From Corporate Survival To Corporate Success: The Name Of The New Economic Game
Read in 19 min. Team and Organizational Survival Strategies for Turbulent Economic Times
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If your company has had a successful year of growth and profitability, you may be tempted to point your browser elsewhere. If you read on, you’ll find that the survival strategies we’re about to discuss are even more effective if you use them as preventative measures to build on your success before your company runs into difficulty.
It’s tempting to laugh and shake your head when you watch Survivor but the parallels to the real world are way too close for comfort. Just like the current economic landscape, the terrain is rugged and the competition is fierce. Some people will do anything to make it. We’ve all met Deb, the highly productive and competent employee who rubs people the wrong way and gets fired for her efforts.
We’ve also worked with:
• Gerri, the attractive young woman, who will use any ploy, sexual or otherwise to get ahead
• Alicia, the competent and assertive African-American employee, who gets canned because people find her intimidating
What would the corporate world be without the inevitable employees who smile in the face of co-workers and then cut them up behind their backs? Worst of all, on Survivor, the posturing, rumours, gossip, and backbiting intensify as times get tougher and the competition stiffer.
What’s sad is that all of these ploys, plots and schemes sap creative energy, kill morale, and undermine the effectiveness of the team at the very time when everyone should be pulling together. When the stakes are high and you can’t afford to lose, working as a team becomes a critical survival strategy.
On Survivor, make too many wrong moves and you face starvation, the cold or injury. In the real world, it’s downsizing, layoffs and bankruptcy. As banks around the globe have discovered, it doesn’t take much. Just one too many clients falling behind on their mortgage and it can be game over. The shockwaves can be felt around the globe as in a surreal domino effect, one company after another and one sector after another comes crashing down.
Changing Times … Changing Rules
In the real world, just like on Survivor, no one is immune. Anyone can get “voted off” the island. We have had a number of wake-up calls in the last decade from the tumbling of the NASDAQ in 2001 to the 2003 recession and now the 2008 Walt Street Meltdown. There is no need to repeat the names of all of the organizations previously considered to be rock solid. Many have been hard hit. The giants are tumbling and we read about them daily in the headlines.
Survival is the name of the game in this economy. It’s tough out there so it’s not hard to understand why a show that enacts these dynamics metaphorically would continue to appeal to such a large audience.
What’s a Company to Do?
So what’s the answer? The truth is that there are no magic answers, just some strategies to consider. To survive this economic crunch requires a change in mindset. It involves recognizing that what worked last year may not be the right strategy for today. It will take the courage to try something different, a lot of support from suppliers, partners, and employees and, lots of prayer.
Yes retreat. It’s impossible to come up with innovative solutions when you’re charging around putting out the latest fire. A retreat doesn’t have to involve going to a resort for a few days. (Save that for the party to celebrate your success when the recession is over.) If you really feel your team is in need of a break, do it frugally. To kick things off, it’s best to trim your session down to 1 day. Select a location that is no more than 30 minutes driving distance from your office. Skip the golf and save by not forking out cash for an overnight stay at a hotel. Instead, participate in 1 recreational activity to pull the team together and invest in a trained facilitator to work with your team, analyze your situation and come up with some innovative solutions. Continue your “retreat” one day a week for 3 consecutive weeks. After that, follow up is CRUCIAL.
When the market is shifting so quickly, a weekly 2 - 3 hour session in which you zero in on a key area is probably a better plan anyway. It’s important for your senior management team to get together to really some quality time to analyzing your strategy in 6 key areas:
• recruitment and deployment of talent
• customer service
• retention of top talent
• market intelligence
• new sources of revenue
• cost saving measures
If you have the skills to facilitate these sessions yourself, then go for it. Otherwise, take one of your senior facilitators out of the training room for a while, or hire a professional. It isn’t always best to go with the big guys. Remember, when you’re forking out $3500 a day to a large firm, a huge chunk of that is overhead. Are they charging you senior consulting rates and then sending you a rookie who they’re paying $600 a day? You’re helping them solve their survival challenges, not yours. A consultant from a smaller firm who has regular and first hand exposure to what it takes to win the survival game is more likely to bring you the expertise you need at this critical time. Also, don’t get caught up in the “not invented here” syndrome. During times of crisis, a fresh perspective is most valuable. It might actually be to your advantage to use a consultant from outside your industry.
