How a Leader Can Make the Most of an Uncertain and Slow Growth Environment
As we emerge from the pandemic, growth appears to have slowed.
But the signals are mixed. While numbers indicate a slowing economy, the talent market remains tight. This has left leadership perplexed -what to make of the scenario?
Confusing as this may seem, it provides an opportunity for leaders to think out of the box. The test of leadership lies in how it can diffuse and neutralize the adverse effects of uncertain economic times and the disruption caused by the pandemic. Leaders can leverage the opportunities for strengthening employee engagement, client engagement and customer relationships, and building better relationships with partners.
Is this easy? No. Leadership never is.
Let’s take the plunge.
Numbers don’t lie
- The personal savings rate in the US stood at 3.4% in December 2022, according to the data released by the Bureau of Economic Analysis (US Dept of Commerce) on January 27, 2023.
- Credit card debt numbers are jaw-dropping. According to data from the GOBankingRates survey, published in a yahoo! finance article on January 30, 2023, the number of Americans with more than $10,000 of credit card debt stands at 14 million. Also, more than 30% believe that it will take more than two years to clear it.
- Organizations are pumping their brakes on hiring, according to National Public Radio, a non-profit media organization based in the US. Although the job market remains healthy, it is slowing and concerns of a recession are growing.
But this is just one side of the coin. In what can be termed as one of the strangest slowdowns or recessionary environments ever, the talent marketplace remains tight paradoxically.
According to an article by McKinsey, published on January 3, 2023, even if the economy slows, companies could still experience a talent shortage.
Baffling enough, leaders?
At the center of the slow growth, or this paradox, is productivity. Microsoft’s Work Trend Index, released in September 2022, shows the existence of a productivity paranoia – the mismatch between an employer and employee’s perception of productivity (over 85% of employees feel productive but only 12% of CEOs agree). It is real and organizations need to end it.
Organizations are finding it difficult to prioritize amid the mixed signals and continued disruption. There is little clarity on the economic outlook for 2023. Chances are that the slowdown will continue.
This is a rare situation. Thought leader and author Josh Bersin, who is also President and Founder of Bersin & Associates, an industry research and advisory firm in enterprise learning and talent management, says that the developing situation has rendered productivity a rather complex subject. How to improve productivity when growth is not guaranteed? This has created a new set of complex workforce and people issues.
Workers, across demographics, have been affected. According to a study by the University of California, published in April 2022, more than 45% of young adults reported mental health symptoms. Those with 20+ years of experience, too, are looking for meaningful engagement, but this is not resonating with the requirements of employers—age discrimination is rampant.
Add to this the growing awareness and consciousness about social and environmental issues. Amid the growing need for diversity and inclusion, sustainability, health, mental well-being and equality have emerged as core values organizations can ill-afford to ignore.
Leaders find themselves in a quandary. Multiple hats need to be donned. Attracting the right talent, retaining them, investing in re-skilling/upskilling, meeting the social commitments, all without stretching the budget and disturbing the balance between the company’s short- and long-term focus.
How can leaders leverage an uncertain and slow growth environment to their advantage?
- Emerge from the clouds. Slow or uncertain times are not necessarily bad. These can be a prelude to speeding up, provided you know how to maneuver.
Leaders sometimes avoid the glare during uncertainties. They prefer to be as less vocal and visible as possible to protect their image. The tendency is to tread safely so that nothing they say now can be held against them later.
Instead of taking cover, leaders should address the situation upfront. Uncertainties or economic slowdowns are often accompanied by rumors. You need to come out of the closet and address these head on.
- Go the Zen way. Introspect on your leadership style. The strengths, weaknesses and the changes required. A slowing economy or uncertainties, irrespective of their challenges, gives leadership the time to rethink and revisit several strategies.
A new style of leadership is emerging. From the earlier focus on aggressively pursuing growth, leaders are increasingly embracing empathy. Excessive focus on productivity is giving way to an employee-centric approach. The current breed of leaders knows where to cut costs, where to invest.
Assess your areas of development, the skills you should have or could improve upon. This is especially relevant for developing power skills or soft skills. How would you want to work on these? Which training or learning & development programs will help? Which courses are available for you to avail?
- Does the way lead to a master? Reflection at the individual level may help. Taking help from seasoned experts may help a lot more.Enter Vantedge Search and our peers.
These firms specialize in leadership development, coaching and mentoring, and succession planning, among a host of other services. They also offer sound advice and customized solutions on talent acquisition and retention.
Leveraging their bespoke services and incisive insights, you can work on developing high potential members for specific roles, including succession planning. Their expertise and experience could be tapped in to scale up the general workforce too, for both hard and soft skills.
Availing these services, you will be better equipped to handle the situation.
- It’s all about being human. Hold conversations with as many people as you can, both within and outside the C-suite. Take their views into consideration. Regular talks help in understanding different mindsets and how to align yours with theirs.
