MANAGING IN A DOWN ECONOMY
As I speak to CEO peer groups and work with clients, something has struck me over the past year or so: there is an entire generation of leaders who have never managed during or through an economic downturn. Through no fault of their own, many of today’s leaders have experienced only a growth economy; the last real recession was probably 1990-91, so anyone who has become a leader since then has never really seen the conditions we are faced with today.
THE CEO’S JOB IN A DOWN ECONOMY
While I have seen at least four economic downturns, I have never seen one as deep or widespread as this one. One of the most critical roles a CEO has in this kind of economy is to reassure leaders and employees alike, and to put this downcycle into perspective for them. The single thing that causes employees the most angst and fear is not believing that their management has a plan. It is helpful if they know something about the plan (long-term goals and projections, as well as short-term focus areas and priorities), but it is more important that they believe that the leaders of their company have a plan and process to execute it. This is why companies that have adopted some process to create a vision and then execute it are so far ahead in managing through the current downturn. The companies that I work with and speak to that have adopted some process like The CEO Advantage, are in much better shape and have more control over their destiny than those who only started to plan when times got tough.
For younger leaders, it is especially critical that CEOs help put this downturn in perspective. Leaders are paid to lead in bad times as well as good times. Leadership isn’t rocket science; it depends on putting the right people in place (we can never have enough “A” players), the right alignment around goals and what is truly important, and a culture of accountability to achieve results.
Great leaders are always asking “What things could we stop doing that would help us maintain positive cash flow?” This should be the primary focus for any company today; maintaining positive cash flow through the current economic times. And secondarily, companies should be looking for opportunities to grow market share and business by adding more value and staying intensely focused on customers. In a true consultative manner, we should be thinking about what products and services we can bring to our customers to help them in turn with their customers.
Smart CEOs will spend even more time meeting with and talking to employees and leaders to reassure them – and not with pie-in-the-sky optimism, because people will see right through that. The message needs to be that strong companies will not only survive but prosper during tough times, and that leaders get paid to lead through any economic conditions.
After all, if a leader sticks around long enough, he will see at least two and probably more economic downturns. This experience will be a great education for the next one!