Kevin is a Leadership Strategies, LLC partner and has over 20 years of operations and human resources management experience in the automotive aftermarket industry. Kevin has owned and operated multiple businesses and serves as an active Board member. He holds Sociology and Communication degrees and is certified as a Professional in Human Resources from The Society for Human Resource Management. Some of Kevin’s primary areas of specialty are organizational design/effectiveness, employee relations, executive search, training and development, coaching and mentoring, career transition, total reward system design, human asset analysis, mergers and acquisitions, employee assessments and human capital retention I was watching the evening news the other night and Brian Williams reported that unemployment was up, the stock market was crashing and the Fed was attempting to save the economy by cutting interest rates, all to fend off what he described as an imminent recession.
I was watching the evening news the other night and Brian Williams reported that unemployment was up, the stock market was crashing and the Fed was attempting to save the economy by cutting interest rates, all to fend off what he described as an imminent recession.
As a business leader, you can’t watch those types of reports without getting a sick feeling in the pit of your stomach or wondering what impact this will have on your business and those you employ. Fortunately, we all have a choice as to how we are going to respond to reports like these. Some leaders will flourish and others will crack under such adversity.
We recently received a call from a CEO who contacted us for help with the design of an incentive compensation plan for her company’s key sales executives. She outlined the challenge that her firm was facing with rewarding individuals for what she defined as the “wrong” activities and the need to drive sales and profitability by ensuring that in the future, the company was rewarding its key sales executives only for measurable results.
After providing her with a proposal to develop a self-funded, metrics driven incentive compensation plan that was focused on driving the company’s much needed bottom-line results, we received a call from her stating that she wanted to move forward with our proposal. She knew it would take her key executives to the next level, but based on what she defined as the current economic challenges that her firm was facing, she could not move forward with our proposal at this time.
Following that conversation, I could not help but think that if every CEO thought the way that this one did, the self fulfilling prophecy of what Brian Williams reported on the nightly news about a recession would become reality.
On the flip side, the next day we were contacted by another executive who requested our assistance in identifying five to eight individuals to assist his organization with their expansion plans within a new and very exciting service offering. When I questioned this CEO about his desire to pursue this area of business that had never been attempted in the past, he responded by saying that the economy is somewhat questionable right now, which in his mind spelled opportunity to reach out to the best and brightest who might currently be concerned with their employer’s financial stability. He further stated that now is the time to set the foundation for this new concept, recognizing that if the economy does slow as predicted, it is only a matter of time before the economy improves and he will be in position to benefit from having this new concept in place and ready to go, well before their competitors.
When I thought about how these two leaders were responding to what has been predicted to be a recession, I couldn’t help but think that one CEO was contributing to the economic slowdown, while the other was strategically preparing his organization to thrive during difficult times, which would benefit his company while contributing in some small way to minimizing both the effects and duration of any economic slowdown.
Where do you fall on this continuum? Have you bought into the concept of a recession, or are you looking for opportunities for your organization to grow and prosper during what could be economic adversity? The following are our observations and recommendations to ensure that you and your organization are focused on activities that contribute to economic prosperity rather than adversity over the next 6 to 18 months.
During financially challenging times, smart companies look for opportunities to ensure that they will not only weather, but prosper during difficult times. The following are some strategic actions that you and your leadership team should consider to ensure that your organization grows and prospers:
· Move forward with projects and plans that are already in the pipeline – If a project or plan was deemed to be beneficial to the organization’s growth/financial objectives 60 days ago, it is most likely something that the organization would benefit from now and in the future. Unlike the CEO who decided not to move forward with development of a much needed incentive compensation plan for her key sales executives, it is now more important than ever to make sure that you are rewarding your team for those actions that actually contribute to the financial success of the organization. In an economy where money may become tight, it is imperative that incentives are never paid as entitlements and that key producers are rewarded well and recognized publically in an effort to multiply this type of performance.
· Recognize and protect your key contributors – During times of economic uncertainty, key individuals can become nervous and start to question their own employment stability. Since communication is key, now is a great time to make sure that you are having regular, informal contact with your top employees, while encouraging their continued top performance. Now is also a great time to challenge your key employees by giving them increased responsibilities as part of their succession plan. Having a clearly defined career path and future goals and objectives is often the thing that will keep your best and brightest committed long-term to the organization. In addition, if you know that your company is not compensating your employees competitively, now would be the time to make necessary adjustments to those individuals who are critical to the organization’s continued financial success. Remember, making counteroffers once a key employee has given notice does more harm than good. In the long run, you are much better off paying someone now, rather than attempting to pay them later.
· Seek out and hire the best and brightest – Now is the time to search out the best and brightest from your competitors. Times of economic slowdown make people nervous and as a result those who may have never considered leaving an organization may now be open to talking about new opportunities. This approach will not only provide you with top talent now, it will put a hurt on your competition who failed to recognize and protect their most valuable employees.
· Prune out the dead wood – A recent Harvard Business Review article stated that 16% of any workforce are top performers, 68% are average performers and 16% are poor performers. Your organization’s percentages may be above or below these, but no one can argue the fact that we all have high, average and low performers and our goal as key leaders of our organizations should always be to grow and retain our top performers by moving more of the poor performers to average performance and the average performers to high performance levels. Our approach to this challenge is to validly identify why individuals fall into the last two groups and to determine what it will take to move them to higher performance. In some cases we find that everything possible has been done to improve poor performance and it is time to make the tough decision to part ways with our poor performer. During challenging economic times, this approach will not only benefit the organization by removing the financial drain caused by the poor performer, but will send a strong message to all employees that the organization focuses on high performance and promptly takes action with those individuals who do not perform to expectations, to the benefit of the entire organization and all of its employees.
· Keep the right mental attitude – “The sky is falling” attitude can be contagious and destructive. It’s amazing how often individuals and companies focus on what is, or can go wrong, rather than focusing on what is, or can be right. As key leaders within your organization, it is critical that you set the tone for your team. We are not for a moment recommending that we turn a blind eye to the reality of what is occurring. What we are suggesting is that our attitude and response to the situation as leaders, will affect the entire organization. It is easy to hold a pity party at the first sign of adversity. If we challenge our team to focus on the opportunities rather than the challenges, we will find that new and creative ideas are born out of adversity. History tells us that Edison failed over 1000 times to improve on the incandescent light bulb. Even under this kind of adversity, Edison never gave up. He kept the right mental attitude and continued to work hard at identifying other alternatives.
As business leaders, we have the ability to set the tone for what will occur within our organizations, which will ultimately have an impact on the economy at large. If we allow the malaise of fear or financial uncertainty to set in or if we put a freeze on the forward movement of our organization, we are promulgating the economic slowdown and impending recession that Brian Williams referenced.
The above actions are all things that you can implement in your organization today to ensure that your company weathers any of the real or perceived storms that may lie ahead. Implementing some or all of these ideas now will ensure that instead of saying ready, set, recession like many are already doing, you and your organization can say ready, set, GO!
Kevin Grindle is a Leadership Strategies, LLC partner and has over 25 years of operations and human resources management experience. Some of Kevin’s primary areas of specialty are organizational design/effectiveness, market compensation analysis and total rewards system design, executive search, training and development, coaching and mentoring, career transition, human asset analysis, mergers and acquisitions, employee assessments and human capital retention. If you would desire our assistance with any of the items discussed above, we can be reached directly at 480-467-0344 or by email mailto:kgrindle@peopleresults.com.