t’s hard to find a more
cyclical beast than the global economy. Throughout modern history, seasons of expansion
and growth have been inevitably displaced by relatively shorter periods of contraction
and recession. How well organizations survive these weaker times has much to do
with how they react—from a people perspective—to the ups and downs of the economic
environment. Survival depends on maximizing competitive advantage, and the first
step is to look at your human assets. Here are eight ways to do that:
1. First and foremost, remember that the best way to weather turbulent times is
with the willing engagement of a focused, fired-up, capably led workforce. Avoid
the moronic tactics so often invoked during a slowdown, guaranteed to make workers
power back a notch or two. Things like knee-jerk layoffs (unless survival is truly
at stake), poorly thought out pay cuts (especially incentive pay) and petty cutbacks.
When you do make necessary cuts, remember: Officers bleed first.
Nucor, a Charlotte, North Carolina-based steel manufacturer
and recycler, has managed to impress Wall Street (which it says in a 2006 national
ad campaign "isn’t usually that impressed with employee retention") with its financial
performance, while maintaining a consistent no-layoff practice, even if it doesn’t
have an official no-layoff policy. Through good times and bad, Nucor, largely inspired
by former CEO F. Kenneth Iverson, has hired, paid and hung on to its workers differently
from most of its domestic competitors and has, in the process, seen net income growth
of nearly 500 percent over the up-and-down years of 1997 to 2006.
2. Don’t let fear cause your workforce to disengage. Asking
people to be judicious about expenses is one thing—injecting unnecessary doses of
fear into the workplace is another. The degree to which employees are concerned
about losing their jobs varies inversely with the degree to which they are concerned
with doing their jobs, and taking care of customers. And they’ll be looking at the
owners and CEO for telltale signs of fear, and of hope.
Hypertherm, a global metal cutting manufacturer based in Hanover,
New Hampshire, hasn’t laid off a single employee in its 40-year history. Instead,
when business is in a slow part of the cycle, Hypertherm pays employees for cost-cutting,
reduces overtime and brings outsourced work in-house. CEO Dick Couch sees his role
as an ambassador of optimism, and believes that a realistic but upbeat demeanor,
even during slowdowns, is critical to weathering the storms of the business cycle.
3. Don’t try to work your way out of a short-term earnings
problem by "dumbing down" the organization. One of the first shoes to fall in a
questionable economy usually lands squarely on top of the organization’s training
budget. If you’re doing training that doesn’t need to be done, then you should stop
it anyway, but the notion that we can somehow help the business by deferring necessary
training is intellectually bankrupt. Think about that the next time you fly or have
surgery.
A deep commitment to training is one of the hallmarks of San
Antonio-based USAA, an insurance carrier that serves principally those in the U.S.
military. Perhaps due, in part, to training that educates member service reps on
things like what it’s like to be on deployment, the firm was ranked by JD Power
and BusinessWeek as the nation’s No. 1 "Customer Service Champ" in 2007.
When Starbucks began to see slower sales growth last year,
it responded in lots of different ways, but not by scaling back on its legendary
training, which centers largely on presenting a consistent product and customer
experience worldwide. You still don’t get to call yourself "barista" at Starbucks
and serve a latte or caramel macchiato without the requisite 24 hours of training
in the art, and science, of making the perfect coffee drink.
4. Don’t (repeat, don’t) stop recruiting. If anything, redouble
your recruiting efforts and encourage your hiring managers to do the same. In a
move that surprised some, Warren Buffett, one of the savviest investors of all time,
closed deals to buy two businesses in the last two weeks of 2007, when economic
forecasts were already taking on a gloomy tone. He’s been on a buying spree because,
with a shaky economy, things are getting cheaper, including good businesses that
he’d like to add to his Berkshire Hathaway portfolio. The same principle applies
to rounding up talented people. They’re out there. Go find them, and start a conversation
with them now. As in now.
Day and Zimmerman, a Philadelphia-based provider of skilled-trades
workers to the power industry, proactively targets those coming off assignment with
the military with its "Helmets to Hardhats" recruiting initiative, and focuses its
"Crayons to CAD" program at a much younger generation, to get them to consider computer-aided
design as a career choice.
The Milwaukee Police Department has taken to recruiting from
among hockey fans. Setting up staffed information kiosks at Milwaukee Admirals home
games has proved to be one of the department’s more effective recruiting tools.
Smart leaders, at every level, recruit talented employees
with as much fervor as they recruit customers. Every day—in social settings, standing
in line at the supermarket, at their kids’ soccer games—savvy businesspeople keep
their eyes and ears open in order to find people with the values and attitudes they
need in their organizations.
We know the general manager at a high-end restaurant in a
major U.S. city who, from time to time, dines at the tables of her competitors.
If she receives exceptional service, she leaves an exceptional tip—and her business
card. All’s fair in love, war and employee recruiting.
5. Encourage the CEO to talk candidly with the organization
about how the business is doing. CEOs shouldn’t delegate this. It’s their discussion
to have. The one thing that distracts people more than anything else is not knowing
what’s going on. As psychologist Karl Jung observed, "When facts are few, opinions
loom large." Every minute your folks spend wondering or worrying is a minute your
customers are being ignored.
"Open-book management," pioneered by SRC Holdings CEO Jack Stack, has been embraced
for years by leaders with the courage to share practically everything—the good,
the bad and the ugly—with the very people who do the work of the business. By sharing
targets, goals and results with everyone on the payroll, Jerry Kathman, CEO of international
design agency LPK, has guided his company of 400 employees to annual revenue of
$50 million.
6. Crank up your "high touch." Going through a difficult economic period isn’t just
about business. It’s personal, too. This is an excellent time to show that you care
by spending a bit more quality time with the people on your team, listening to them
and making sure they have what they need. Especially those on the front line. Don’t
pry, but sharpen your awareness of special circumstances. Has a spouse been downsized?
A mortgage foreclosed on? Watch for signs of added stress. Don’t play psychologist,
but make sure your employee assistance program is ready to respond and help where
needed.
East Alabama Medical Center, in the town of Opelika, has long
had a reputation as one of the best hospitals to work for in the United States.
With nurse turnover rates at a small fraction of the national average, they must
be doing something right. For most of his 20-plus-year tenure, CEO Terry Andrus
has made it a daily practice to go on his "rounds," as a doctor would. He’s not
seeing patients, though; he’s talking to employees, to get to know them and to keep
his finger on the pulse of what they need to keep providing the best care possible.
A few years ago, the hospital’s employees formed a charitable
foundation, funded 100 percent by voluntary employee contributions, to provide financial
assistance to fellow workers who, through no fault of their own, fell on hard times.
Since the foundation’s inception, hundreds of thousands of dollars have been made
available to employees who have suffered personal tragedies, illnesses and property
damage.
Dan Cathy, president of the rapidly growing Atlanta-based
fast service restaurant Chick-fil-A, told an audience of his stores’ managers recently,
"When you see an employee enduring a personal hardship, we want you to go above
and beyond for that person. And when you do, you will have their full attention
when you talk about going above and beyond for our customers."
7. Pay extra attention to the customers you’ve got. Translate
the meaning of that for all your employees. Too many businesses hunker down and
go below the radar when economic growth slows. This is an ideal time to show customers
that you care about them. If you do, chances are you’ll exit the current rough patch
with better customer relations, and maybe more customers.
8. Smile. That’s right, smile—and do it more often. The fact
that things are getting a little shaky and people are scared (including maybe you)
doesn’t overturn the principle that people prefer to be around those who are positive
and optimistic. Your smile will lighten the folks around you up just a little, they’ll
get more done, and feel better about it, too.
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