MANAGING Through Difficult Economic Times: Nine Lessons for Leaders

How are you managing through these difficult times? Over the past month, I’ve spoken to several groups of managers and executives in the Northeast and Midwest (of the US) on the subject of: “Energizing Performance and Motivation in Difficult Economic Times”. I asked them two basic questions: 1) Is your business revenue stagnant or declining? 2) What are you doing about it? I then shared strategies they can use to up their likelihood of success.

Roughly 80% of the participants in these recent seminars and presentations reported that their revenues were either declining or stagnant. Yet nearly 100% reported that they were cost-cutting and reducing staff.

Most interesting to me is that the vast majority of these managers reported that their companies were doing little else besides cost cutting to deal with the downturn. In my experience, that not only leaves a lot on the table, but can leave them vulnerable to competitors who are more proactive. And it can demoralize their workforce and thus weaken their companies.

Here in a nutshell are the lessons I shared with these groups based on the turnaround situations that I’ve been involved in (and written about, most recently in Noble Enterprise: The Commonsense Guide to Uplifting People and Profits):

Lesson #1: Don’t overdo cost-cutting.
Running a tight ship is good, but in the rush to get costs in line with revenues, some companies go so far that they impede revenue generation and weaken their companies. So be careful to assess what the impact on the health of your business will be of the cuts you intend

Lesson #2: Be proactive – not just defensive.
Cost-cutting is just one strategy for getting through difficult times. There are other important things to do to manage through these difficult times, which are positive and proactive. See the next four lessons.

Lesson #3: Continually improve your business or operation:
This pays dividends, especially in lean times. By improving your business or operating processes, you will find ways to cut costs that do not hurt your business, and you will be improving value to your customers (which could make you stand out in a time when your competitors may not be doing this).

Lesson #4: Grow or Die!
Though it may not be easy or even possible to grow revenues in these times, you don’t want to become captive to negative thinking. Dedicating time, and asking your people to work on this, keeps the positive juices flowing – an important thing for the health of your business.

Lesson #5: It’s ALL about People!
– Especially in difficult times. Why? Because without attention on people during difficult times, morale, motivation and energy all naturally droop. When people are worried about the company and their jobs, they can easily become paralyzed by fear. By keeping them focused on the positive, proactive things mentioned above, you can help keep that morale high.

Lesson #6: Improve Management.
Good leaders and a good management system are obviously important to an organization’s success. This is even more critical in a tough economy. With good leaders and a powerful management system, companies can achieve miracles, even in a tough economy. Yet, this ingredient is often overlooked.

Lesson #7: It’s not just about the DOING!
Executives typically ask, “What do we DO to lead our company through the difficult economic times?” While the actions taken are important (and are the visible part of the answer), it’s often what’s going on inside people that makes the big difference between a company that declines and one that rises to the challenge. That’s the all-important BEING aspect, as further described in the last two lessons.

Lesson #8: Get into the right Mindset.
This is the first Being aspect that needs to be shaped and strengthened. What’s our vision and mission? What’s our strategy? Where are we headed? People need a vision and a compass. This is a time for leaders not merely to tell people what the problems are, but rather to paint the vision of the company we are “building” – even through these times – to stimulate the desire to get there and the belief that it is possible.

Lesson #9: Get some Attitude!
This is about stoking a sense of purpose – both of the organization and of people involved in it. When people believe strongly in their organization and its purpose, they have the motivation to fully invest themselves in the endeavor. It’s also about passion. When people are engaged in activities that they enjoy and that bring out the best of their talents, this passion is triggered. Even in the darkest of times, winning companies have “attitude.”

How are you and your company doing on these nine lessons? If past experience is any guide, it will be the companies that heed these nine lessons that will build the muscles of their companies and that will come out of the downturn with flying colors.