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How to lead staff during an economic downturn

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Leading staffWith the collapse of Lehman Brothers and the takeover of HBOS, everyone is focusing on how businesses can cut costs and streamline operations. Stephen Archer explains how to address and lead staff during these times to increase retention as well as commercial effectiveness.


The current turmoil in the financial markets has meant that the media is focusing a great deal of its attention on the challenging times that companies are facing and the tough times ahead. All talk is about redundancies, cost cutting and streamlining operations. Much of the ‘advice’ being given has an operational emphasis, with less focus on the impact on the employees that remain within troubled organisations, who are no doubt feeling pretty insecure about their future careers.

“Employees are in tune with the economic climate and the impact this will be having on the company in which they work.”

Employees are in tune with the economic climate and the impact this will be having on the company in which they work. They will be feeling worried about their job security and morale will be at a low ebb. But, one thing is for certain, poor morale will be exacerbated if leadership has allowed morale to slip and even more so if it participates in the low morale.

There is a clear link between employee motivation levels and business productivity and businesses simply cannot afford to let their effectiveness slip in these difficult times. Teams need to better motivated, correctly motivated and led with better focus than before to ensure they stay afloat in such times.

Now is certainly not the time to cut back on the training and development of staff – quite the opposite, leaders need to invest in their people more than ever. If training is pushed aside, staff will feel as if promises to them have been broken; their self-esteem will suffer and they will end up leaving the company.

Future fitness

Leaders need to appreciate that their staff really are the future of the organisation and invest in them, whatever the economic situation. In fact, now is a sensible time to hone skills and develop people and processes to ensure the business is fit for the future.

Businesses need to work smarter and company leaders should manage from the front with even greater conviction to ensure the team will follow.

An organisation that behaves this way may not grow, but it will survive during an economic downturn. If costs do need to be cut then good leaders always involve staff in their decision making where they can, so their employees feel included and empowered. This approach means that employees are more likely to empathise when tough decisions need to be taken.

If redundancies have to be made, then decisions should be made quickly and professionally. But, after a short period of time, the company needs to move on. Managers really need to lead from the front at such a time and rather than dwelling on the past, re-energising their staff and talking positively about the future. This is a time to boost the morale of the staff who remain and remind them of the organisation’s values and beliefs.

“The companies that prospered were those that energised their teams, and they fought their way out of it.”

To understand how important it is to motivate staff in such times, we only have to look back at the last recession. The companies that prospered were those that energised their teams, and they fought their way out of it. They certainly did not ‘batten the hatches and pull up the drawbridge’.

Inevitably, in any recession, there will be companies that don’t survive – and it will be down to those that do to fill the market voids. This is the opportunity for successful companies to build market share and take the business from those who lost it.

This type of mindset needs to be entrenched into an organisation’s employees – they need to be looking for opportunities and excited to be part of a company that is focused on growth. They should be energised and ready to outperform both commercially and psychologically against the competition and this mindset will follow from good leadership.

Simple steps that business leaders should address during an economic downturn:

  • Front up to any issues very quickly; tell your staff that the economic conditions are working against the market
  • – not just the business.

  • Don’t leave them in the dark on anything – remove all doubt and ambiguity

  • Stress that you have strengths that your competitors don’t, and that you will focus on these during the downturn

  • Remember that nearly all people will want to follow your company’s leadership. They will be committed followers

  • Adopt the mindset that you will weather the storm, and then you will

Stephen Archer is a director of Spring Partnerships, a fast-growing UK business and communications consultancy.

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