Recession-Proof Your Leadership: Seven Strategies to Lead Through the Economic Slowdown

By Lee Froschheiser, President and CEO, MAP

It’s spring of 2008, and the economy is slowing down. The slump is taking a toll on businesses, and CEOs say they’re feeling the crunch. According to a recent national survey by MAP Consulting, 83 percent of CEOs believe the economy is either going to stay the same or decline over the next 12 months. Whether it’s the mortgage crisis, jobs at risk, skyrocketing gas prices, soaring raw-material costs, or a handicapped healthcare system, these and other uncontrollable factors have brewed up the perfect storm — perfect, that is, for testing the leadership of today’s CEOs, as well as the stability of the “vessels” they steer.

So how can today’s business leaders navigate the rocky waters? First and foremost, during hard economic times, companies must focus on implementing recession-proof strategies based on Vital Factors, the fundamental business components that can be measured, worked on and ultimately improved. Vital Factors can be as simple and straightforward as “quality,” “cash-in vs. cash-out” or even “productivity.” And by zeroing in on even just one of these Vital Factors, it’s easy to see what’s going on in a business and the corrective action needed. Once a single vital factor is addressed, other Vital Factors will experience an impact as well. A domino effect occurs, and improvements will sweep infectiously through the business.

In paying attention to a company’s Vital Factors, business leaders focus on key management fundamentals, and this dedicated, offensive approach is the number-one way to ensure a company stays the course through a downturn. As well, this commonsense, yet often-overlooked tactic, in addition to the following strategies, are the secrets to surviving the crisis at hand.

1. Concentrate on what you can control. It’s a simple, no-nonsense piece of advice that works. For instance, if you can’t control the rising cost of raw materials, put your energy into what you can control, like improving upon and delivering the best customer service or product quality for the prices you’re forced to set. And remember to get clear on what you can and cannot control, so you’re not misdirecting your time, energy and resources.

2. Hold regular team meetings. Gather your team and set up weekly meetings to discuss and report upon your company’s Vital Factors. Keep these meetings concise and focused, and they’ll keep your team members focused as well. In addition, regular meetings will give you the opportunity to hold each person accountable for his or her part in your company’s success.

3. Have a “Plan B.” When hard times hit, do you have a strategy for cutting expenses by 10 percent? If not, you need one, because that’s the fastest way to impact your cash flow and bottom line. Cut the waste — or the fat — that your company developed during high growth periods, and you should notice an immediate improvement.

4. Step up your leadership skills. During an economic downturn, or any period of crisis, your actions and emotions set a tone. If you’re in a panic, that fear will be reflected and manifest in your business somehow, someway. So keep cool and be the calm in the storm, setting a good example for your team. This courageous leadership keeps fear and worry out of the workplace, and enables you to help “overwhelmed” team members understand their priorities better.

5. Create teamwork with your team. During tough times, weak teamwork becomes easily stressed and can deteriorate. So as an accountability leader, challenge your team and push them to perform. Ask those tough “why” questions, rather than “how” or “yes/no” questions. Motivate your people to articulate their thoughts and why they’re thinking them. You’ll get real answers, improve communication, and empower your team.

6. Face the brutal facts. To lead your business and its team through an economic downturn, you must face the brutal facts. And the nuts and bolts of doing this is being honest with yourself. So sit down with a pen and piece of paper, and write down the facts. This might reveal that the “sins” committed during good times have caught up with your business now. Or maybe you’ll uncover some overlooked successes.

The brutal facts don’t all have to be negative or bad, but you do need to spell them out, in black and white, and determine the facts. Only then can you see where the business needs to go and how your leadership can take it there. Then, in the event that changes are required, you must be prepared to make the tough calls — such as reducing headcount or boosting productivity — and, again, controlling what you can, when you can.

7. Be open and ready to “reinvent yourself.” Always a long-term business strategy for any successful company, it’s a card that sometimes gets played during tough economic times. However, remember that if you dabble in a different market or diversify products or services, you will need to define new Vital Factors for that fresh direction, implement them, and then measure these indicators of your business’ health. With the right Vital Factors, you can determine how effective you are in reinventing yourself, managing this new challenge through the downturn and beyond.