Jeff Lipschultz’s Blog

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Leading in Uncertain Economic Times

As the world watches to see how new US leadership will address the myriad of challenges facing this country, many agree there will be long-term solutions and the worst of the economic woes may still be looming.  Certainly, renewed optimism is a key to recovery and even small steps will be welcomed.  However, in the meanwhile, many companies are taking strong action to stay the course through this stormy period.

CareerBuilder.com continually takes the pulse of employers to understand their plans for hiring, but also how companies are managing their resources.  They have offered an interesting article on how to lead the company during this historic period.

Leading in Uncertain Economic Times

You don’t need to hear yet again that we as a nation are in a state of economic turmoil. If you’re not hearing about it in the news, chances are you still get the latest updates at the dinner table, during office elevator rides, or while waiting in line for your morning coffee. But being aware of what is going on around you is only half the battle. How you choose to react to our current economic situation as an employer – and as a leader – will make a significant difference not only in your own life, but in the lives of the employees who depend on you.

According to a recent Duke University/CFO Magazine Global Business Outlook Survey, a record 81 percent of U.S. CFOs are more pessimistic about the economy this quarter (twice as many as last quarter), and 85 percent of European and Asian CFOs are also more pessimistic this quarter. Weak consumer demand and financial market woes are major concerns for CFOs around the world.

What are your employees seeking from your leadership?
Your employees are seeking stability and longevity in the market, solid career advancement opportunities, and a rewarding work culture in the times ahead. Moving forward, your employees are also looking to your leadership to guide them through economically troubled waters and onto safe workplace ground. Tensions are high, pocketbooks are light, and morale is low. Now, more than ever, they need a leader who is strong, realistic, and able to create a sense of balance. It is not an easy task, but we have laid out several tips to help you reinforce confidence during these trying times.

1. Absorb Uncertainty.
You likely have your own set of worries and uncertainties about the future. But as a leader, it’s essential to keep your own uncertainty in check. Leaders often tend to let their own feelings overwhelm them, and neglect to consider how their employees will receive negativity from those they look up to.

As leadership speaker and author Rita McGrath asserts in her Harvard Business Publishing article “Absorb Their Uncertainty – And Get Your People Unstuck,” leaders should ask themselves the following questions to more effectively absorb the uncertainty of their employees.

• Am I providing a clear set of assumptions for people to operate on, with the understanding that they may change as more information becomes available?
• Have I made sure to reach out to people who are badly affected by the current turmoil?
• Am I moving quickly enough to help people get past the current situation to focus on the future and what is coming next?
• Have I made clear to the people who are deeply valued by the organization that they have a promising future?
• When a decision will affect someone negatively, have I personally delivered the bad news, dealt with the fallout in a fair and transparent way, and made it clear to observers why the decision was made?
• Absorb your employees’ uncertainty first by assessing the current environmental barometer, and create your communication plan based on this assessment.

2. Communicate and Encourage.
In his Human Resources Magazine article “Managing in Tough Economic Times,” Associate Publisher and Editor Craig Donaldson stresses the need to ensure everyone is on the same page during an economic crisis. He adds that performance suffers when alignment on key goals is absent, according to studies on strategy execution. This mentality applies to departments from the top down, and as a respected figure, it is important for you to lead by example
by communicating your vision and goals for the company out to your employees.

Encouraging those who work for you to express their concerns – as well as their ideas about the future of your organization, however, will help restore lost faith and improve morale throughout the office. “Encourage questions and new ideas by making it safe for employees
to raise them,” Donaldson advises.

While, ideally, the leadership and the employees of a company will have a shared vision, your employees should feel secure in expressing unique or dissenting opinions, or in raising concerns about both their future and the future of the company.

3. Be Positive, Yet Realistic.
While things may fluctuate between better and worse, it is vital to be consistent – and authentic – in your communication. While your employees don’t expect you to paint a constant rosy picture of what the company may be going through, they also will tire of an endless stream of dire news. Strike a healthy balance between the two. Be honest in everything that you say, but realize that they are human, and that negative news can have a negative effect on morale.

4. Creativity. Innovation. Future.
In the business world, success belongs to those who innovate; those who think – and act – one step ahead of their competition. In this current recession, your competitors are employing many of the same tactics that you are thinking of or are doing already. To not only survive, but also stand out, it is imperative that you employ entirely different ways to
“energize the base.” Contrary to popular belief, recessions, and not peak economic times, are actually the best times for companies to invest in their competitive strategies.

“Studies have shown that companies have twice the opportunity to change their relative position in an industry during a recession compared to growth times,” according to Kevin P. Coyne and Shawn T. Coyne in their Harvard Business Publishing article “Recessions Call for More Creativity, Not Less.”

Begin by encouraging strategic brainstorming and original thought in your employees. Provide a forum for exchanging ideas, whether in the form of formal department-wide meetings or less structured gestures such as email feedback, small brainstorming sessions, and Q&A calls. It is important for those working for you to understand that their thoughts and ideas are respected – and won’t get them in trouble.

5. Reconsider Cutbacks.
While this option may be an impossibility in your particular company’s situation, there also may be alternatives to layoffs that you haven’t considered. Layoffs are often the knee-jerk reaction to financial situations such as the one we’re in the midst of, but as Donaldson suggests, if possible, businesses should reconsider across-the-board cutbacks.

6. Reach out to Your Customers.
While you may be concerned (and understandably so) about your own business’s future, you have another half of the business to consider – your customers. They have their own financial futures to be concerned about, in addition to your business’s. They also keep up with the news, and unbeknownst to you, they may be fretting over a recent article or malicious water cooler gossip about the strength of your company. Your customers need to have touch points
with you – not the masses; when they have opinions to give and questions to ask, engage them. Find out what they want and need from you as a business partner, and follow through on the promises you make to them.

One Last Thought
Be human. Reach out. Everyone is affected in small and large ways by this economic downturn, but by being compassionate, realistic, empathetic, and innovative, and by making your employees a valued voice within your organization, you will come out of this a much more effective – and respected – leader.

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March 15, 2009 - Posted by | Management 101

1 Comment »

  1. Sound Advice!

    Good leadership is tougher and more important during difficult times than when times are booming.

    These are solid principles to focus on.

    Thanks Jeff.

    Comment by Harry Urschel | September 24, 2009 | Reply


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