NEW YORK—Many business leaders today have not experienced or managed businesses during a serious financial crisis like the financial crisis we are now in. Regardless of one’s experience, executives, managers and business owners all seem to be seeking help dealing with today’s crisis of confidence in the economy, especially when it comes to employee engagement and talent management.
A phrase often used, mainly in sports, is “The best defense is a solid offense.” Put another way, when it comes to your business, don’t wait for something to happen to you; take the initiative and have the conviction to make something positive happen. So before simply considering downsizing, right-sizing, cost cutting, deferred investment, or reductions-in-force, pause to consider some of the following points:
Avoid knee-jerk actions. While the financial experts debate the cause of the global financial crisis, executives and business leaders cannot wait for a uniform explanation of what has happened and what prognosticators believe will happen in 2009. Accept that we are in a recession and that it will take time to recover from it.
Difficult economic times often result in strategies such as hiring freezes and job cuts. There also tend to be cuts in spending on new on ongoing initiatives such as training and other efforts that may not show immediate financial returns.
Few would argue that well-thought-out cost cuts are not a logical starting point, but cost-cutting as a knee-jerk response can be self-defeating. A Perth Leadership Institute white paper noted that "short-term cost cuts often end up hurting long-term sustainability of profits and competitiveness … [and] morale and employee loyalty suffers.”
Communicate often and fully. Managing and engaging talent in this very different business environment is a challenge. Few companies have a clear understanding of what to do during a global financial crisis let alone a crisp plan to avoid unfavorable consequences to the business. Consequently, executives who become true talent leaders by managing and engaging talent well during downturns have a clear competitive advantage for their companies.
Successful business leaders take pains to frequently communicate to all employees regarding business strategies and objectives prospectively. Clear communication helps the entire team understand the actions their senior leaders are taking and the results they are collectively achieving. Absent frequent and clear communication, the unknown that often causes fear, leads to many questions that are only answered by what employees “think, feel or believe,” not what they know. Astute leaders avoid that scenario by communicating as often and as purposefully as possible. This results in enhancing teamwork and engagement by encouraging everyone to work productively and collaboratively during difficult times.
As such, today's business leaders have to communicate to their employees that things are bad and, without everyone’s full engagement in the business, things may not improve.
Invest in Customer Value. During difficult times comes another opportunity that communication can foster during a slowdown: the opportunity to speak openly to all employees about challenges faced by the business, and to share insights across the organization so everyone knows how to create superior customer value. This can be particularly advantageous because research has shown that the companies most likely not only to survive slow times but also to thrive during them are those that invest in enhancing the value they provide customers.
Some experts suggest that employers use a slowdown to pick up outstanding talent and then aim their skills at the accounts of competitors. The idea is for companies to leverage their competitive edge in the business, not simply to win customer loyalty from lower prices, but through higher quality, or a unique selling proposition to prospective customers.
Position Human Resources as the Business Leader. HR is not just an organization function. Finding and keeping the best talent when money for compensation and rewards programs is less available requires thoughtful strategies and skill. To support the efforts of talent leaders, HR must become engaged and lead the organization in strategic initiatives designed to more fully engage employees, build and grow talent, and develop metrics to measure and chart business improvement.
Finally, here are a few additional initiatives to employ to maximize employee engagement and talent management:
• Account for investments associated with people programs by tying them to the financial performance of the business.
• Create recognition and rewards programs to reinforce the efforts of your most valuable and highest contributing talent.
• Encourage an organizational culture that embraces learning and holds managers and employees equally accountable and ensure that their learning initiatives are shared throughout the organization.
As executives, managers and business owners, you can provide the impetus your company needs to take the initiative to be creative with the resources you have. If leaders need a rallying call for these trying economic times, view the recession as an unparalleled opportunity, not as fate without a solution.