Leading a business through the inevitable roller coaster of change has plenty of challenges. Organizational change is just a concept. Organizations do not change – individuals change. If enough individuals change then you start to reap the benefits of organizational change. Here are two common vs. effective responses to tough times.
Control vs. Involvement
The first common response to tough times is control. This response has the statement “We know what is best for employees. They will just worry” as its basis. Typical leadership behaviors that result from this assumption are working in the business rather than on the business and TLM (tight-lipped management). These result in distrust in company leadership and an expanded organizational blind spot (weaknesses that everyone, except management, are aware of).
Many companies who have previously grown over the past several years, are now responding with control. Controlling management practices set them back to old ways of managing when they were a smaller company. When the leader shifts back to working in the business rather than on the business it predictably squelches any type of ownership behavior by employees.
Studies on organizational change show that most employees do not resist change itself; rather, they resist that unknown place between where we are now and where we will be – the Abyss.
The effective alternative to control is involvement. The involvement response works off of the assumption, “We must harness all of our ideas to manage these times most effectively”. Leaders taking this more effective approach work on the business and solicit employee input for solutions. Naturally, these behaviors result in greater ownership behavior (what every leader wants more of) and a diminished organizational blind spot.
It is important to not just make employees feel like they are involved -a common, mechanical substitute for real involvement. Those who underestimate their employee’s intelligence overestimate their own.
Analysis of cumulative employee attitude research shows that the biggest concern for employees is communication. However, leaders are continually frustrated that their communication efforts do not improve employees’ perceptions of company communication. Further analysis of these historical data reveal more specifically what employees want to know. It boils down to four simple questions companies need to address:
- Where are we going? (Strategy)
- What are we doing to get there? (Plans)
- How can I contribute? (Roles)
- What’s in it for me? (Rewards)
So, imbed your answers to these questions every chance you get.
Panic vs. Focus
The second common response to tough times is panic. The panic response assumes that “We better do something different to get through this”. This assumptions leads to a continuous eye on the next deal and an obsession with getting new customers or initiatives. This results in eroding customer service, missed, low-cost new business opportunities with current customers and the “ship is adrift” syndrome.
This is a classic entrepreneurial response. Look for a new deal or create another business model. The problem is that it is five times more expensive to obtain business for a new customer than it is from an existing customer. Also, employees really want clear direction, not a plethora of new initiatives, during tough times.Focus is the effective alternative to panic. Focus assumes, “Let’s keep doing what we do best”. Leaders that respond with focus reinforce customer service and existing customer relationships and sustain their marketing efforts. This results in improved perception of market position and stronger, more profitable customer relationships (again, what every leader wants more of).
Put your resources where you are strongest (core competency). It is tempting to try to shore up your weak areas during tough times. However, unless those areas are strategic, you will just be throwing good money after bad. Think about this – since some approximation of the 80/20 Rule exists in almost all systems, we can safely infer that it also exists in your company. This means that the most profitable 1/5 of your company is 16 times more profitable than the remaining 4/5. Needless to say, you should regularly look at your most/least profitable sales people, products, service lines, divisions etc.
During a slower economy, everything gets commoditized except customer service. Focus appropriate resources on these existing relationships and commitments while your competitors are looking for the next deal. This will build customer loyalty and resulting profitability for you company.
Regardless of where your company is on the economic roller coaster, consider the organizational impact of your own personal assumptions and leadership behavior.