I recently had a conversation with a friend who is an executive with a mid-sized software company growing rapidly through acquisition. We discussed the various challenges his leadership team is facing and the approaches they were taking to solve them. His company is struggling to assimilate the cultures of the acquired firms, reduce expenses and create synergies from the combined companies. He admitted they had a solid plan to address the financial side of the issues, but they felt overwhelmed by the more complex people side of the equation. In my experience, many senior leaders like my friend and his peers typically develop a “business response” to their “business problem”, which, on paper, seems logical. Where these plans sometimes fall short is in how leaders miscalculate the unintended consequences for their employees resulting from the decisions that have been made and how these decisions are communicated to the organization.
For the readers of this post, what constitutes a “challenge” can vary, but some examples might include reducing costs after acquiring another company, missing revenue or profit targets, marketplace disruption from a competitor, product recalls, lawsuits, layoffs, etc. Before we address the unintended consequences I mentioned in the first paragraph, let’s reflect on six common maxims business leaders should consider taking to heart when dealing with difficult challenges:
- Everyone already knows (to some degree) what is happening. There are no secrets in business anymore.
- The less we communicate what is really going on, the more our employees will jump to their own (and often incorrect) conclusions.
- The leaders tasked with communicating the change, the battle plan, the bad news, the future strategy, etc. may feel ill prepared and fearful about delivering these messages.
- Our competitors will likely know we are struggling and the phones of our best people are ringing with recruiter calls.
- People are committed and loyal to the extent the company is loyal and committed to them…and not one bit more.
- There is a real person (or people) impacted by every business decision. We should always strive to be compassionate and fair with our employees.
Unfortunately, senior leaders often operate in bubbles of their own making and make faulty assumptions that are fueled by infrequent candid interactions with the rank and file of their organizations. This lack of interaction is often exacerbated in times of difficult challenge as leaders sometimes retreat from open dialogue with their teams as they develop strategies to deal with the pressing issues at hand. This is a dangerous and common mistake that leads to misinformed calculations regarding how employees will react to company leadership decisions during difficult times and the unintended consequences of these decisions often come as a surprise.
What are some of these unintended consequences?
Low Morale-Difficult business challenges can cast a cloud of nervousness and fear over employees that dampen morale and employee engagement across the organization. Poor communication from leaders only makes it worse.
Dampened Productivity-Low morale and decreased engagement negatively affect work habits and productivity suffers. Deadlines and goals may be missed as employees are distracted by the uncertainty of the company’s future and how this will impact their personal situation.
The Best Employees Leave-The high potential, high performing and experienced leaders we hope will stay through this difficult period will likely start listening to the recruiting calls they once politely ignored. This talent drain is the most common and damaging unintended consequence to companies in my experience.
Diminished Brand in the Marketplace-As people start leaving in greater numbers and employees tell their friends about the challenging times in the company, this will likely affect how the company is perceived in the marketplace. This brand challenge will have a negative impact on everything from current customer relationships to the future recruitment of new hires.
If you are a leader at any level of an organization dealing with a difficult business challenge now or expect to in the future (and every leader should expect to encounter challenges on an ongoing basis), how do you plan to address the four unintended consequences I have shared? What can you do to get ahead of these challenges and be better prepared? They may appear obvious to some, but far too often they are overlooked.
Here are six proactive approaches/ideas for how to address these issues I have learned from a small group of companies and leaders over the years who have largely avoided the four unintended consequences:
- Be Transparent. “Houston, we have a problem.” Don’t deny or hide the issues. Be clear about the challenges, share what you know and be candid about what you do not know (or cannot yet share). Trust your employees with the truth. If layoffs are part of your particular challenge, don’t hide or soft-peddle it. “If you don’t choose to do it in leadership time up front, you do it in crisis management time down the road.” – Stephen Covey
- Listen to Your People. Listen to your employees across the organization and understand their concerns/fears in one-on-one meetings and small town halls. Whatever the plan is to address the change, challenge or crisis, people need to feel that they have a voice and are valued…and that leaders genuinely care about them. The worst time to avoid engaging with team members is in the midst of a tough time for the business. “If people don’t weigh in, they can’t buy in.” – Patrick Lencioni
- You Touch It, You Own It. As a leader of the organization, no matter what your level of responsibility, take personal ownership to ensure that you are offering a positive contribution to helping the company and your team through the challenge. Your candid communication, positive attitude and willingness to engage with your teams will help the company and employees survive the difficulties at hand. Remember: Leaders are required to inspire and motivate, especially in difficult times.
- Communicate, Communicate, Communicate! In the absence of transparent and consistent communication, people always assume the worst. Better to over-communicate than to have too little communication. It is also critical to communicate the “WHY” behind difficult decisions. Why are we making this change? Why is this decision important? Why will it be necessary to have layoffs? Helpful tip: Place yourself in the shoes of those who will be receiving important information from you and reflect on how it will come across. Do you feel trusting, accepting and motivated to do what is required after listening to yourself? If not, go back to the drawing board.
- Don’t Neglect Your Best People. I have seen time and time again over the years the surprised reactions of leaders who see their high potentials, high performers and experienced leaders opt out before, during and immediately after a period of change or crisis. If you peek behind the curtain to understand why, you often discover these talented people are not viewed as flight risks and not enough is done by their companies to invest in them, make them feel wanted and give them compelling reasons to stay during the period of difficulty. These very people are also often forced to shoulder heavier than usual burdens in the middle of layoffs or other significant changes to keep the business going in the right direction. This neglect extracts a steep price from companies after the change or crisis is past, when many of the key people they are relying on most for the future have left for what they believe will be greener pastures.
- Ask for a Commitment. If you execute on the other five approaches outlined above, you have earned the right to ask for a commitment from your team. If they believe you have been transparent, candid, listened to them and treated them as the valuable assets they are, you can humbly ask for patience and help to see the company through the difficulties ahead. Even if you announce layoffs are coming, you can ask people to continue doing their jobs to the best of their ability if they trust that painful people decisions will be made fairly, compassionately and for those being laid off…hopefully with generosity.
Difficult decisions in the business world must be made…that is never going to change. Employees may lose their jobs or experience some sort of other negative impact during challenging times. This is an unfortunate, but often necessary part of business. But, we can’t forget that there are human beings affected by every decision we make. Whatever the change, challenge or crisis we are facing (or will face in the future), remember the unintended consequences of narrowly responding to difficult times with only an accounting exercise without an equally thoughtful “people exercise”. The accounting only approach is shortsighted and will achieve only temporary improvement if we do not also serve the needs of our people. Perhaps Robert K. Greenleaf, who coined the term “Servant Leadership”, said it best: “Good leaders must first become good servants.”
It comes down to two simple questions: Can we avoid or at least moderate the unintended consequences mentioned in this post? Is it possible to serve the needs of the business and the people who work there with a more thoughtful and balanced approach to solving our business challenges? I shared this post with my friend after our recent conversation and he found the ideas and reminders to be helpful in re-shaping his thinking about the people side of the equation. Please take this post to heart and reflect on how you as a leader will embrace different thinking in your moments of change, challenge and crisis.
“Always do right. This will gratify some people and astonish the rest.” – Mark Twain
Randy Hain is the president of Serviam Partners, the award-winning author of seven books, an executive coach, leadership consultant and thought leader on business relationships.