By Paul Plotczyk
These are some seriously scary economic times. Even companies that are doing well are preparing for the worst because no one knows how bad things might get and for how long. The typical organizational response to economic crisis is to cut deep and ride out the storm.
A major challenge with this crisis is that most organizations are coming into it with very little corporate fat to cut. What's left in many cases is organizational muscle and vital organs. What happens when you start taking a knife to that? On the other hand what happens if you don't?
Today's leaders know they not only have to answer these tough questions, but they have to do it fast. They do not have the luxury of time nor will they get a second chance to get it right. A difficult task but not impossible.
To follow are 4 things that we see today's leaders doing to move forward quickly and strategically, and steer their organizations through these amazingly challenging times.
4 Keys to Surviving the Economic Meltdown and other Organizational Crises
1. Get the Right People on the Decision Bus.
This may not be the most obvious first step but it seems to be a common denominator for organizations that are successfully navigating this crisis.
Leaders are quickly assembling agile, quick-acting task teams. Decisions as critical as the ones that need to be made at this hour cannot be made by a single person or even the executive team alone. A broad and deep perspective is required - without weeks of study!
Virtually all executives know that in crisis, they are at their best when they acknowledge and leverage the expertise of a few, trusted individuals.
What does the Team look like?
In terms of skills and competencies, this Action Team should be composed of people who:
A. Understand the internal workings of the organization - where it makes its money, beats out the competition, operates at a high level of efficiency, has the right people/technology/processes in place, as well as where it trying hard but failing.
B. Know the markets in which the enterprise operates and where it stands in each - the good, the bad and the ugly. (This is not the time for a "rose-colored glasses"perspective.) Tough decisions demand a critical and reality-based mindset, without just a dumping of bad news on the organization.
Challenge
The Action Teams are clear that their work is of the utmost urgency, resulting in even longer and busier days as team members struggle with doing two jobs. It is tiring and stressful but their work must be done.
Leadership Tip
We have found that a number of organizations are, "clearing the decks." That is, they know from the past that an enemy of a rapid response is a crowded appointment calendar.
Yes, people may still be doing two jobs, but one executive told us she had every member of her Action Team un-clutter their calendars, by handing off virtually every non-urgent activity. Her comment to us: "Schedule clutter undermines rapid action."
2. Get the Right Information
Organizations know they cannot predict the future and the idea of not cutting the muscle can only occur if accurate information is brought in, which truly informs decisions. (Our US Air Force client calls this "actionable information.")
The Action Team knows that it cannot let hierarchy, status or fear of disclosing troubling information paralyze them or slow them in a way that will limit urgency and action.
In one of our previous articles, The Sky is Falling: Managing in Tough Times we stated another obvious point: Knowledge is Power. The organizations doing a good job in responding to this financial crisis know that accurate, targeted information is more critical at this juncture. They know it is all-important to get accurate information about the reality of their organization's position in all product and geographic markets.
They believe that with clear understanding, what needs to be done next may not be easy but they are seeing that it is more obvious than not.
Leadership Tip
Remember Business Process Reengineering (BPR)? This is a great technique for identifying processes that are critical to the enterprise and those it can do without. We have a 10-Step Model we would be glad to share with you and there are many other effective models out there as well.
Although we are fans of face-to-face interaction, BPR can be done fast and simply across the globe utilizing web-based technology.
3. Take Swift and Bold Action
Organizations who are successfully responding to this crisis are putting together solid, bold plans and implementing them. They know this is not the time for small actions.
Armed with the knowledge of the sources for the highest revenues and the products/services that are currently showing the best returns, as well as knowing what resources - both personnel and non - are required, they are cutting as deeply as they can.
And they do not want people to, "wait for the other shoe to drop." That is, they know that layoffs are never easy but they also do not want to set up their organization for a slow, painful decline.
They know that doing it right rather than taking a "wait-and-see attitude" is actually positioning the organization to save jobs. Employees are putting in the extra effort to save the enterprise and their jobs!
4. Monitor and Measure Results
Finally, organizations are keeping some of the Action Team members together to monitor and measure results and make course adjustments based on the ever-changing economic landscape.
The recession in the US may follow a commonly used accounting term, "first in, first out." That is, we were the first country to go into the recession and according to some economists, we may be the first to come out.
The fact that the US may come out before other countries offers little solace to many of our clients who have been bringing in substantial revenues from their global operations.
However, organizations responding well to the crisis are identifying the "cues and clues" that can provide early warning to a further downturn or the beginning of a recovery.
Conclusion
To say these are difficult times may be an understatement. (As I write, the Dow just closed down over 200 points and this feels like a good day for the market given the recent historic dives it has taken.)
However, with the right leadership, tough times can also provide an opportunity for organizations to reposition themselves for even greater success.
Crisis situations help organizations bring laser focus to the things that really matter and block out distractions that might otherwise derail their progress.
Samuel Johnson, an 18th century British scholar, put it quite well - "When a man knows he is to be hanged in a fortnight it concentrates his mind wonderfully."
This concentration and focus can create breakthroughs in productivity and effectiveness which will not only allow organizations to ride out the tough times but typically position them to take quick advantage of any upturn.
If you would like to discuss any of the keys for this economic meltdown or any other organizational issue, please call me at 781-343-4005.
About the Author
Paul Plotczyk's expertise in turnarounds and corporate restructuring has made him a highly sought-after consultant, particularly during these tough economic times.
Paul first became a leader of business turnaround efforts as a Trustee for the United States Justice Department for Chapter 11 reorganizations in the 1980s. Currently he specializes in helping organizations with corporate re-structuring, downsizing, lender, creditor and vendor negotiations and operational redesign.
Paul has authored several articles about managing in times of crisis and is often asked to speak on the subject. Please contact us at 781-343-4008 if you would like to arrange to speak with Paul one-on-one about an organizational issue you are facing.
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