As the current economic downturn unfolds, it is easy to focus only on short-term implications, but in so doing you could make decisions that could cripple your organisation in the long term, warns Graeme Codrington.

Crisis times can breed panic mindsets. In particular, companies are in danger of being short-sighted about how they manage their people during the downturn, responding with actions such as across-the-board staff reductions, staff development freezes, cancelling conferences and international team meetings, as well as managers demanding more from already stressed staff, while offering less reward and no security.

These are just some possible responses. Some are reasonable and reasoned. Most are not – they are reactions to crisis. The danger is that when trying to ‘cut out the fat’, it is very easy for the scalpel to cut away some muscle, too.

The crisis mind set is understandable, especially in the financial services sector: some of the world’s leading banking and insurance institutions have literally disappeared, and almost every industry is feeling the effects of a credit crunch and economic slowdown.

The uncertain future

Government attempts to rescue the world’s banking systems are only the end of the beginning. The next few years promise to be difficult indeed, with a significant increase in unemployed professionals, devaluation of savings and wealth – most importantly the pension and retirement savings of the soon-to-start-retiring boomers – and rampant volatility, insecurity and uncertainty.

Yet, the medium-term outlook is not as depressing as it feels. The financial industry crisis has not spread to full-blown economic meltdown. No major country seems close to collapse, and the government responses have been quick and intense. Of course, this is the bottom of the business cycle, but it is not the ‘new normal’. It may take a few years, but we will get through this crisis and emerge into another growth cycle soon.

The danger therefore lies in companies responding irresponsibly to short-term crisis without considering longer-term repercussions. In a downturn, people and companies do not necessarily look for the cheapest option. What they really seek out is safety – absolute assurance that their purchase will give them what they are looking for.

Your ability to offer a level of safety that exceeds anything offered by your competitors has very little to do with what you sell (largely because your competitors sell very similar products, with similar guarantees at similar prices in similar ways), and very much more to do with who you are. And this has everything to do with who you employ and how they represent you.

Passionate and focused employees

Now more than ever you need well-trained, passionate staff, focused on delivering consistent, high-quality service and products. In turbulent times, more so than ever, people matter.

Yet, just when you need them to be most passionate and focused, many companies are finding that their people are demotivated and distracted. There may be good and immediate reasons for this, such as staff lay-offs which so often accompany an economic downturn. Or it could simply be a general downbeat sentiment, fuelled by a diet of 24-hour media coverage of failing banks, chaotic stock markets and rising inflation.

An absolutely critical component of any rescue and revival plan, therefore, is the ability of leaders and managers throughout the organisation to connect more effectively with the people they lead and the customers they serve. Understanding what motivates the attitudes and behaviour of these people is vital to business success – not only during the downturn, but also in preparation for when the economy picks up again. This, therefore, needs to be on every leader’s daily to do list, and needs to be a focus area for leadership teams. ‘What are we doing to engage and motivate our people?’ is a question that should top and tail every management meeting during the downturn.

In particular, leaders need to understand that a younger generation of staff and customers, who have never experienced a downturn, have different expectations of the workplace and will respond to the stress of the current environment in different ways to older people. Not just because they are younger, but also because they have a different set of generational values guiding their attitudes and behaviours. Acknowledging that different generations will respond and be motivated in different ways is key to developing a strategy implementation plan that everyone in your organisation can buy into and be passionate about.

Dr Graeme Codrington is a business strategist, keynote presenter and thought leader on the future of work and attracting, retaining and engaging talented staff and clients across the generations. Email him at graeme@tomorrowtoday.uk.com