Communicate with the juniors, too. It is important to keep everyone in the loop. Transparency in communicating the situation builds confidence among employees. Gain their trust. This will reap rich dividends when you plan any productive organizational change later on.
Use the time to increase connectivity with the team across the organization. Be honest and consistent. Ask for questions and give genuine answers. If you don’t have answers, acknowledge that openly. Keeping in the dark dents trust.
Hold meetings, both formal and informal. Keep the atmosphere light during formal discussions, even when you are taking the status reports. You don’t want to make it very serious and add to the chaos. Conduct meetings or discussions in such a way to eliminate strain.
Healthy conversations facilitate the exchange of ideas, insights, and information. You get to know what others think, while communication from the leadership helps in assuaging concerns and quelling rumors.
Extremely important – listen. Observe people—not just during meetings, but otherwise as well. A lot of thoughts, perceptions and ideas float around during periods of uncertainties. Some may be critical of the approach taken by the leadership. Don’t react or lose composure. Absorb. Ponder. Then respond – calmly.
The various interactions or observations will provide you with a lot of information. You can process this knowledge by anticipating what might unfold next and how you could keep your employees engaged. Based on how you handle the situation, employees will draw their conclusions about the leadership.
- Strike the winning chord. Uncertainties and slowdowns set the stage to rally employees behind you. How? By investing in talent building as a means of employee engagement.
Often, the first recourse during a downturn is to scale down the workforce. You may be tempted to do the same. Before you proceed, think rationally. What are your requirements and targets? How will losing talent affect you? What if the people you layoff are absorbed by your rival firms?
Leadership should first aim to retain talent that could add value in the future. See how you can upskill and reskill your existing workforce for futuristic roles such as advanced analytics and other hard-to-find skills.
Invest in your existing talent pool. Revisit the learning & development programs. Come up with relevant modules for training. See where you can invest in upgrading their knowledge and skills for more specific roles. You can also hire the services of talent acquisition solution providers with specialization in coaching and mentoring.
Facilitating internal talent mobility may also help you attract high potential talent. Besides, it will send a powerful message to the existing workforce about the organization being employee-centric.
Use the time to coordinate with HR leadership and see if certain roles need to be redefined. Assess if career paths need a revisit; how KRAs or KPIs can be molded to fit the new or changing requirements.
See how you can widen your talent pool, make it multigenerational and diverse. This will help you in widening your network for sourcing the right talent. It will indicate your focus on creating an inclusive organization.
Ideate on working arrangements and how you can provide a better ecosystem to support people. See if you can make these flexible to suit different requirements. The more options you have, the greater the chances of attracting and retaining workers.
- Do we need a makeover? Organizational change may be on the cards. Revisit your mission and vision statements, company strategies, policies, processes, and structure. Assess your company’s culture. Are all these aspects in alignment with each other? What measures must you take to build a more inclusive and diverse culture?
Revisit your budget. Does the current slow growth environment call for trimming or reallocation of funds between activities? What will be your priority areas for investment – growth, marketing, expansion, workforce, any specific market or division? Where would you cut costs?
Assess the operational aspect of your organization. Should you realign functions or operations? How will you execute it?
Assess if changes in management structure are required, or in hierarchy. Is there scope or reason to realign the responsibilities of the various teams, the line of command, or the job structure?
Do you foresee layoffs if pushed to the wall? If yes, this is the best time to plan it in a way to minimize the impact on the remaining workforce.If some employees exit, what changes do you foresee in the respective divisions and their structures? Discuss with the department heads or with other C-suite members, but be very guarded and ensure the conversations are held prudently—you don’t want to spread panic.Your aim is to just put a word in their ears for a “maybe” scenario – nothing more.
Assess the level of technological advancement in your organization. Do you need to invest in certain technologies to streamline processes, any new software, or systems to enhance efficiency?
Re-look at risk assessment and contingency planning. How prepared are you to meet unforeseen circumstances, say any potential supply chain disruption that could happen in an economically uncertain and disruptive environment? Which other issues do you foresee?
Interact with the relevant people in your company to take a stock of the preparedness. See if there are any loopholes and how these could be plugged.
Slowdowns give you the scope to revisit every aspect of your business. You can leverage the time to identify the problems and make remedial changes.
Bad economy and uncertain times put the character of a leader to test. Leadership, as it is, is not easy. Times like these make it even more challenging. You can be bogged down by turnabouts, self-doubt, and the constant anxiety of losing the goodwill of your people.
How you deal with the situation will reflect on your style of leadership. The way you navigate through the challenges will show your maturity as a leader.
It is obvious the usual crisis protocols will not apply.
The right approach is to treat it as an opportunity. When you look at it through these lenses, you connect with your employees and work to build an engaging workplace culture. It gives you the time and scope, which a period of fast growth may not afford, to work with your team.
You need to rein in your natural response to deal with a downturn by speeding up and pushing others around you. The more self-control you exercise, the more effective you will be in de-escalating the crisis in terms of impact.
When the going gets slow, leadership opportunities grow.