I can hear you asking “are you for real?”
Absolutely! If you can’t free up at least 3 hours a week to focus on strategic issues that are vital to the survival of your business because the latest technical glitch, customer or employee complaint keeps landing on your desk, it’s a HUGE red flag that you can’t afford to ignore.
You need a super strong team at the director and management level that’s competent enough to handle the latest crisis and keep you informed. If you don’t have that kind of team in place, then you’ve just identified your first area of focus for your survival strategy sessions.
Talent Recruitment is not an HR Issue
During an economic downturn, companies often overlook the importance of a solid talent recruitment strategy. This is not the time to become complacent. An effective team will be the most important weapon in your arsenal in your organization’s fight for survival.
As a result of the downsizing that’s going on, a growing pool of qualified, talented people is available on the market. We haven’t seen this in years. Organizations have the opportunity to thoroughly screen and assess candidates to ensure appropriate skill level and corporate culture fit. Clearly define your requirements. Pinpoint the key competencies that you require in your management team and the job functions that are core for your organizations success. Incorporate behaviour based interviews, rigorous reference checks and work samples into your talent recruitment strategy.
Apply the same diligence to your promotional decisions. This is not the time to let the old boys’ network come into play. You need top talent who will produce results and help you through these uncertain times. Sometimes this means looking at people who don’t quite fit the mould in terms of sex, age and race. Remember, you’re running a business and the name of the game is survival. If you want to surround yourself with people who will play golf, agree with you, drink beer, and laugh at your jokes, join a country club.
Employ or Outsource
In an uncertain economic climate, the decision to expand your team should be weighed carefully. Is there any point in dramatically increasing your employee base to respond to new projects? An unexpected change in the financial stability of even a few of your key clients can mean a bunch of layoffs a few months from now. Hefty payouts for benefits, severance and vacation pay can substantially trim your bottom line.
There is a pool of freelance and contract talent available to handle challenges at all levels of the organization. Ask yourself:
• Does this project really have to be handled by an employee?
• Is outsourcing a viable option?
• Would we gain more flexibility by responding to this increase in business by using freelancers or contract workers?
• Can tele-commuting be used as an alternative to increasing overhead in the form of office space, furniture, and computer equipment?
Ask your HR team to provide you with an analysis to compare the full cost of filling a position with an employee vs. a contractor. Factor in the costs if there is a need to lay the employee off a few months or years down the road. The results may surprise you. Even when the economy recovers, weigh your hiring decisions carefully. It makes no sense to staff up when the good times roll and then have to lay off thousands of people a few years later.
Be Compulsive About Customer Service
When times are tough, you can’t afford to lose even one customer to the competition. If one customer has a negative experience with a member of your team, that customer will tell dozens of people about it. This can gradually erode your customer base and trim your profits. This is not the time to cut back on training your front line employees. You need to ensure that they have all of the training, tools, coaching and support that they require to deliver top-notch service to your customers. That is what will give you the competitive edge in this market. Instead of closing the training department, why not retain and re-deploy your best corporate trainers to provide “just in time training and coaching” to keep customer service standards high.
Remember that customers come in all shapes, sizes and colours. You need to make it clear to all members of your team that their biases and hang-ups belong at the door. Every customer and every employee deserves to be treated with dignity and respect.
