Recession Realities

 

 

Many pundits are forecasting that we are heading into a recession.  Without commenting on the veracity of their claims, let me share a few facts.

1.    Since 1950, North America has experienced 11 recessions as defined by successive quarters of negative GDP. Therefore we experience one about every 6.5 years.  With that level of frequency you would think that business leaders ought to have some idea about how to respond.

2.    The average recession lasts about 11 months, but the median is closer to 8 months. Why then do these same leaders react like ‘chicken little’ and believe that the sky is falling in?

3.    If it does happen, this recession will be unique in that it will occur during a period in which both employment and interest rates are at or near historical lows.  Granted, inflation is higher than it has been in years but these same economists state that this is a short term blip and not a systemic situation.

Against this background, how should leaders prepare and respond?

1.    Do not…let me repeat; DO NOT…start laying off personnel.  In a market where staff shortages seem to be the norm rather than the exception, why would your first response be one of eliminating your most important asset?  You have invested heavily to recruit or retain, train and equip these assets and they should be the last, not the first casualty.

2.    Seriously examine your ability to sustain your business for 2-3 quarters of declining revenues of 5%.  If your bottom line is so fragile that this puts your company in a perilous situation, I suggest that your problems are much bigger than facing a recession.  Revenue-and profit-declines are not new to the business cycle and your plans should always have some room to respond without it being a crisis of survival.

3.    COVID taught us some important and painful lessons, not the least of which is how to be creative in times of uncertainty.  With COVID we had no idea of the timeline or the severity of the impact on our businesses.  But recessions are actually more predictable as the timelines noted above have proven.  For most businesses the impact on your bottom line will hurt but it will not be fatal.  Ride it out, tell stakeholders to be patient, and come out the other end grateful and ready to seize the opportunities that always follow.

Start now to examine your business.  It should be structured to withstand tough times and to prosper in the good.  A knee jerk reaction to changes only means that you are structurally inept and that is never sustainable.

The Lesson I learned from John Kutumbo

 

Some years ago I was privileged to accompany a group headed to Nairobi where they were teaching a number of Kenyan pastors studying towards their Master’s degree in Theology.  As is customary, on the first day each person was asked to introduce themselves.  Several attendees started off by identifying the particular church in which they served.  But when it was his turn John stated ‘…my name is John Kutumbo and the Lord Jesus Christ is my saviour…’

What John had reminded me is that what I do is not who I am.  John is a pastor. That is his profession.  But John is a Christian and that is who he is, that is his identity.  If John ever ceases to be a pastor, that will only change what he does.  It will not change who he is.

I cite this example because I believe that my boomer generation lost sight of the differences and has, by example and by word, failed to lead subsequent generations effectively.  Too often identities have been associated by what one does and what one has accumulated.  It gave rise to the phrase attributed to Malcolm Forbes, an American entrepreneur who stated “…he who dies with the most toys wins…”

At this point I need to also reference a line from the Wizard of Oz.  When Dorothy’s dog Toto pulls back the curtain to expose the so-called wizard, Dorothy scolds his by stating ‘…you are a bad, bad man…’ to which the gentleman replies ‘…no little girl, I’m not a bad, bad man; but I am a bad wizard…’ I include this reminder because boomers and others did not intend to be bad examples; they just didn’t try hard enough to be good examples.

Regardless of what you do or what you have, you should never confuse that with who you are.  The importance of this is relevant especially for those in leadership because your teams are always looking past that which is temporal – position or things – and they are seeking to be led by your character, by who you are. 

You do the same thing even when you aren’t conscious of it.  If your leader has pinned his or her credibility on their title or possessions, then they lack the substance to be a sustainable leader.  You know that; either intrinsically or experientially.  And you will not invest fully because you know that they lack the character to persevere when times are not going well.

The question then is a simple one.  Who are You?

Actually...it is a popularity contest!

 

There’s a well-known adage that says ‘…people join companies and leave managers…’

Like most sayings, there is more than a little bit of truth in it as these statements are a compilation of experiences gathered over time.

As the leader, what type of attitude are you projecting; what kind of environment are you creating; are you someone that you would want to work for?

It is not a matter of being everyone’s BFF.  In fact, it is more often not being anyone’s friend at all.  But if your employees fall into one of three categories you have a serious problem.

·        Some are former employees who left because of the workplace that you have allowed to develop.

