“How long will this crisis last?” and “How do we manage our company in this economic downtime?”
These are the two questions I have heard most often over the last few months. And although the answer to the first question remains an open debate, I can give you some pointers on the second.
Here’s a list of 10 actions you can take to improve your Strategy Execution capabilities in times of crisis.
1. Shorten your strategy review cycle. Today’s business environment is evolving at the speed of light. Instead of using your annual strategic review cycle to kick-start your budgeting process, aim for quarterly meetings. Make sure these meetings are well-prepared to allow for sound and rapid decision-making.
2. Balance the short and long term. Everybody has to make tough decisions. That’s what managing a crisis is all about. But be sure you evaluate each decision against your ability to compete over the long term. Using scenario thinking is a good way to approach this. It forces you to come up with alternatives and reflect on the long-term impact.
3. Do not mix up cost reduction with restructuring. A classical cost reduction exercise doesn’t impact your operating or business model – it merely trims the fat. Depending on your starting situation, it’s unlikely you will be able to reduce your overall cost basis by more than 15%. Re-think what you do. This not only saves costs – your primary concern today – but it puts you in pole position when markets rebound again.
4. Measure what is important. Don’t waste your time monitoring old Key Performance Indicators (KPIs) that have lost their value in these special circumstances. Instead, select those indicators that matter most. These will probably be related to your cash position, access to capital, and exposure to short- and long-term risk.
5. Manage cost reduction tensions between departments. It can be perfectly logical, from a business point of view, to cut costs more in some areas than in others. But these actions can quickly create perceptions of unfairness. Be careful to communicate the “why” behind these decisions. This will improve acceptance and reduce tensions among the groups in your organisation.
6. Make sure objectives are accepted. You can define a cost reduction objective by yourself, but you need people to implement it. This requires ownership – and ownership comes with acceptance. Even if you are pressed for time, it’s often a good idea to take one (or two) extra weeks to debate the cost reduction objectives. You will make up the lost time in multiples during the implementation.
7. Increase performance coaching. Most people get nervous and edgy during a crisis. They stop thinking clearly and under-perform. But this is exactly what you need to avoid in times of crisis. You need all the available potential to get the job done. Performance coaching is a great way to help managers stay at the top of their game in difficult times.
8. Manage high-performers. During a crisis, you need to hang on to your most talented people as they are the most likely to leave first. The best way to keep them on board is to involve them in the exercise your company is going through. Give them a role to play. Don’t leave them on the bench. If you are up for it, you can even consider attracting top talent – several are available and motivated to work for companies that navigate professionally through the complexities of the crisis.
9. Get rid of low-performers. There’s never a good time to have them on board – but due to past decisions (or a lack of them) most companies still employ quite a few low-performers. Well, now is a good time to take appropriate action. In times of crisis, the social climate accepts lay-offs. This reduces costs and sends a clear signal to your high-performers. So, don’t waste a good recession – take those steps you always wanted to take but never got around to taking.
10. Watch out for variable pay promises. Bonuses are a hot media topic today. The way a company deals with bonus plans has an impact on its image in the market. So, be careful what you promise. It’s better to have a bonus envelop that can be altered in light of future economic developments. Remember: research shows that individuals see money more as a satisfier than as a motivator.