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Rule #1 for Leading Through a Slowdown: Don’t Panic!
By Bill Catlette and Richard Hadden
In a span of less than a week, USA Today (among others) chronicled the pending layoff of better than 100,000 workers at places like GE, Honeywell, Daimler-Chrysler, and AOL Time-Warner. The public reaction to this doom and gloom? A big, collective yawn. Simultaneously, investment services firm Charles Schwab, in an effort to hold down expenses and avoid that very same unpleasantness, asked non-customer contact employees to take a few Fridays off (as paid vacation days) over the next two months. Public reaction? You'd think Charlie had asked for their next born children.
Despite some chilly, near-term economic headwinds, some of us manager-types seem to be losing sight of a few inescapable facts.
First, the ``war for talent" ain't over. This is an inevitable demographic phenomenon set in motion more than thirty years ago, and it won't be erased by the economic pundits' predictions and the increasingly grim scowl on Tom Brokaw's face. The retirement of baby boomers in the next decade alone will create greater employment opportunity (also known as ``competition for labor") than can possibly be met by persons over the age of 10 currently residing on planet Earth.
Second, the last time I checked, a recession was defined as ``two consecutive quarters of decline in real output". There's a big difference between ``slower growth" and ``decline", and an overreaction to the former can only hasten the onset of the latter. So let's keep things in perspective.
Did anyone really think the rapid growth would continue forever? While it's wise to prepare, let's not forget that forecasters, it's been said, have predicted 12 of the last 3 recessions (think about it). Try as they might, economists, like the weather professionals who prudently warned us of this week's ``devastating" storm in the northeastern United States, sometimes get it wrong. Though it's too early to tell, the foretold economic devastation might turn out to be more manageable than some would lead us to believe. Formidable, but not widely destructive.
Finally, and more to the point of this article, the ultimate winners in the talent war will be those who have zealously guarded their reputations as employers…reputations that are shaped not so much in good times, but in times like these, when the wheels appear to be coming off.
No, I'm not suggesting that we return to that failed experiment called lifetime employment. But I am suggesting that the two concepts of treating people as an expendable resource, and being an employer of choice are mutually exclusive, period.
Let's review a little of what Contented Cow companies know (and hope their competitors have forgotten):
- One of the best things any business can do for its income statement is to have a focused, fired up, capably led workforce.
- Your business doesn't have a chance without people who are willing to part with copious amounts of Discretionary Effort, that increment of human effort the expenditure of which is solely at the discretion of the individual. This is especially true in lean times.
- The extent to which employees are concerned about the prospect of losing their jobs mirrors inversely the extent to which they are concerned with doing their jobs. In short, worried cows don't make very productive, let alone, Contented Cows.
- Pardon the reference to Senator Clinton's husband, and the inherent bad pun, but as we've always said, It's your people, stupid!
1) Officers bleed first.
Recently, a young friend called to wish me (Bill) a happy birthday… the last one I'll have with a `4' as the first digit, I might add. After the birthday greeting, the conversation quickly turned to some problems he was having at work. My friend works for Schwab. It seems that just prior to the aforementioned `vacation' announcement, his manager had convened a team meeting to let everyone in the group know that, due to a difficult business climate (4th quarter earnings were off about 27%) some of them might be forced to justify their continued existence with the firm. His reaction… ``Wow, that's pretty harsh, don't you think? That just doesn't seem right. They can't do that. Do you think I should be concerned?"
I reminded my friend that approximately 6 weeks before, his company's senior management made headlines by acknowledging that, due to a difficult business environment, the executive team would be taking pay cuts ranging from 20-50% and forgoing their bonuses. ``Do you think it's realistic, I asked, for you and your teammates to continue whistling past the graveyard in a business-as-usual mode while the executives are taking all the hits?" Silence on the other end.
2) Tell people the truth, face-to-face.
We're certainly not suggesting that we coddle people. In fact, if we really care, some of us should consider dispensing some tough love.
At Schwab, in an apparent bow to pressure, both the time off and `justify your existence' messages were subsequently restated in a `kinder, gentler' way. That's too bad. In doing the research for Contented Cows, one thing we found consistently in evidence at `Employer of Choice' companies is unabashed candor. One thing they understand perfectly is that despite the initial shock of bad news, their people would rather read mysteries than live them.
No, Schwab had it right the first time. People should know exactly what is going on in the organization, and candy coating the message benefits no one. People should hear it first from their manager, in person. They shouldn't have to read it in a newspaper. And they certainly shouldn't read it in an e-mail. And no, broadcasting ``delicate" news via e-mail is not, repeat not, an ``efficient use of our communications network", as one company put it recently in a national publication. It's crass and insensitive. Here in the south we call it tacky. The truth is, it's just plain cowardly.
3) Keep your meathooks off the training department!
The least creative, and perhaps most destructive knee-jerk reaction to an economic slowdown is to eliminate, or even severely curtail your training efforts. No company ever ``dumbed" their way out of an earnings slump, and you won't either.
4) Be careful when doling out extras.
This tip is intended for times of prosperity. Lots of you are still there; others will be there again. The message is this: be careful about giving out extras when the going is good…extras which might have to be taken
away when things go south. We're not discouraging you from sharing the wealth, when there's wealth to be shared, but be smart about it. Tie “extras" to extraordinary gains in productivity. Make sure people know where the extra came from, what it took to get it, and what's required to maintain it. If you can afford some extra perks and privileges, by all means extend them while you can, but manage expectations. Guard against entitlement mentality. Look up the definition of “bonus" in the dictionary, and be sure that what you're calling a bonus really is one.
5) Enlist the help of your employees in outsmarting the economy.
OK, maybe the bloom has come off the economic rose for a while. It happens. But if you've adhered to Contented Cow principles on a consistent basis, most of your employees will be sympathetic to the reality of business cycles. If you've done your job, and gotten them truly Committed to your organization, most of them will be at least willing, if not eager, to help out. Deal with them honestly, treat them like the assets you tell them they are, give them clear targets and interesting rewards for achieving them, and the ones you really want on your team will get behind you 100% to beat the competition.
Please print the following attribution for this article: Bill Catlette and Richard Hadden, co-authors of Contented Cows Give Better Milk, help clients clobber the competition by having a focused, fired up, and capably led workforce. They deliver powerful conference keynotes and leadership training. They can be reached at 800-940-7006 (+1-904-720-0870 from outside North America) or www.ContentedCows.com.