We all know 2009 was a year of great uncertainty. With the number of companies who faced the prospect of laying off employees, reducing investment and freezing budgets it certainly was. While the downturn caught many people “off guard” it certainly wasn’t the first recession the world has faced and it will not be the last.

Couldn’t we see this coming?

Was it never going to happen again?

Did anything change after the last downturn in 19xx?

The truth is, the downturn of 2008-2009 was no different than the fable of the Ants and the Grasshopper. Great organizations spend every day preparing themselves for the challenges that may lie ahead, while others buried their head in the sand, and assumed it wouldn’t be too bad. Now, with the business graveyard packed to the brim with those organizations that didn’t meet the challenges of 2009, it’s time to turn our attention to the next downturn.

Yes, the next.

Yes, it’s coming.

Yes, it’s going to be just as bad – if not worse.

Regardless of what has happened after the last recession, or during this one, now is the time to change. Sure the next recession is 5 – 10 years away, but if you want to survive it, you’d better start now.

As the adage goes, you’re only as strong as your weakest link. Therefore, as you prepare, you must focus your attention on each component of your business:

Your Leadership – those who decide what you will do in the future

Your Organization – the tools and operations that will determine how you will survive

Your People – the very fabric of your organization who will ensure your success.

Prepare Your Leadership

Assess

Understanding the true strengths and weaknesses of your leadership team is essential if your organization is going to be ready. Whether you use formal processes, including 360 degree feedback, or informal performance measures, there must be an ongoing assessment process for each member of the leadership team. A crucial component to the assessment process is the actual calibration of the measures your organization uses to evaluate ongoing effectiveness. The true measure of success will come when your leaders willingly accept development to ensure there “readiness” in the future.

The Key: Take your Leaders to the next level

Align

Your leadership team may be made up of the very best people in their own functional responsibilities, however the higher up the organizational ladder you go, the more critical the alignment of these individuals becomes. In addition to the individual assessment process, there must be an ongoing alignment process or audit to ensure that all of the “dirty laundry” is aired, and the camaraderie of the team is maximized. Therefore, in the event of a potential future crisis, there is a minimal amount of friction between team members and a maximal collaborative effort towards the task at hand.

The Key: Turn Strangers into Friends

Adapt

If you agree with the fact that the business world reacts on a cycle that virtually ensures regular course corrections, then it must be believed that your current team may not be applicable at all stages of the business cycle. In growth times it may thrive, however, shortly following a recession, a different set of skills, and personalities may in fact be required. It takes a strong CEO to make these important decisions for the betterment of the organization overall.

The Key: Embrace Situational Leadership

Prepare the Organization

Metrics

Everyone knew this recent downturn was coming. The numbers were there, and as a community they were ignored, and we all saw what happened. Going forward great organizations have to change their rigour around monitoring key facts and figures regarding their company. In many ways, organizations must adopt the mentality of a Day Trader. Set parameters to gauge success and failure and act on them in a rational manner.

The Key: Avoid the Stall Points

Structure

One of the major changes we’ve noticed over the past 18 months is how great organizations are evolving their structures to become more nimble in the face of dramatic changes. In most cases, there is an emphasis on distributing the power to many people in segmented regions. While it may seem like a process of creating silos, the actual results are quite different. As it turns out, by moving to a broad structure, faint signals of change are picked up more quickly, and the knowledge is quickly passed across the organization.

The Key: Go wide

Process

In order to ensure success up to, through and past an economic downturn, there must be a strong desire at every level of your organization to establish rigorous processes. The goal is to ensure that everything done on a given day supports the growth and effectiveness of the organization. The key is to allow for a certain degree of flexibility which in turn may result in a further improvement of the process.

The Key: Stamp every process with an expiration date.

Prepare the People

Culture

Your organization cannot be faceless. No matter how big your organization is, it must have a soul and that soul is its culture. The stronger the cultural DNA, the greater the likelihood of survival towards and through the next recession your organization will face. In order to achieve a sustainable culture, there must be a concentrated effort to build a targeted recruiting process, an engaging leadership development program, all of which are built upon a set of meaningful Core Competencies.

The Key: Build an internal brand

Accountability

Economic downturns are certainly not to be taken lightly. The thousands of people who lost their jobs in 2009 can attest to that. In preparing for the next recession, your Human Resources department must educate all people managers to enforce a high level of accountability throughout the organization. Managers must also be held accountable for creating winning conditions for their people. By doing this you not only ensure your organization effectively executes its strategy, it lets your top talent know that their ongoing efforts are noticed.

The Key: Embrace Two-way accountability

Succession Planning

It is very unlikely that the next recession is going to happen tomorrow. However, it will happen eventually. Therefore, your organization must ensure it maintains a strong talent pipeline that ensures that future leaders are identified using standardized Early Talent Identification Assessments, and developed according to each individual’s performance improvement plan. That way, when the next recession is upon us, your new leaders will have been prepared accordingly to meet the challenges.

The Key: Grow your own Leaders

Conclusion

While another economic downturn is certain, the fact remains that one can’t predict exactly when it will happen. If however you do step back and observe from time to time you can see it coming. Look for the warning signs - 100% return on real estate investments, double digit growths on stocks, and a decade of record sales growth. Sure these things are allowed to happen, but if it’s happening to everyone, watch out – it’s about to blow. If you’re looking to prevent an absolute crash at your organization, take some time now, and build a Time Capsule. First, find a large clear container. Second, gather up some recent business magazines, business books, and broker’s reports and place them inside the container. Third, leave the container somewhere most people in your organization will see it. It will serve as a great reminder of how most people were caught up in the hype, and will help your people steer clear of the next recession.

About the Authors

Kyle Couch

Kyle is the Vice-President - Client Learning Experience for The Beacon Group. His primary responsibilities include the creation of all Leadership Development initiatives, trend spotting for The Beacon Group and its clients, as well as client relationship management.

Kyle’s work with clients is focused primarily in the areas of Emerging Leader Development, Creativity and Innovation, and Change Management.

R. Douglas Williamson

Doug Williamson is President & C.E.O. of The Beacon Group. Doug leads the company’s associates in their activities providing state of the art Leadership Development, Executive Coaching, Strategic Planning and Performance Management services and solutions to both private and public sector organizations in North
America.

Throughout his business career Doug has been actively involved in initiating positive change within many different organizations while improving the overall performance and effectiveness of countless senior level executive teams.

About The Beacon Group

The Beacon Group is a Canadian-based professional services firm providing support to clients throughout North America and around the world. We focus on helping organizations leverage their investment in their people. With our full line of service offerings, we are not only able to help organizations understand their strengths and weaknesses, but develop and deliver programs that help address key areas of concern, and enhance current strengths.

Visit The Beacon Group at www.thebeacongroup.ca