It’s Memorial Day Weekend in the United States. A time of year when the school year ends, the summer begins, and for many businesses, there is just one month left in the 2nd quarter and the first half of the year.
As many Americans get ready for the long weekend and the chance to get some well-earned downtime with family and friends, the storm clouds of a significant recession are formulating on the summer’s horizon. By definition, a recession is two consecutive quarters where the gross domestic product (GDP) contracts. The GDP is the sum of all outputs of products and services consumed by an economy. The drivers of the coming recession will be easy to identify as they typically are the function of multiple factors. The recession of 2022 is going to be driven by staggering inflation, the ongoing supply chain disruptions, the continued global COVID pandemic, and the hot spot geopolitical issues that rise up every week.
Many business leaders will take the easy way out and start cutting budgets to make up for lost revenues. By doing this, they will be able to point to the fact that they still made their profit numbers. But, at what cost to the future? Great, you cut Sales, Marketing, and R&D expenses in the short term, but what is the impact in the long term?
Over the past several weeks, I have had the unique opportunity to interview leaders around the world and across different industries to gain some insights into the best and most productive ways of getting ready for the recession. One senior leader even asked me to develop a proposal for a business simulation experience called, “Recession Readiness” which I will work on over the weekend. In the meantime, I wanted to share some of the findings of the research with our readers. What we discovered is there are three key skills to focus on when executing your strategy in times of recession including:
Develop Strong Alignment in All Functions
One of the most worrisome issues that came up in our discussions was the fact that many employees have never faced difficult times. “We are going to go from the great resignation to the great recession and all these people who thought the grass was greener on the other side are going to find themselves in the unemployment line,” shared one executive who is predicting cuts to her workforce.
The same executive shared that she is going to be putting all her energy into creating an even stronger alignment between the functions of her business. Sharing goals, objectives, and being empathetic toward other functions is one of the best ways to come together as an organization during difficult times.
Training People on How to Communicate Bad News
“I am so worried that my new managers are going to melt under the pressure because they have no skills to deliver bad news. And if they don’t deliver bad news, things will get worse and worse.” Delivering bad news is an art whether it is down to a direct report, across to a peer, or up to a manager. Organizations that will succeed or fail based on their ability to train managers to have open conversations and deal with bad news.
Build Bench Strength for the Future
“This is not my first rodeo and one of the most important lessons ever learned was to build bench strength for the future during tough times.” A recession is a good time to exit underperformers from the organization and replace them with hungry and appreciative talent. As opposed to the last few years when we had talent shortages, there will be great talent available willing to join the team for a chance to have a job and a future.
In summary, everything has changed, and everything is still changing. Business is never easy, and we are always faced with opportunities and challenges. The next recession will be unlike anything anyone has ever seen and there is a very slim playbook for it. I hope these three ideas stimulate some thought over the weekend.
Be safe and see you next week!
