How do we manage during the tough times?
Managing During Tough Times
During the easy times, everybody can make things happen. But tough times, especially economic downturns, require a different approach to managing. In fact, the ability to re-assemble the team and manage the interpersonal conflicts that arise during tough times is seen as very key to potential investors. But what can you do to maintain morale when tough times strike?
– First, be honest with yourself. Do not end up believing in your own marketing and PR
campaigns. Do not lose your intellectual honesty.
– Second, refocus on your true competitive strategy. Do not overreact to current industry conditions and chase trends. Start by investing in a strength instead of shoring up weaknesses, and do not work on anything where you might be just average. It is important to emerge from tough times without compromising the potential future growth.
– Third, revisit your value metrics and look hard at what you truly need to measure and analyze. Consider what may happen during growth periods, when inexperienced venture teams may be hiring “B” bodies (called “under-hiring”) instead of going after quality “A” team members. Once the growth curve (topline sales) flattens in tough times, these “B” bodies become dead weight and the organization will lose its lift. In such down times entrepreneurs often stay in denial, then not cut deep enough or quick enough. Tentative or partial cuts will only slow the bleeding, not stop it. Do not be afraid to “prune the tree deeper than imagined.” If you need to reduce headcount, make your cuts based on performance, rather than on arbitrary factors like seniority, nepotism, or friendship. Focus on keeping the people who can help you drive value.
– Fourth, you need to create and communicate a positive agenda for your remaining workforce that creates a sense of purpose, and strategic direction for keeping the venture moving forward. It is important to clearly communicate that the decision to retain each of them was based on an objective examination of their contributions to the venture. Make it clear that they are still with you because your management team wants them there.
– Fifth, a reduction in headcount is an excellent time to revise or implement an effectively targeted incentive program. In the middle of tough times, such an effort by the venture team makes it clear to the remaining employees that your venture is looking ahead through lean times and will not be passive in its pursuit of success. In tough times, great teams pull together. Like John Elway’s famous “drive” during the football game, this action reassures the remaining employees that management not only has a strategy to address the tough times, but more importantly is committed to sharing the upside benefits of achieving that strategy with its people. It is financially sound too, because by relying on incentive programs instead of salary increases, you can motivate targeted behaviors that drive value while simultaneously holding down fixed salary costs.