Edu-Leadership

Dealing With Tough Times

By Scott Airitam

If you haven’t heard the word by now, we are in an official recession. We’ve been in a recession since March or so and symptoms of these times are (and have been) a decline in the stock market, evasive action on behalf of governments to stimulate spending, and a rise in unemployment spurred by downsizing, reorganizations, and hiring freezes. Our economy is cyclical, even with the best minds at the helm; we cannot seem to avoid chasing a great economy with a bad economy. Well we are in a bad economy right now and we have to find ways to deal with it. Now, in our dealings, we can hunker down and focus on the situation at hand, but we’ve learned that we need to think “bigger picture” than that. If we spend our time in pure survival mode during these bad times, we will emerge well behind our competition when the economy turns. So, the big question is how do we survive and prepare for better times? Below are three, big picture action items that should be very high priority on your list for your company or department.

Be thrifty, but, set aside time and money for creating good habits. Would you believe that people tend to form habits that transcend the economy? Yes, gentle reader, it’s true. In difficult economic times, many companies tend to turn a blind eye toward cost-cutting techniques that are nothing more than shoddy business practices. These business practices quickly become the norm and are accepted as reality within the organizational culture. Before you know it, the economy has recovered, but not all of the “cost cutting” habits are reversed. Building bad business practices into your organization is not healthy, nor is it wise. However, it is done everyday.

I once had a person that I held in very high esteem as a manager, tell me, “during the best of times, one must prepare for the worst of times.” It is a lesson that was wise and well stated. I have never forgotten the lesson. The lesson was basically that, like in chess, you need to always be thinking at least one step, if not several, ahead of your present situation with regards to how you condition and prepare your organization. The man who said that was Herb Kelleher, former CEO and President of Southwest Airlines, for whom I worked for nine years. He was commenting on how Southwest was able to survive with a record number of profitable years and no layoffs or furloughs. I call it the Squirrel’s Plan. Squirrels collect lots of food during the summer and fall months. They could feast on their findings—after all there are endless acorns, pecans, and other food sources out there in the summer and fall. Those nuts are all over the place. But the squirrel will only eat what it needs and store the rest away because, on some instinctual level, the squirrel knows that winter is coming and there will be no more endless food source. When winter arrives, the squirrel eats as good or better than it did during the summer even though the external supply has dried up. We should all follow the Squirrel’s Plan, but, being here in our proverbial winter, it is pretty clear that many of us did not. Now, what do we do?

Well, we need to spin the Squirrel’s plan. We need to survive the winter that we may not have planned well for, but, in addition, we need to emerge from this winter strong enough and well prepared enough to compete. Our cupboards are bare, but we need to acknowledge that we are going to be lean and set aside some money and time to prepare and condition ourselves fo when the economy turns good. That means we need to continue to provide our employees with the tools they need to do their jobs effectively, we need to hold employees and ourselves to the same standards as we did during the best of times, and we need to be mindful of slipping processes, leadership, and culture.
Doing these things presents some obvious monetary challenges, but not doing it presents some not-so-obvious challenges. The biggest not-so-obvious challenge is that when the company allows cutting corners to exist, employee training (soft skills and industry-technical skills) to slip or disappear, and daily leadership to erode, who takes the brunt of this? The “in-your-face” answer is that the customer absorbs most of it. When the customer gets this type of behavior, service, and/or product from a company it causes a downward spiral because over time, revenue from those customers declines. This magnifies or extends the bad economic times for the company. That, however, is not where the hurting stops. Eroding quality and efficiency takes a special toll on our best employees. They wind up covering for other employees who’s effort decreases out of frustration and a feeling of being viewed as value-less by the organization. The best employees wind up being the only ones who can be trusted to “do it right” and they get all the extra work dumped on them while trying to make up for the lag created by the other employees. They are the ones that are already trained well, so slashing training again directs more work their way. As soon as the economy loosens up and the best employees have choices, they are the first to leave. This sticks the company with a largely untrained, unmotivated workforce to try to compete with.

It is imperative that during these bad times, companies direct time and money toward trying to keep their best employees. That means appropriate and timely rewards and recognition becomes very important. Training becomes more important than ever—even though conventional thinking has that as the first thing neglected or cut during these difficult times. Keep in mind that time can be as important as money. The book, The GE Way Fieldbook, by Robert Slater illustrates Jack Welch’s habits as he works to create good habits in his employees.

“Welch has come to Crotonville {a GE school for employees and executives where, once a month, Jack Welch teaches a class} to transmit his, and the company’s, business values, but he is also there to listen to what this batch of GE executives has to say about how the place is being run. He’s a zealot about listening to his executives—not just the handful of senior executives whose spacious offices are near his.

Jack Welch is involved with his people, training them, and listening to what they have to say about the organization, where it’s going, and their customers. This investment of time, for leader of one of the largest companies in the world, is outstanding. If Jack Welch can find the time to involve himself in these activities to make him a better leader, to set a tone for the work environment and culture, to push down to the employees what the company’s standards and values are, why can’t any of us? His employee base will be ready when competing and progressing and growing are the order of the day instead of surviving—and he’ll have his best employees right there with him.

The final item to mark on your to-do list is to create an Owner Breeding Ground. In great times, having employees that literally think like owners helps the company to move forward. Having them in the bad times is almost mandatory. The book, Nuts, by Kevin and Jackie Frieberg, states that employees that act like owners might think along these lines, “If this were my company, how would I handle a customer in this situation? Would I buy this piece of equipment or make that investment? If I personally owned this business, how would I treat my employees? Would I establish this committee, attend that meeting, or make that trip?” Creating an Owner Breeding Ground is a matter of forming the right habits by creating the right norms of behavior within the organization. It permeates every aspect of the company from who is hired to performance evaluation to process analysis. It is complex, nevertheless, it is almost mandatory. Too many times at fast food restaurants do you see the exact opposite of Owner Breeding Grounds. You find it in many government offices as well. It is an apathy that is offensive to the customer. The environment, the culture, allows this behavior to be acceptable. It is about pride in the company and pride in the work. It is about excellence and reinvention.

Look around within your company. Take off the blinders that get set around your eyes by being immersed in your organization’s culture day in and day out. Spend a day looking at your organization, your department, or your team from the perspective of an employee of a company that you admire. Look at it as Herb Kelleher or Jack Welch might. Evaluate it for what it is. In this trying time of recession for the economy, understand what needs to be done to survive and what needs to be done to ensure long-term success. Know that these are starkly different things.

Scott Airitam is the president of Leadership Systems (www.lsctservices.com), a company committed to providing organizations with new and inventive ways to maximize the "people systems" within them. Scott can be reached at or (214) 507-9700.