Leading out of Recession

“Given the difficult times, we have to invest in good quality leadership rather than reorganising and restructuring or trying to manage our way out.” Dominic Turnbull, MD McLane Group (quoted in Top Consultant Newsletter)  

This is one of the most sensible statements about the current financial and economic climate I have read in weeks. It is also a very polite, diplomatic way of saying that the knee-jerk response of managers to reorganise and restructure is simply shuffling the deckchairs on the Titanic and doesn’t achieve anything other than prove they are devoid of any better ideas and lack a basic understanding of how business actually works.

Clearly I lack the same diplomacy, but it is something I feel strongly, not least because a common side-effect is redundancy.   

Why should a change in market conditions demand a change in organisational structure? Despite Gordon Brown’s wishful thinking, one of the only givens of the market is that it experiences rises and falls. A well-managed business should plan for both, and be structured to best serve its customers, which means there is no logical connection between structure and market conditions.

I have never forgotten the sense of pride I had working for IBM after learning that it was a company that had refused to lay-off a single employee during the Great Depression. Not only did it feel good to be associated with such a company but it was also made quite clear that IBM’s subsequent success stemmed from that policy, giving it a head start when the economic climate changed. That exemplifies the real difference between long-term and short-term thinking, as well as the value of higher principles on the part of leaders.

My experience, however, highlights important lessons that are borne out by research. Companies that avoid mass lay-offs or downsizing:
1. Get a more loyal, productive workforce.
2. Snap back faster with the economy.
3. Have far higher customer-satisfaction.
4. Have a recruiting edge.
   
Most significantly of all, however, they have people who aren’t afraid to innovate. This is key, because it is true leadership and occurs at all levels of the organisation. When times are tough it is imperative for everyone to be pulling together, and this is more likely to happen when people feel engaged – valued and part of a team. It may be trite to say that managers do not have exclusive rights to new ideas, but the one that gives a company a new competitive edge may just come from an employee who might otherwise have been made redundant. 

I am not sure whether this is precisely what Turnbull means by “investing in good quality leadership” but it works for me and I hope it does for you too.