As I write this, the economic outlook for the UK (and Europe) is looking precarious to say the least. Although we are not currently in a recession, market conditions are tough with a credit squeeze, rocketing fuel and power prices, falling house prices and statements from the Bank of England and many leading retailers that trading conditions are worsening. The press would have us believe that a recession is just around the corner. I’m not sure I buy this, but regardless, leadership is becoming more important than ever.
So how do we lead in these situations? For me there are 6 points to consider:
- Have Vision
This is important at the best of times, but at the worst, it become critical. Articulating your vision to your employees allows them to perform in an atmosphere of confidence. If they feel that you know where the company is going and that they are involved in this journey, they will be more inclined to roll their sleeves up, to give you the discretionary effort which can be the difference between success and failure. Keep them abreast of developments, good and bad. Make them feel a valued member of your team. Get this right and they will walk through the proverbial brick wall for you.
- Understand Your Shortcomings
This is in both yourself and your team. In good times, we tend not to think about our own weaknesses. In bad, they can really hurt you. Now is a good time to work out what your people need to do to improve their skill sets with coaching and/or training courses. Brainstorming meetings with employees you rate can kick start innovation.
- Nurture Your Employees
Your top performers are less affected by market downturns than others because they are the most mobile and confident. To hang on to them they must feel part of your team. Get creative in how you make them feel like this: increase their professional development, think about their reward structure etc etc. However don’t neglect everyone else. If they perceive the top dogs getting more than they do, it will quickly breed resentment which can undo all the good work you’ve done elsewhere.
- Empower People
This is about trusting your team. Delegate to them and allow them to make strategic changes without asking permission if they think it is in the best interests of the firm. In bad times, speed of decision-making is crucial.
- Don’t Cut the Marketing Budget
This is one of my biggest concerns with clients as they don’t seem to see the obvious flaw in this logic. In order to survive, you need to sell. When the market it poor, your sales drop. So you need to find new sales channels. How can you do this if you cut the marketing budget? I’ve always felt that there is a strong argument to be made for actually increasing the marketing budget in a slump. But one thing you must do is “sweat” your budget. Get the most “bang for buck” by putting pressure on your PR company, advertising agency etc. This can easily be sweetened by paying them a performance related bonus – a real “win win” in this market.
- Be Brave, Be Creative
When the going gets tough, you need to look at every aspect of your business including things which you hold dear. Nothing can be sacrosanct. Remember this is about survival so everything can and must change if it helps in this regard. If it doesn’t help, think about whether it is actually necessary at all. If it adds to your costs, kill it. A healthy does of realism makes it much easier to be brave – and creative!
You will note that I have hardly mentioned costs in the list above. Indeed several of the points will increase your cost base in the short run (training, coaching etc.). Many companies won’t have a lot of cost they can strip out as they have outsourced in the past and can use the Internet for much of their workflow. Ironically cutting costs can bring about the very recession we fear. If I cut costs, my suppliers get squeezed so they cut costs which in turn squeezes their suppliers. And so it goes on. This takes liquidity out of the marketplace and it is liquidity, not interest rates, which determines how people feel. If your mortgage rate goes up, but you have money in your pocket, you don’t feel too bad. But remove the cash element and you quickly feel upset.
Being a leader in times of trouble is what seperates the successful from the failures. It is hard to do emotionally as you won’t get much time just to be, but it will pay off believe me.