·        Some are people who have given up on you and have disconnected to the point where you no longer get their best and they are actively looking to leave.

·        Some are just unhappy and unproductive but willing to fly under the radar and collect a cheque.

Regardless of which group they are in, they all have something in common.  They don’t like you as their boss…they just have different ways of expressing it.

The most common complaints that these people would express about you include:

1.     You do not show proper respect for the contributions people make.

2.     You fail to provide clear expectations and objectives.

3.     You fail to invest in the training and equipping of individuals.

4.     You are short of encouragement and long on criticism.

5.     You are complacent and self-serving.

6.     You have built a toxic workplace.

7.     You cannot be trusted.

8.     You fail to lead.

No person in leadership can survive these comments.  Today’s employees are smart and they have transportable skills.  They are less likely to go to HR to express their frustrations because it is easier to just leave and find another job. 

You really only get one shot at attracting and retaining top talent.  Unless you can truly project a personality and character that gives a damn, you have no likelihood of success. Being ‘popular’ means that others respect you and want to work for you towards shard success.  Being that person who projects ‘my way or the highway’ will result in your best staff choosing the latter more times than not.  And those that don’t make that decision are probably not the ones you had hoped to keep.

Would you work for you…?

How do your decisions define you?

 

 

As a leader there is a simple truth.  You are praised for your best decisions but remembered for your worst.  This may seem unfair but it is a reality. Why, because we expect your best as a function of your responsibilities.  After all, isn’t that why you hold the position? 

Your decisions, your best decisions, advance the enterprise. That’s a reasonable expectation. But your bad decisions stall progress and your worst decisions may be catastrophic… both personally and professionally.

The first two legs of the stool are authority and responsibility.  But it is accountability that allows that stool to stand.

Here are some examples that speak to the point.

Dennis Muilenburg was the CEO at Boeing and was praised for promoting the development of the company’s 737 Max aircraft.  This plane was going to revolutionize the industry and help the environment at the same time.  The problem was that Boeing rushed the plane into production and subsequently two of these aircraft crashed within months killing hundreds.  Muilenburg was fired for both his oversight errors and for the undistinguished manner in which he handled the PR fallout.

He is not remembered for his career and accomplishments.  He wears the hair shirt for the consequences of his actions regarding the 737 Max.

Steve Easterbrook was appointed CEO at McDonald’s in 2015 at a time of company turmoil.  He instituted a number of changes to operations, menus and franchises that brought about significant financial improvements to the company.  But in 2019 it was revealed that he had repeatedly ignored company policy with respect to personal conduct and he was fired.  His $105 million termination package was subsequently clawed back by the company when the full extent of his misconduct became known.

Who remembers what operational improvements he instituted?  Most just remember that his Big Mac was in places not on the menu.

Travis Kalanick started Uber as the first ride sharing company and built it into a dominant player in that space. But he was fired because he created a toxic and sexist workplace and left in disgrace.

There is a common thread to all of these examples.  The dismissals were not predicated on incompetence. They were a result of failures in their character; moral, ethical or legal.  Thus they were personal choices that each person made and sadly these are the things that we remember. Pride and arrogance were at the root of their actions.  Their accomplishments are things of the past but their failures will follow them for a long time. 

As leaders you make decisions every day.  Not all will work out as you hoped. But as long as you have done your best to ensure that you have been morally, ethically and legally proper you can recover because your character is intact.

Lead with your words and your actions.  Others will take note and follow!

Profiles of Courage

 

 

Allow me to share three short stories.

1.     My boss, the VP of Sales and Marketing, asked me to do a self-appraisal as part of my annual review.  Upon completion he invited me to lunch and asked for my work.  He quickly read it, initialed it and then asked me what I wanted to eat.  End of discussion.

2.     My boss, the company President, asked that I add the direction of a recent acquisition to my portfolio.  The acquisition was turning out to be a miserable failure and a real embarrassment for him.  After evaluating the management team (the former owners) I recommended their dismissal and the installation of a new team.  The President concurred.  I flew out early to be there for a Monday morning meeting with principals and then the staff announcement.  The President called mid-morning to ask how things had gone. Learning that the meetings unfolded as expected, he invited me to dinner.  I replied that I was 3 time zones away…but he stated that he too had traveled out west ahead of me and was therefore in position to celebrate the decision that he refused to make for three years.

