and easily – face-to-face is the communication style most preferred by staff.

Lead by example: Leaders should be honest about the economic environment and its challenges for the business – and stay positive, exuding confidence that the company can work through this. If the leadership conveys anxiety and negativity, the staff will respond accordingly and productivity will slump. Be aware not only of the words used but also body language and tone.

Don’t stop reward and recognition: Just think about your focus - during a downturn pay increases may be modest or frozen and bonuses reduced or stop. Plan any communication around these with great sensitivity and military precision.

Look for opportunities to praise and provide positive feedback and small recognition awards. Research shows it is recognition that most motivates staff and it costs little or nothing.

Stick with it: Motivation, morale and retaining key players require doing all of the above day in day out, these are not one-off activities. A combination of management and leadership will bring success.

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