Is it going to get tough?
Are tough times ahead of us? Ask 10 different leaders, you’ll get 10 different answers. How bad, how long, how much…
When things are uncertain, here’s my answer on how to lead in tough times.
A Little History
In 1987, I decided to leave the consulting arm of Price Waterhouse, having seen too many organisations that were so intently focused on the immediate bottom line, they had forgotten the people element.
In those days many organisations, through my perhaps naïve eyes at the time, seemed to be the “killing fields of the spirit”. They panicked when costs got too high and often made immediate knee-jerk reactions to lower them.
And what do you think the main reaction was? Getting rid of their greatest cost, which of course is people. To me, this seemed both crazy and hypocritical, particularly as everybody at the time was espousing “people are our greatest asset” and changing the function name from Personnel to Human Resources (now, of course, People and Culture). The funny thing is, within 12 months they were desperately trying to find good people.
A Rose By Any Other Name
Not only did the act of firing people seem crazy to me, but to rub salt into the “retrenched flesh”, companies changed the term “downsizing” to “right-sizing”.
As if that rewording justifies their decision or takes away the pain and anguish, the family impact of retrenchment, or the “survivor guilt” of those left behind.
Look I’m well aware, there’s often a lot of deadwood in organisations, but why wait for a crisis to performance manage or fire them. That’s just bad, bad leadership that a slowdown in results forces you to face.
A More Humane Way and a More Long Term Profitable Solution
I didn’t know what the best solution was at the time, I just knew there had to be a better way for organisations to both survive and thrive in the future. Places where there were great economic results and a real sense of ownership, meaning and joy. Which I went on to call “the human enterprise”.
Now years later I do have a solution to leading in tough times, based on my exposure to thousands of organisations and hundreds of leadership thinkers (My latest influence is the work of Dr Ichak Adizes from Adizes Institute).
Here are some suggestions:
1. Keep People On At All Costs
If they really are your “greatest asset”, and they are, then wouldn’t you want to keep them at all costs?
Look at the time you’ve spent hiring them, training them, engaging them, leading them, integrating them into your business. What a cost!
Different sources cite different costs of salaries when people leave. A 2014 Forbes article quoted up to 150% of an entry-level manager and up to 400% for a Senior Executive. So at the lower end, an $80,000 leader will cost $120,000 to replace and a Senior Executive even on as little as $300,000, will cost $1.2 million to replace. That’s a lot of “bugs bunny” and those figures are from 6 years ago!
Not only that, I see morale and engagement drop dramatically after mass retrenchments which increases the fear and anxiety of those that are left. The absolute worse conditions to re-energise and unite your workplace.
”DRIVE OUT FEAR” Point #8 of Edwards Deming’s 14 Points for Management.
2. Tidy Up Everything
Yes, I mean even your desk. If we can’t be effective (reaching our outcomes) we can at least be more efficient in trying to reach them (process).
There is something therapeutic and cathartic about throwing out, cleaning and tidying up.
Ask everybody to tidy their work area, their computers, their processes, do all the things you’ve been wanting to do, but have just been too busy to get around to, because you were flat out keeping up with the work.
3. Cut The Waste
Waste creeps into every organisation, every workplace, every home, every charity. We keep doing behaviours or processes long after they have outlived their usefulness.
Look at where you think you are adding huge value, but may not be in your client’s or consumer’s eyes.
There are great processes for this like “workout”. Get everybody involved with these, and position it as not a way of getting rid of people, but saving money to keep people on.
We used to provide a full pack of Faber-Castell colour pens for every participant on every programme with a cost of around $3 per pack and about $9,000 per year. When times got tough for us at the beginning of the GFC, we purchased smiley cups and put the pens in these on the tables for participants to share. We collected and reused them after each workshop. No one commented. If anything it went the other way, people loved the bright coloured cups on the table when they walked in and shared the pens because it was an extra bit of fun and created a sense of community.
4. Cut Long Term Investment
This is not the time to be making major capital investments or running $500,000 to $1,000,000 conferences (even with the use of engaging leadership consultants). Now, not even a possibility with the COVID-19 pandemic.
Assess every long term “play” and put them on hold where possible (no breaches of contract or promises though; integrity is everything).
Rather than have past decisions embedded in your culture that may be costing you and adding no value, go back to “zero-based budgeting”. Many CEO’s would disagree with me here, thinking I’m alarmist, or having a knee jerk reaction, or not thinking strategically enough. But you can’t be Strategic if you’ve got nothing to be Strategic with, in other words, you’ve gone bust.
