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Home» Notes on Noble Business » Executive Management » Recession & RevitalizationThe Recession is Over. But how will Companies and their People truly Recover?

Recession & RevitalizationThe Recession is Over. But how will Companies and their People truly Recover?

September 26, 2010 - Executive Management, Leadership
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So, it’s official: the recession has ended. In fact, it officially ended mid-year last year! How can that be? Leave it to experts in economics (and that was my college major) to define the end of a recession as merely when the economy stops plummeting and begins clawing its way back. That definition actually just means the bottom of the economic downturn has been reached. We’re far from getting back to where we were before the recession – in terms of output (Gross Domestic Product) – not to mention in terms of employment levels!.

This recession (oops, I guess we need another word for today’s terrible economy: we’ll just call it the “tough economy”) has gone deeper and longer than all other recessions since the depression. And the so-called recovery is far slower than prior recoveries. This all translates into much greater job losses than in prior recessions – and longer unemployment. At the anemic rate of recovery we’re experiencing in GDP growth, that unemployment will last a long time, far longer than in prior recessions.

We’ll leave aside in this post the question of why this recovery is so anemic and long – and let the economic policy folks debate that. Let’s look instead at what all this means for companies and their leaders trying to lead their people and their companies out of the doldrums of a tough economy and back into the sunshine of high growth and employment.

The Unique Challenges of Leading in a Tough Economy

What happens on the OUTER, physical level in a recession is well defined and well recorded. That includes a cascading litany of “hits” such as

  • A drop in demand for our product and services
  • A downward pressure on prices
  • A decline in revenues
  • A cutback of budgets and spending, which in turn means
  • Staff reductions and reduced hours worked
  • Reduced or postponed investment in the business, e.g., new products, new markets, new/replaced equipment, etc.
  • Cutbacks on orders we place with suppliers, which in turn causes them to go through this same cycle

What happens on the INNER level is equally catastrophic, though not as readily measured or recognized as the outer “hits”. This includes such hits as:

  • Fears that hold management back from taking risks and of believing in positive outcomes
  • Management “holed up in their offices” trying to figure out the path out of the downturn, including whom to “let go” and when – and increasingly isolated from their employees
  • Employees who, overwhelmed by bad news, slowly shut down. One study showed that 90% of employees were essentially in “neutral” expending very little or no energy to do their job – just waiting for the “other shoe to drop on them”
  • Meanwhile, managers also descend into a shut-down mode, fearful of losing their own jobs, are thus unable to communicate with their people, not to mention to provide encouragement to them. There’s just isn’t any good news to share.
  • As a result employees fear even more for their future
  • Yet studies show that, ironically, it is during just such bad economic times that the better employees become less committed to their companies and their jobs and contemplate moving to another company when the opportunity presents itself.

In short, the human energies of most companies decline in quantity and quality. This is the inner hit that so many companies take during a recession. It’s also why some companies have trouble even when the physical dimension improves: their energies have been so depleted that they can’t readily rev up the organizational energies needed to drive the company forward.

Energizing your Organization and Leading your People through the Tough Economy

This is why we at Noble Advisors focus just as much on the “inner” health and direction of a company as on its “outer” dimension. The two dimensions, when operating at top performance, together make for a dynamic, successful company. But how to do that, especially in a tough economy where both the outer resources and inner ones are strained and weakened?

I’d like to steer you to three immediate resources that may help you manage through these tough economic times:

ARTICLE: Leading through Tough Times:
Ten Strategies for Generating Success

This soon-to-be published article I recently wrote for the American Management Association’s PERFORMANCE & PROFITS e-newsletter describes what you and your management team can do to strengthen the “inner” muscles of your company. These proven strategies are helpful in any economy, but become essential in a tough economy. They will make you more successful as a leader, and as a company.

You can sign up for this and other AMA newsletters at http://www.amanet.org/news/enewsletter.aspx

CONVENTION: Business Momentum – Re-energizing Your Organization

This New England convention, sponsored by Mainebiz, will be held October 27th in Augusta, Maine. I will present on the topic of “Re-energizing Your Organization” – addressing what drains and blocks productive energies, what energizes work organizations, and how you can re-energize your people and revitalize your company.

For more information about the Momentum conference, go to http://www.mainebiz.biz/momentumconvention.html

BOOK: NOBLE ENTERPRISE: The Commonsense Guide to Uplifting People and Profits

This book, published by Cosimo Books in 2008 near the start of the recession, chronicles the story of how the management of a near-death company revitalized its people and its fortunes, thereby becoming an industry leader in just three years, raising all the outer measures of business success while also raising the inner ones, like employee morale. The book provides steps leaders can take to energize their own organizations to become industry leaders. It is being used in several university executive education programs.

To read the first chapter FREE, go to http://www.noblebusinesssolutions.com/Chapter1-UncommonTurnaround.pdf.

For more information about the book, go to http://www.noblebusinesssolutions.com/NobleEnterpriseBook.html.

To order the book, go to:

Cosimo Books

Amazon

Barnes & Noble

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