Five Ways to Recession Proof Your Leadership Team
When companies are thriving and the macro outlook is strong, issues can fly under the radar. However, macro stressors like a recession can expose cracks in your foundation and cause friction in places you've never had before.
For some businesses, the pandemic was this kind of wake-up call. How you responded as a leadership team was the difference between coming out of the pandemic feeling stronger and more confident or coming out of it feeling beat down and defeated.
When times are tough, here are some of the unproductive behaviors that can undermine leadership team effectiveness:
Finger pointing
Hiding of information
Fear of failure
Extreme risk aversion
Not giving credit where credit was due
While you're shoring up your business strategy, here are some ways you can avoid these unproductive behaviors and recession proof your leadership team.
Recession Proof Your Leadership Team
What does success look like during a recession?
Success during a booming economy looks very different than success during a recession. If your team is still measuring success the same way, it can feel demoralizing and unmotivating. Instead, define as a leadership team what winning looks like during a down period. How will you know you're successful? Maybe last year success was double-digit revenue growth, and this year, it's single-digit revenue growth with a focus on increasing profitability through automation. These objectives drive very different behaviors and results. Both can be motivating and drive value for your organization.
How can we better align our goals across the organization and focus on what's most important?
Now that you know what winning looks like, it's critical to align the goals of your leadership team to this north star. In the example above, your sales leader may produce fewer sales wins this year, but perhaps you realign your sales team's goals around brand awareness with new prospects — planting seeds that can flourish in future years. If everyone on the leadership team understands each other's goals, this will reduce noise about people not pulling their weight.
What are the triggers for difficult actions like reducing team size or pay cuts?
In uncertain times, you have to be prepared to make hard decisions. If you wait until you're in the moment, emotions will likely take center stage and cause unnecessary conflict. Establishing triggers for difficult decisions — like if and under what circumstances you would reduce team size — creates alignment as a leadership team on actions you will take in the future, reducing conflict when those needs arise.
What values will we not compromise?
If you find yourself making concessions that feel uncomfortable, it's time to revisit your company values. What is it you value? What are the pillars of your company that make you unique? For example, cutting the training budget is not a good choice for a company that values continuous learning and is known for subject matter expertise. Knowing what those non-negotiables are upfront will help your team make decisions quicker and more cohesively.
How do we maintain a growth mindset during the recession?
Companies with a conservative stance send a message to their teams to do the same. This signal can lead to good results like tamping down spending and reducing non-value-added activities. But it can also go too far and reduce risk-taking that drives innovation and lead to an overemphasis on the short-term results at the expense of the long term. Leadership teams who balance the short-term and long-term tension during a recession will come out stronger.
With a potential recession on the horizon, it is not only a good time to evaluate your business strategy, but also to ensure your leadership team is aligned on what's important and how you will respond together.