However, two things I wouldn’t cut down on are marketing and leadership capability development. Both are investments that are essential to keeping your brand in front of customers and keeping people engaged and focussed through great leadership in the “tough times”.
With leadership development, it is needed more now than ever. It just may need to be virtual.
5. “In God we trust. All others strictly cash”
I still have this sign my grandfather used to have on his desk.
Over the years you see a lot of difference between SME’s and large corporates however, there is a pattern. The great large corporates act like SME’s and the great SME’s act like large corporates. And one of the things I see SME’s do much better than large corporates is managing their cash. If profit is the fuel for growth, cash is the antidote for the collapse of all businesses.
What you learn very early in an SME is you can be making a lot of money (revenue, sales) and still go bust. Simply because you or someone else didn’t collect the money. Without using too much “corporate muscle” and applying the “no arsehole” rule with suppliers (particularly small independent contractors) revisit all your trading term, and make getting paid everybody’s business.
6. Cut the Excess
This is not the time for “flash”.
Don’t show “flash” and blow “flesh”. That is, have your corporate excesses (flash) be responsible for people’s lives through downsizing (flesh).
Sounds too dramatic. I don’t think so. I’ve seen it all:
- Downsizing one week and then masses spent on Melbourne Cup entertainment the next.
- A Whole factory “downsized”, yet a senior leader purchased a Sydney Apartment as value-add “accommodation” for key clients.
- Ridiculous lunches or dinners.
- Toilets and washrooms that don’t work at the factory while the whole of Corporate HQ gets a refurb and the CEO gets a beautiful wooden table, big enough to seat a small army.
To the Senior Leaders out there, you are being scrutinised now more than ever. Your integrity is at stake. Don’t make behavioural ground rules for your whole team, that you personally won’t or can’t keep. It will cost you very dearly in the future, particularly your credibility.
It’s not that these things are incredibly “bad” or “ugly” (if you know me, you know how I like my toys). It’s just that at these times every act of “excess” is a symbol of top leadership’s lack of empathy, understanding or commitment to maintaining people’s livelihoods.
7. Ditch Unprofitable Businesses, Product Lines, Skills or Services
Now is the time to get real. Ask yourself was that underperforming aspect of your business working anyway? Should it have been deleted or shut down altogether years ago? Was it ever going to make a profit?
I recall many leaders I spoke with after the GFC telling me it was the GFC that caused the end of their product, service or business.
The reality was they were often in trouble long before the GFC. Their offerings were behind anyway. The GFC exposed them. It also gave them an out. A reason a failing. A way to save face, allowing them to hang onto their identities.
Get real. Get ruthless, Put people on the things that do work.
“Never underestimate the power of denial.”
From the 1999 film American Beauty
8. All For One and One For All
And finally rather than putting people off, have everybody cut their days back or ask them to take leave without pay.
Yes, I mean everyone, from the CEO or MD right throughout the business. Cut or put your own salary on “back pay” and be visible about it.
Position it as it is: “It’s tough, we want to keep all of us here as long as we can. We all need to take a hit, starting at the top and in equal proportions. We can’t promise you that we will get out of this, but we can promise you we will ALL do everything we can to not just survive but thrive. And when things do get better we will all feel great about how we supported each other and pulled through TOGETHER.”
Jim Collins in Good to Great calls this “The Stockdale Paradox”.
“The time to dig for water is long before you are thirsty”.
The Bottom Line
Will there be tough times ahead? Of course. These will be testing times for all of us.
Will these strategies save you in tough times? I don’t know.
But here’s what I do know. They will build incredible TRUST and incredible RESPECT. And that’s at the heart of every great relationship, every great culture and every great business. Remember, things do get better, they always do. And when that time comes, you will be so poised, so ready, so energised to “seize the day” that your organisation will be unstoppable.
Grandpa used to say “this too shall pass”.
Until next time…
Find the passion.
Develop the skills.
Make the numbers.
Make a difference.
“APAC’s most respected transformational leadership performance coach”
Paul Mitchell (@Paul_S_Mitchell) is a speaker, author, transformational leadership coach and founder of the human enterprise. Through leadership coaching, leadership development programmes, keynotes and facilitation, Paul works with organisations to build cultures where everybody leads.
We believe it’s essential to keep developing your leaders, even when times are tough. We will soon be launching BlessingWhite’s L.I.V.E. – Leading in a Virtual Environment.
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