The COVID-19 pandemic has created new challenges for everyone, businesses included. When we get beyond the current lockdown events being experienced by many people, there is yet to be another, more familiar challenge: a recession. With many economists predicting a recession to rival the Great Depression, many businesses will go bankrupt through no fault of their own, victims of extraordinary circumstances far outside their control. How companies deal with these tests will reveal a great deal about the character of those in charge; their approach to the challenge will be a strong determinant of whether they will survive. This article will explore some of the ways not to manage people and business during such a crisis.
People and Productivity:
The natural instinct of many poor managers during a time when they are faced with less work is to crack the whip and try to get people to work harder, more efficiently, put in more hours or some combination of all three. They will be scared by seeing money going out of the company on salaries and not enough revenue coming in to make a profit. One easily recognisable shape this takes is excessive criticism and focusing on unimportant things. For example, criticising an employee for using the wrong font on a document. Such criticisms rarely address any real failing on the employee’s part but are just meant to be a way of asserting control and making people feel that they need to do better.
All this does is produce a de-motivational effect on workers. People who are relentlessly criticised for unimportant things just develop a confrontational attitude towards those in authority. They will start to wonder why they bother doing the work they do if they are going to be treated badly for it. At the end of the day, if you do not think your employees are working to the best of their ability anyway, you have made a serious hiring error. Assuming that you hired well, you should not need to resort to such cheap tactics to attempt to motivate people. Most people want to do a job and do it well. Let them do it and stay out of their way.
Pay Cuts and Redundancy:
Unfortunately, many companies will have to face cost-cutting measures and these may include pay cuts and redundancies for many. This is often a sign that a company has been managed poorly (e.g. not saving enough for unforeseen events) but can also be due to a range of other uncontrollable factors. As ever though, the true test is how companies and managers deal with this difficult situation. Some will raise pay cuts and redundancies as a way of scaring people into working harder and longer. Others may take advantage of the situation to reduce employee pay despite the company doing well.
Either of the approaches described above will have negative effects on the employee population. When pay cuts and redundancies are discussed (even in the context of avoiding them) the first thing any sensible employee will think is that they should be polishing their CV and open to new opportunities. They will lose focus on their current job and start thinking about the potential for others. Even if they are temporarily galvanised into working harder, when the economy recovers, they will remember that when pushed into a difficult situation, their company was thinking of sacrificing their jobs to preserve profits. It should not be a surprise if the best people begin leaving a company that treats them like this.
For most knowledge work companies, people are the most important assets. They do not own machines that do valuable things, they employ people who know how to do valuable things. If a knowledge work company is considering removing employees or becoming less competitive for talent by reducing salaries, that company is in trouble. This reduces their effectiveness drastically, more so than in other types of work. If these measures have to be taken though, they should be taken in an open and honest way. Management accounts should be shared to clearly illustrate the situation the company is in. Pay cuts should be proportional and shared, rather than foisted upon more junior employees by more senior ones. Redundancies must be approached in a similarly open manner, with a discussion around why they are necessary and how best to ensure the company survives and everyone is least affected. Crucially, in this approach people are viewed as a part of the company rather than an expense to be reduced.
In a crisis that is out of their control, some people resort to focusing on what they can control. This results in micromanagement. For example, a manager calling up to tell you that the borders on a document you prepared are not to their liking and should be 1mm closer to the edge. This style of management represents a failure in either hiring people who can perform well on their own initiative or trusting and empowering people to do their job in their own way (or even both).
When people are managed in this way, the first effect is to waste everyone’s time by focusing on minor details. While there is some merit in consistency and getting details right, this is not how this should be communicated. Having to do something and then being told that it should be done differently and having work interrupted for minor points is a huge waste of time through cognitive task switching costs and redoing work. This is therefore another response to crisis that actually harms the organisation, reducing its chances of pulling through.
These factors are all closely related to the style of leadership used by people at the top of an organisation. Reacting in the ways listed in previous sections actually harm the company through decreasing the effectiveness of employees at just the time when they need to be at their most effective. It also has a sense of implying that employees are not already working to the best of their ability during a crisis, which is often untrue even if only for purely selfish reasons. This kind of strict and authoritarian approach is likely to have a demotivating effect on those who are already working hard, bringing us back again to them polishing up their CVs are looking for an opportunity to leave.
If we can call the above style being a boss, then being a true leader is very different. An actual leader understands that in order to thrive in a crisis, they need to lead the organisation from the front and view it as a collaborative effort rather than an autocratic one. They look to their employees for ideas and insight, working together to navigate through bad situations. They take a share in the good and bad of the company and recognise what is necessary to keep the company successful: its people.
Ultimately, this is a time to show leadership rather than simply management. Work as a company, ensure that your employees know that the company is trying to look after them and you all need to work together to ensure that you can all survive. Try not to get caught up in minutiae and focus on what is important: your people doing their best work and showing others how valuable this work is, not borders and fonts or other largely irrelevant details. With a truly collaborative and cooperative approach, companies can not only survive, but thrive and be made stronger by the hardship of economic crisis. When the economy emerges from the other side, these are the companies that will not be abandoned by their best employees and will be model organisations for their approach to managing people and crises.