Leading company’s in a recession requires grit, perseverance, and determination coupled with IQ/EQ and real time problem solving skills.
As boards look to coach their CEOs and executive leadership teams, I share a few practical / actionable ideas along with a philosophy and approach for consideration:
In times of great uncertainty, it is very important for CEOs and leadership teams to be present, in person, in front of employees.
I believe it is valuable that the CEO is spending a very significant amount of time sharing the vision for the future with employees across geographies and regions.
Layoffs / financial austerity and restructuring are part of the tools many companies will use. Employees need the reassurance they are part of the go forward team.
Employees need to hear the vision and what to expect going forward as the CEO shares the plan and more importantly on the EQ soft side, galvanizes the company around the company’s mission and creates cultural connectedness.
In these difficult times, employees look for positive points of reassurance.
Recognize your employees who are high performing in these difficult times. Employees want to know they are appreciated, valued and that as they tighten their belts and lean in to do the really hard work of getting through this difficult cycle. Find ways to celebrate and recognize incremental small achievements as well as big ones. Perhaps there is a new product feature being released, or a metric being achieved. Think about how you can more regularly celebrate the team’s achievement and recognize your top performers.
On the practical side, creating morale and esprit de corps is key.
Having regular all-hands meetings as well as out in the field in person meetings is very impactful. Think of how you engaged with your team in the early days of Covid.
You may also consider, are there any inspirational motivational outside speakers that can be part of a rotation on all hand’s meetings.
At Wynn ResortsWYNN the company created deeply emotive and powerful internal videos celebrating the Wynn culture.
These videos were very effective, and they showed the wide range of diverse people and diverse roles and functions across the organization capturing the individuals authentic and genuine feelings creating a esprit de corps reinforcing what is special about your culture. Perhaps there are similar video artifacts you can create.
Employee engagement is key to getting through this tough cycle. Look at delegating some authority to managers and look at giving them a budget so they can give small recognition awards to their team members. Small things can range from hats, gift cards etc., but delegating the authority to the manager and giving them a budget is very effective.
Not everyone on the team has the skills, background and resilience to handle both the growth cycle and the current recession cycle.
You may need to make the hard choices of who is not going to make it through the recession cycle.
You need the team members who are motivated for the long term and fired up to go through this tough time.
You may want to ask management to review the employees with the lens of who are the right people for this cycle and to make the hard call of who will not make it early.
Another important thing to ask your CEO and leadership team is to identify the top performers who really “move the needle”. This would be a time to lock them in with differentiated equity and long-term incentives.
Those that are your most important “life boat picks,” should be rewarded and retained in a differentiated way.
When looking at functional groups in the company in a recessionary cycle, one of the learnings that is often cited from other downturns is the importance of customer acquisition and retention.
I think it is worth doing a very deep dive on some of the actual very small tactical things that the best sales leaders like Steve Benson have identified:
It is valuable to look at how you would forward plan the challenges your CROCRO and sales team will be facing in this bad economy, here are some examples from the software industry:
1. Great leaders face a crises and look reality in the eye. In times of great change you need to be action oriented and get an accurate picture of what challenges you think your company will face. Build a plan. Have a positive outlook, involve the team and be transparent about the action plan going forward. Identify your most successful reps and find out their customized playbook they are using. They have figured out how to crack the code. Make that rep the hero and teach those behaviors across the organization.
2. Sales leadership must be very close to every deal and be sure it is getting to the key decision makers. Sales leadership often will need to come in and assist to get the big deals closed.
3. Sales reps will need coaching in the down economy. There are new skills you need to help the team acquire. Assess if your sales leader is spending at least 50% of their time coaching the teams and doing in person joint calls.
4. Maniacally looking at the lead generation and qualified leads in all three sections of the funnel are key. (Understand if your deals are stalling at the middle of the funnel or at the end).
5. Buyers will negotiate tougher terms. Deals may get stuck and not close. It will be important to qualify if the buyer is actually authorized to go forward or if there is a companywide freeze. Deep focus on the sales operations and forecast KPIs so you are sure deals are really progressing to close.
6. Decide if you should change your commission plan. In this time of duress do you want to compensate on revenue, or do you want to compensate on margin? Historically in the software industry reps are paid on revenue. Do you want to consider paying them on profit / margin?
7. Look at upskilling your sales organization on negotiating and retrain the sales organization to sell the benefits of the solution. Plan ahead to defend your margins.
8. Your competitors may well become desperate and do significantly deeper discounting. Some companies will be under such duress they may liquidate inventory. Expect that there will be pressure to give away free consulting or other valuable products/services steal your customers.
In an ideal world you would hope to do one very deep layoff rather than multiple cuts. Given that this recession is new and uncharted for many companies you may be going through the pain of more than one cut. The board should consider the wisdom of encouraging management to do the tough planning to aim for one big cut and to try to avoid doing many frequent small cuts.
I hope reading this list has spurred you to your own tactical learnings and experiences. Think about applying this tactical lens to other functional areas and distilling down the most specific tactical decisions that can be made to move the company from its peacetime growth at all costs cycle to a wartime cash conversation profitability footing.
There is a lot of wisdom your friends, colleagues and board members who have been through cycles can share.
Think about allocating time in your next board meeting for a discussion about what learnings each board member has to contribute having lived through different recessionary cycles. You’ll energize your board by asking them to engage. You’ll be surprised by the vibrancy of the discussion as everyone collaborates to help iterate on which experiences and learnings are most appropriate for your company.