In this turbulent economic climate, there is a misconception among some senior management teams that they no longer need to worry about talent retention. Even and especially if you have had to consider such drastic action such as layoffs, taking proactive steps to maintain the loyalty of your best talent is critical. If you treat some employees harshly during downsizing, then your most valued employees will wonder if they’re next. Their tendency will be to jump ship. Frank discussions with your team about the direction of the company, it’s challenges, and prospects are important. It’s best if employees hear the latest news, good, bad or indifferent, from you. Otherwise, the rumour mill will work overtime and undermine your efforts.
Companies also need to shape and mould an employee friendly culture so that your best people will remain loyal to you until things turn around. During the last recession, companies that took advantage of the situation and made unreasonable demands of their team, sowed the seed of talent recruitment and retention challenges that plagued them for years.
When there is a downturn, marketing is often one of the first areas to be cut. Remember, Eaton’s, a Canadian retail giant, went out of business because its senior management team lost touch with their customers and marketplace trends. To survive this economic crisis, you need regular and accurate data about your customers and your market. Rigorously track demand patterns in your key markets. Scan the horizon and seize opportunities in emerging growth markets.
What marketing strategies have been most effective in bringing your new business?
• Focus on those areas
• Save money by eliminating efforts that haven’t been paying off.
We have learned from the current crisis in the banking industry and the dotcom meltdown a few years ago that we neglect the fundamentals at our own peril.
Sources of new Business
Ask yourself: What new market niches can you target?
• The ethnic market is growing dramatically in North America but you would never know it when you look at most advertising campaigns.
• The Internet has literally opened up a world of opportunities, even for small businesses. If your traditional markets, are stagnating, look to areas of the world where there is growth and an increasing demand for your products and services.
• If your traditional market is consumer, ask yourself “in what way can I add value and attract potential corporate clients?”
Founded in 1980, Osim International, a Singapore based company with a stellar track record in product innovation, has traditionally marketed high end massage chairs for the consumer market, has faced some challenges in the last couple of years. In 2008, Emirates Airlines signed an agreement to purchase Osim massage chairs for all 18 of its dedicated first and business class lounges worldwide.
What are your competitors doing?
One of the contributing factors to the problems in the telecommunications industry is that too many companies have been focusing on the same narrow market niche creating an over supply in the market. The real estate markets in North America and the Middle East have also been setting themselves up for a similar problem by building too many luxury developments for the upscale market. I first wrote about this in 2003 and we are now seeing the results. If you’re all chasing after the same customers, there is bound to be a problem. Carve out a unique niche for yourself and reap the benefits.
Is there an opportunity to forge strategic alliances with some of your competitors?
Sometimes it is possible to bundle your services in new ways to serve a larger customer. This can work easily as well for small clients as it can for large corporations
Recently, a limousine company in Oman received a request to transport a team of executives and senior managers. The company did not have enough vehicles in their fleet. Through a strategic alliance with a competitor, they were able to win the business and service the client.
Re-think Your Offer
Pinpoint your core areas of expertise and do some brainstorming to identify other areas in which you can apply it.
Founded in 1993, CBL Data Recovery Technologies Inc. used to re-furbish and repair hard drives. A drop in the price of hard drives resulted in reduced demand for his services. CEO re-thought the company’s core offering applied the company’s expertise to data retrieval from damaged hard drives or hard drives that have crashed. In 2000, the company generated a profit of over $1,227,000 and was ranked by Profit Magazine as the 89th fastest growing company in Canada. The company has experienced steady growth worldwide since then. It now has worldwide labs in Asia, Australia, Europe, South America, and the Caribbean.
Shift Your Paradigm and Move Beyond Conventional Wisdom
BMW Canada had its BEST October ever in 2008 when the North American automobile industry was on the verge of collapse. Why? Instead of following the conventional wisdom that providers of luxury goods should never cut their prices, they reduced prices on some models and invested in glossy spreads in Canadian magazines. In a turbulent marketplace, all bets are off. The old rules don’t necessarily apply and there is a need to re-think the way things are “supposed to be” according to the experts.
