Managing Through a Crisis

The recent economic turmoil will likely challenge small businesses in ways they haven’t experienced in many years. Managers will be forced to evaluate every dollar they spend, consider how resources are allocated, determine which initiatives should be advanced and which ones should be tabled. They may be forced to evaluate each and every employee and be asked to trim budgets through lay-offs.

For some businesses, the marketplace may change so dramatically that the company cannot survive. A small business supplying products to the flailing automotive industry, for example, may not be able to adapt their products or services to other industries and simply fail. For others, however, this down cycle may create enormous opportunities to dig in, improve products and services, and capture market share.

A recent Business Week article (“Managing Through a Crisis: The New Rules”, Emily Thornton, January 8, 2009), sets forth some advice in adapting to the realities of the changing marketplace:

Acknowledge to yourself and your team that the world has changed. Dennis Carey, a senior partner at Korn Ferry International (KFY), argues that now is the time to question every technique that worked during boom years. “You can’t rely on a peacetime general to fight a war,” says Carey. “The wartime CEO prepares for the worst so that his or her company can take market share away from players who haven’t.” Many of the best managers in 2008 were gearing up for battle during good times.

Perhaps you were one of the “best managers” that geared up for this battle during the good times; perhaps not. Regardless, this business climate provides enormous opportunities for the great manager.

First, this is the time to get back to basics. Review skills, ensure employees can do the basics of their jobs perfectly, provide additional training, update knowledge, even cross-train. Why? Because many companies – in a panic – will react quite differently. They will reduce training, automatically reduce their workforce, and slow down advertising. A “wartime” manager will recognize that opportunities abound as competitors pull back.

Second, turn to your employees for ideas. How can we improve? Where can we cut costs? How can we become more efficient? How can we become more competitive? What opportunities exist to capture market share? Great teams are often forged during tough economic times.

Third, if there was ever a time to evaluate and improve communication with your team, this is it. Change always creates stress, which, in turn, can create needless worry. Communicate with your team as a group, but spend plenty of time in one-on-one conversations with your direct reports – and make sure they do the same with the people they manage.

Economic downturns can create challenges; however, they don’t necessarily have to lead to crisis. Quite often, they can be opportunities in disguise.