3.     As the Canadian VP, I reported to a US based SVP of North America.  An executive realignment had me report to an International SVP.  Our Canadian business was unlike any of the other foreign divisions and this so intimidated my new boss that he took SEVEN MONTHS before reaching out to introduce himself.

 What’s my point? Simply, the title does not define the person. 

In difficult situations don’t expect a knight on a white horse to magically appear and make everything all right.  Our leaders are human and their weaknesses will be exposed under stress. As a leader, how should you respond?

1.     Never place the leader on a pedestal.  Respect the title; respect the responsibility and respect the person.  But never elevate them to a position which would disappoint you if they failed.

2.     Be the example for others even when that example is not being modeled for you.

3.     Seek mentors for support and strengthen your character by associating with those who are willing to build into you when your circumstances cannot.

4.     Determine for yourself if the failings of your superior are simply human shortcomings in a specific area or if they are indicative of a greater problem that is too toxic for you to accept.

5.     Disney is not writing the script:  no company or person has all the answers.  Sometimes the devil you know is better than the devil you don’t know.  Given that you recognize the areas of failure, how can you react to minimize the impact on your team and on your career?

6.     Finally, where are your weaknesses and what should you be doing to improve and to make a better contribution for your team.

Leadership isn’t easy, but keeping your standards should be.  Build a character that sustains in times of disappointment.

The Contradiction of Sacrifice

 

 

During my career I often heard of and saw others who had made a personal sacrifice for their company.  Most times this related to things like extensive travel; late or early hours (or both); weekends and holidays consumed with things of work.  Their feeling was that this level of sacrificial dedication was a good way of being considered for promotion or deserving of some recognition…particularly financial. 

A standard dictionary definition of sacrifice in this context put it this way.

 “…the surrender of something for the sake of something else…”

Expressed in this manner there is a certain magnanimous aspect to the individual’s efforts.   But that would be the wrong interpretation!

The fact of the matter is that the individual has not sacrificed anything.  Rather, they have made a conscious and self- serving decision.  Use whatever other rationale that may suit you, but the true sacrifice is made not by the individual but by those impacted by their decision.

Whether it is family or friends who lose the opportunity of relationship with the individual, these are those who are truly sacrificing something. 

When someone CHOOSES to throw themselves into their work to the extent that it causes disconnect with those who should otherwise expect this person’s time and attention, then this person has not sacrificed anything.  They are pursuing exactly that which they have chosen.

As a leader, are you justifying time away as a sacrifice you are making?  I submit that you are deluding yourself.  Clearly there are times when work appropriately demands more of you than is otherwise reasonable.  But when that demand is chronic, your choices are a bigger part of the problem.

Don’t pretend that the company is at fault.  Sacrifice only pertains to the relationship between individuals.  A company has no personality and therefore can neither demand nor recognize a sacrifice.

Leaders model behaviour for others.  In a perfect world it should be very much a ‘do as I do’ example.  How do you measure up?  Are you encouraging the sacrificial work ethics of others or are you - by word and by deed – demonstrating balance.

Here’s a quick example of sacrifice.  A former employee was in the middle of a successful career when they approached me to say that they were going to resign.  They felt an urgency to help others and were committing to an NGO for six months of volunteer work in a needy country.  Resignation seemed the only option.

Instead we worked out a leave of absence.  I wanted this individual to both realize the desires of their heart while affording them the opportunity to resume their career. I knew I could not replace and train someone in that period of time, but more importantly I commended their humanity and personal sacrifice. Their example continues to inspire me.

Your personal welfare and the welfare of your team members supersede the welfare of the company.  Be the leader that demonstrates that reality.

Thing Leaders Don't Do

 

Things leaders don’t do!

 

Great leaders:

1.    Don’t settle; they exceed.

2.    Don’t talk as much as they listen.

3.    Don’t hoard; they share.

4.    Don’t belittle; they praise.

5.    Don’t build walls; they open doors.

Outstanding leaders:

1.    Don’t hope for dreams to come true; they make them come true.

2.    Don’t require allegiance; they build loyalty.

3.    Don’t demand respect; they earn it.

4.    Don’t react; they anticipate.

5.    Don’t criticize; they teach.

 

Precious few leaders:

1.    Don’t build legacies; they build leaders.

2.    Don’t hang on; they know when it’s time to leave.

3.    Don’t need recognition; they acknowledge the contributions of others.

4.    Don’t fear diversity; they seek it.

5.    Don’t define themselves by title; but by results.