Weathering the Tough Economy

Few businesspeople today have ever faced such a dreadful economy, nor the multitude of challenges it has wrought. This is new territory for almost everyone. How well people operate going forward will determine the speed at which we, both individually and collectively, pull out of this economic malaise.

Though I do firmly believe that “this too shall pass” and we will eventually see an expanding economy, with job growth, I am no economist and certainly have no crystal ball to foresee when that turn-around will come. But I can opine on internal business environments and how leaders, managers and their employees should be operating together to serve the best interests of their companies.

Regardless of which way the economy goes in 2009, leaders' and managers’ uppermost focus must remain on the perpetuation and long-term success of the company – a goal that encompasses many aspects of running a business and countless decisions, big and small. But if business leaders and managers do only one thing right in these trying times, it has to be treating their employees with respect.

Many companies have had to impose layoffs in recent months. Likely there are more to come. Even if they haven’t laid anyone off yet, virtually every company, even those with strong balance sheets, is considering or has enacted pre-emptive budget cuts, including wage and hiring freezes. The result? Nervous and insecure employees everywhere.

Needless to say, nervous and insecure employees are not always doing their best work – which is the last thing a stressed organization needs. Businesses need their people to be at their best to collectively surmount today’s complex challenges, and can’t afford disaffected or disconnected employees.

It is incumbent, then, on managers and leaders to take some simple actions to counteract the unavoidable negative climate of fear that can set in and afflict even the best businesses under the cloud of budget cuts or a recent or potential layoff.

Downsizing and economic uncertainty is a time for dialogue based on facts and the realities of the marketplace. It’s a time for listening and responding, and for alignment. Words alone will not calm people's insecurities. But the right behaviors and actions will. One valuable behavior is encouraging dialogue. Set up a system to invite feedback. Don't let anything fester. Keep the dialogue open. Listen.

Re-engage the workforce in the business at hand. Restate business goals and the strategies that will get you there. Remind them in succinct terms why you're in business. Bring the outside world in to re-emphasize the climate of uncertainty you’re operating under, including the challenges your customers, suppliers and competitors are facing. Acknowledge people's frustrations and insecurities but, at the same time, remind them that this is the world we’re all operating in today. The only thing they can control is what they do every day. Re-iterate what is important – the business goals – and make sure that they see their connection to and role in fulfilling those goals.

Employees, too, have a significant role to play in this dynamic. In addition to their willingness and desire to put in the extra effort, they should be open to new ideas and new ways of doing things. The need for honesty is also critical, alerting supervisors and managers to new opportunities and unanticipated problems - along with proposed solutions. Employees should also remain curious about the world outside their company, especially their customers but also the global economic climate and the many facets of the world that have direct and indirect impacts on how their company operates.

Leadership should keep managers in the loop so there is a common understanding of the marketplace realities that led to the action (e.g., layoffs and/or budget cuts), the company's business strategy going forward, and the responsibilities of the employees to drive toward those goals. Prepare backgrounder documents for the managers to assure that employees across the organization are hearing a consistent message, and that managers are prepared to answer the inevitable tough questions.

There's an unspoken truth when people are laid off: their work still must get done. But where is that work going? How is that particular operation, function or department going to make up for the lost manpower and productivity? Who is going to take on that burden? What work or project needs to be stopped or reassigned? These are often the first and most difficult questions on everyone's mind after the dust of downsizing settles. Be prepared with realistic, workable answers.

In their January 12 Business Week column, Jack and Suzy Welch offered what I would consider another valuable piece of advice:

“…resist the impulse to make 2009 a year devoid of celebration. When times get tough, leaders often assume it’s unseemly to stop now and again and, well, have some fun. But this year – because of its severe challenges – is sure to be filled with remarkable small victories and heroic efforts. What a lost opportunity to build morale it would be, then, not to recognize and reward the people who are over-delivering. More than ever, they need and deserve it.”

If we learn anything from these frightful, uncertain times, let’s hope it’s the central importance of showing respect for employees by communicating with them frequently, openly and honestly.