Harness the Creative Drive of Your People to Cut Costs
Earlier I mentioned that there are no magic answers. However, frontline employees who interact directly with your customers are in an ideal position to give you some ideas for the best ways to reduce expenses. By involving your people in regular brainstorming and problem solving sessions, you can collect a lot of valuable information and ideas to help you resolve some of the issues you're facing. For example, your frontline employees should be able to help you generate strategies to streamline your processes and reduce your costs. It would be a shame to overlook this virtual gold mine within your organization.
This could significantly boost your profit margin. Concord Idea Corp. is able to produce memory at 33% of the cost of its competitors. Perhaps your team can help you achieve something similar in your market.
In 2008, Toyota cut 130 billion yen (US$1.4 billion) in expenses by identifying every possible way of saving money….even down to disconnecting the electric hand dryers in washrooms.
Every little bit helps. To quote James Surowiecki, financial columnist for the New Yorker "Toyota implements a million new ideas a year, and most of them come from ordinary workers. (Japanese companies get a hundred times as many suggestions from their workers as U.S. companies do."
Although still profitable, when Toyota predicted the first operating loss in its history, its President Katsuaki Watanabe affirmed that workers would be asked to contribute "ideas as well as sweat" to steer the company through tough times. Toyota has formed a CEO lead Emergency Profit Improvement Committee to identify ways to trim costs and evaluate the timing and scope of all projects.
Here are a few other ideas for trimming a tight budget that may be of use to your organization.
• Scrutinize your catering bill. Ask yourself, do executives earning over a million dollars a year really need to be provided with catered lunches on a daily basis?
• Examine your travel policies. Why fly business class for short distances if economy will do? Remember how the US auto companies were recently chastised? Is a corporate jet really necessary?
• Take the time to really find out what your customers want and remove expensive features that they don’t perceive as value added.
• Explore more cost effective options for hotel costs. Why is your team still staying at expensive airport hotels? Residence Inns by Mariott, Hilton Garden Inns, and Quality Suites are much more affordable, spacious and comfortable.
• Take a leaf out of Toyota’s book. Is your company spending money on recreational activities and calling it “team building”? Why not turn your team building sessions into an opportunity to generate ideas and strategies to improve corporate performance instead of an excuse to shop, drink alcohol and party? (This could also save your company the embarrassing publicity that AIG recently received for its US$400,000 spa retreat.)
• Just because times are tough does not mean that a company should cut all social activities. However, instead of letting every team select it’s own activities for team outings, why not come up with a central plan and realize cost savings through volume discounts.
The Bottom Line
Corporate survival involves:
• getting a clear picture of where you want to go,
• building a management team that shares your vision and communicates it clearly,
• getting your team to pull in the same direction and generate valuable ideas and solutions.
You'll reap the rewards in the form of:
• high morale,
• reduced turnover,
• a committed team focused on your goals,
• an improved bottom line.
Corporate success takes things to the next level by rewarding your team for its efforts, finding ways to dazzle your clients express appreciation for their support. Allocate a certain percentage of your budget to reward your team and your clients for helping you pull through tough times. Be proactive so you’re your company has a back up plan in place and you’re not caught off guard by the next meltdown.
When the economy recovers, we hope that some of these strategies will help your company to be much more than a corporate survivor. Instead, we hope that we have been able to ignite some creative sparks to fuel your corporate success.
The Rules of Survivor
The goal of the game is to survive. The last player to remain on the island at the end of the game wins $1,000,000. The game begins when 2 teams of strangers are left in a rough terrain. There is no opportunity for planning before the game begins. Each team has minutes to gather whatever supplies they can grab and trek across rugged terrain in search of their campsite. Exhausted and hungry, they must work together to construct some make shift dwellings, get a fire going (without matches) and figure out what they're going to eat in the middle of nowhere. The inevitable jockeying for position and politicking begins almost immediately.
Your thoughts matter - more than you can imagine.
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