The Wrong Strategies

The right and wrong strategies during challenging economic times.

Tim Connor

There are numerous approaches that management can take during challenging economic times.  Some of them work for the short term but you will pay a serious price in the long term.  Some of them don’t work in the short or long term and a few will work for both the short and long term.  If this is true why do so many business owners, executives and managers opt for either the first or second approach and totally ignore the third strategy?  Lot’s of reasons.  First let’s discuss the basics of all three approaches.

Good for the short term but you will pay the price long term.

A common response to challenging economic times for many organizations is to circle the wagons, reduce the number of its employees, cut spending for employee development, training and motivation, dramatically decrease the sales focus and its effectiveness, finger pointing, as well as eliminating new business development approaches and reducing the investment in research, marketing and employee compensation.  In addition many business owners operate from a position of arrogance, heavy top-down management style and secrecy.  They fail to keep employees informed about the reality of what’s going on at the top of the organization and expect remaining employees to fill the productivity void created by a reduced employee base.

I could go on but at this point I’m confident that if the above is your strategic approach or response to challenging times I have your attention. 

There are numerous negative long term negative outcomes as a result of this approach.  Yes, for the short term, this response may keep you in business for the short term and ensure that you may have the ability to maintain current business but the question is will this strategy negatively impact your ability to grow the business effectively and quickly when the negative times end – and they always do.

What are a few of the negatives for the long term based on this approach?

Well, for starters when the bad times end and new growth begins in the economy you will need to replace all of the employees who were let go.  The result?  A significant amount of time and training resources to bring these new employees up to speed.  This can be a deterrent to a quick and profitable recovery.

In addition, you may have lost market share or experience increased negative market perceptions due to this approach. To regain momentum can take a great deal of time and resources.

And don’t forget that if you reduced the impact or exposure of your sales force or sales effort, re-capturing this lost potential can be a very time consuming and lengthy process.     

Why do businesses follow this approach?

There are many reasons but the most common are; insecurity, a lack of faith and trust in their business model and their ability to maintain success regardless of what is going on in the marketplace, fear of what could be if they don’t cut back and to some degree ego – the inability to take full responsibility for where the organization is and where it could go or couldn’t go in the future.

Good neither for the short or long term.

This one is simple and short.  Putting everything on hold, and I mean everything.  Suspend hiring, marketing, product development, training, compensation increases, technology improvement, effective top-down communication, strategic planning, innovation etc.

Why do businesses follow this approach?

Again this one is brief – operating from a mindset of fear, lack of belief in the business and its purpose and benefits to customers and not having a clue as to what to do next.  So – it’s just sit and wait and hope.

Good for both the short and long term.

The one thing that will help you emerge from difficult economic times is motivated, productive and creative employees who are dedicated to long term success and exceptional performance.  If employees operate from a mindset of uncertainty and fear for the potential loss of their position it is unlikely that they will consistently and creatively implement new and creative ideas and techniques that will grow the business or their role or department.

The best strategy to create this culture is a top-down management style that encourages imagination, new ideas and honest communication.  Business owners and managers that continue to validate their employees and share the wealth rather than horde it soon discover that these motivated employees help them dramatically remain secure and competitive.

Why do businesses follow this approach?

There are three reasons that managers follow this strategy. One.  They trust and believe in their employees.  Two. They trust themselves and their management and leadership skills and three they get out of the way and let employees bring creative solutions to every situation and challenge.

So, what’s the best overall strategy given slow economic times? Read the above paragraph again.

Which of the above is your approach and how is it wor