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Executive Briefings

Published December 2008

Tips for a Challenging Economic Environment

  

  Brian Summerfield

In the wake of the economic crisis, a number of helpful tips have emerged from learning thought leaders to help professionals in this space cope with the resulting challenges. The Forum Corp., a strategic consultancy, recently offered its own take on what business and learning executives should do to survive in these tumultuous times.

The organization laid out 10 steps that span three categories as part of a managerial toolkit. Those steps are:

Financials:

1. Move quickly to reduce costs and control spending by narrowing focus. Winners in a downturn focus on a few critical priorities in which they can develop a clear lead, and they walk away from bad business. Losers chase unprofitable sales in an attempt to hold their top line.
2. Refrain from across-the-board cutbacks, being sure to preserve areas that customers value most. Businesses that uniformly cut costs often find that they end up damaging their ability to sell and deliver their products and services. How do you find out what customers value most? Ask them.
3. Consider alternatives to layoffs. Downsizing tends to bolster the bottom line and stock price in the short term, but often creates long-term negative repercussions. Alternative strategies include cutting management bonuses, freezing salaries and reducing compensation options. It’s critical to clearly communicate the rationale and impact to employees.
4. Invest in opportunity. A bad economy can present bargains, both in new assets and in new talent. Good areas to invest in are R&D, marketing and customer-perceived quality. By contrast, investing in working capital, manufacturing and administration doesn’t pay off as well.

People

5. Retain and develop top talent. High-impact workers often are more susceptible to being poached by a competitor in a downturn. Organizations that provide development experiences and rotational assignments have better employee retention rates.
6. Make sure everyone’s on the same page. When alignment on key goals is absent, performance suffers, according to studies on strategy execution. Top leaders frame an agenda and meet with key stakeholders to gain support and build commitment to overarching goals and values. Ineffective leaders let interoffice politics fester and hidden agendas dominate.
7. Encourage questions and new ideas by making it safe for employees to raise them. Leaders who admit they don’t have all the answers and ask for input empower their people to contribute their best ideas.

Climate

8. Manage the heat. Leaders often are tempted in difficult times to relieve the organization’s stress by making unilateral, tough decisions. That’s often a mistake. Leadership by dictate often doesn’t take because it lacks a broad base of support, and it often eliminates constructive conflicts that challenge the status quo and fuel good decision making.
9. Communicate authentically. Strong leaders acknowledge the challenges they struggle with and, by doing so, build trust among followers. Rather than being a sign of weakness, it’s a sign of strength.
10. Create a positive vision and attitude that acknowledges reality. Businesses at the top of their markets often fall while “sleeper” companies sometimes jump to the top in a tough economy. When leaders exercise discipline and focus by mobilizing employees to respond to customers’ interests and values, they increase the chance they’ll come out on top after the downturn.