01 March 2023
What is a common Leadership mistake made in Economic Volatility?
We would answer that by saying a common leadership mistake in response to economic volatility is focusing on short-term survival, which often means putting revenue first and people second.
But it is important that effective leaders keep an eye on the long term, balancing immediate results with investment in the people working to achieve those results—which also positions their organisations for a stronger recovery.
When economic instability sets in, it’s natural for organisations to become more risk averse. But scaling back too much can backfire, especially if you eliminate training programs or personnel essential to accomplishing your business goals.
A key to steady leadership within your organisations is to resist making drastic changes unless there is a compelling reason.
Instead, stay super focused on achieving your most important goals and ensuring your people have what they need to reach them.
4 Disciplines of Execution
Quoted from Franklin Covey:
- Clearly and narrowly define—or redefine—your goals. Even if you already know what your most important goals are, priorities can change in the face of economic challenges. Take time now to review your strategy and identify the number one goal that will define the future of your organisation. This will be your North Star for any difficult decisions that arise.
- Be proactive, not reactive. Rather than making decisions to avoid an unpleasant outcome, take actions based on achieving what’s most important to your organisation. If you need to cut budgets or reallocate resources, do it strategically and keep the focus on channeling resources toward your top priorities.
- Be specific about how you will measure outcomes. When teams and individuals are clear about how performance will be assessed, they can focus their efforts on the activities that will move the needle the most.
- Hold people accountable regularly. Weekly meetings are ideal for talking through successes, failures, and new goals. This helps teams stay motivated, and it helps you understand immediately where things might be going wrong so you can course-correct without missing a beat.
- Invite feedback. During stressful times, leaders sometimes become less open to constructive criticism. They can interpret suggestions for improvement as resistance to their leadership. To keep execution on point, it’s important to remember that the people closest to the work may have the best insights and ideas for optimisation as you drive toward your goals.
Build a Culture of Trust
Once you have your execution strategy in place, turn your focus to the individuals who will implement it. A turbulent economy can involve high levels of uncertainty and pressure that affect everyone. People naturally worry about the future of the organisation, their own jobs, and other factors outside of work—all of which can impact their performance.
A culture of trust is especially important during difficult times because it helps teams feel safe, connected, and motivated. It empowers people to bring their best selves and ideas to work, fostering greater innovation, productivity, and business results. The more trust that exists within a team, the better they can execute on your most important goals.
Consider these tips for creating a high-trust work environment:
- Start at the top. Be transparent and honest about how you’re steering the organisation through rough waters. Communicate clearly and model trust by allowing people to ask any questions on their minds. Let your people know you’re all in it together.
- Resist the urge to micromanage. Difficult economic times can bring a sense of urgency, and leaders often want to get more involved with their teams so they can feel in control. This sends a message of mistrust and can even interfere with their team’s ability to get work done. Look for ways to support your team without taking over. For example, a clear execution plan—complete with clear goals, measurement, and the right coaching—will build trust and boost your team’s performance more than trying to do their jobs yourself.
- Handle conflict fairly and effectively. Your team needs to know that you don’t ignore problems, especially when they threaten performance or job satisfaction. Create regular opportunities for people to raise issues and be straightforward about what actions you decide to take in response. When team members see you consistently handling conflicts in a fair way, they trust that you’ll be fair with them too.
- Recognise and celebrate people’s work. Show that you notice and value every team member’s contribution, even small ones. Gratitude leads to better interpersonal relationships and builds a sense of community that can be an anchor to help steady people in difficult times.
- Support career development. When team members know you’re invested in their growth, they develop trust and loyalty. Prioritising development during difficult economic times can also help you expand the set of skills in your team’s wheelhouse.
Thrive in Any Economic Climate
The best time to prepare for challenging times is before they hit.
Start now to create effective execution plans and build a winning culture, and you’ll be more prepared and confident that your organisation will not only survive but thrive—no matter what the economy does.
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Article references - HR Executive and Franklin Covey