Stability (sweet word). Growth (also sweet). National optimism (remember when?). Full employment (global competition has eroded this concept). Retirement anticipation (yesteryear).
The election period is almost behind us, and these concepts seem to have faded away as we come to grips with basic economic problems, not just in Washington but in all of our workplaces and around our own kitchen tables. There is continuing instability in our once well-respected financial system, and this impacts all of us — businesses and individuals. Many economists say we should not expect any sense of normalcy until perhaps 2010. Certainly the housing market must return to growth mode and builders must be optimistic about future financing ability.
Tom Peters, a well-known business consultant and executive guru of the 1990s and early 2000s, authored a popular prescriptive book, “Thriving on Chaos.” He argued then (and would argue now, I believe) that if “the organization” is not broken, we should break it now and put it back together in a fashion that would fit the new environment in which we operate.
Our political candidates have stressed “change” as a basic theme, although they have used the term in vastly different ways. One candidate will now emerge as the victor, and set about designing the implementation of his “change” strategy. Ideally, the new president will be able to provide the leadership needed to establish a renewed sense of national pride.
What must private sector executives do? Perhaps Tom Peters’s counsel is appropriate: Rethink what we do; rethink our planning process and set about developing a truly strategic plan for this “change” environment; rethink how we best might do what we plan for (forget how we do it now); rethink how to structure the organization. Peters would add that we must throw away our policy manuals and rules, because now is a time to look ahead and make adjustments. Our employees will be most able to accept change now, given the chaotic times we face. You can get all employees to rally around an organization change. Time is fleeting, however.
You may need expertise outside of your staff. Choose consultants carefully and examine their experience with strategic planning and its implementation. Do not overlook the expertise in universities and local colleges. It often can be had at bargain-basement prices.
Even before such change is readied in your organization, it faces numerous hurdles because of the business chaos of 2006-2008. Executive-level personnel will experience a possibly devastating challenge. Mid-cap firms rely on established banking relationships. They provide their banks with periodic updates on their financial stability and, in return, normally receive renewals of their line of credit. That availability of funds is a real security blanket.
For the small-business venture, there has often been a challenge in dealing with banks. Bankers traditionally have shied away from risk, and small businesses often are viewed as risky, especially if there is insufficient collateral to secure a loan. In today’s financial turmoil, banks are quite resistant to borrowing requests by small businesses (this may come as no surprise to many readers). Since the infamous “bailout,” many small businesses in the marine industry have seen their lines of credit cancelled. That line of credit is far more an important asset to them than to most mid-cap firms. Some small businesses have been able to locate new credit lines from small community banks, but at higher rates of interest. Some have had to rely on personal or business credit cards. Some have been able to negotiate credit from their landlords, who themselves would be in a bind if the small marine business were to fail. Marine manufacturers may become lenders of last resort for marina operators. Time will tell, but such ideas should not be quickly disregarded.
Some automobile dealers are experiencing inventory financing problems now, and it’s possible marine retailers could encounter the same problems? What will you do? Find a backup credit source now? Maintain contact with other retailers to be able to learn early if financing is becoming a problem? It is best to confront this issue now, rather than when the urgency is high.
Another significant role for senior managers is the assurance that truth and honesty prevail in all internal discussions of challenges faced and future plans. Non-truths and game playing with employees at any level can be damaging for the long run. Senior managers are expected to be optimistic, but they should not overlook reality. Only when a realistic plan for the future is developed will employee questions be answered with any degree of realism.
Truth and honesty must prevail in all discussions of retirement benefits. In the marine industry, we have both benefit-based and contribution-based (401k) retirement plans. The benefit-based plans call for a specific benefit to be paid after a certain period of employment. Is this plan secure? Senior managers must verify the financial health of the pension fund, normally managed by an external investment organization. Most such plans are conservative by nature; however, mortgage-backed securities had been viewed as safe investments until the last two years. This is a high-priority issue for employees.
Mid-level and front-line managers have a totally different challenge: to allay the fears of all staff members. Reflecting on classical “need” theory, employees are concerned not just with rising prices of groceries and fuel, but with the underlying security of their job. Unemployment figures are rising, and many marine industry employees know these “statistics” as people who no longer work alongside them. As Mary Elston noted last month in the management column, the people who remain on the job usually must do more than in previous periods, in order that the total job gets done with fewer people.
These “survivors” often are far more stressed in their daily lives than are those who lost their jobs. Managers at every level must find ways of reassuring staff members of the company’s viability. If the company is strong fundamentally, make this case to all employees. If there are problems far on the horizon, explain them, and let employees at all levels become part of the solution. Group decisions tend to build commitment to the organization that has entrusted people with that responsibility. What’s more, group decisions also tend to be more accurate.
Consider the issues being discussed in the presidential campaign. Each of these issues is now of concern to all staff members — they have been so exposed to the political ads trumpeting the problems.
Take health care. You may consider a series of meetings with all staff to explain the company’s current coverage and any changes in the works. Be ready to answer questions and reassure people of their security within your company.
One primary quality of a leader and a good manager is to see optimism on the horizon, and now is the time to offer as many reassurances as possible that you are optimistic about your future and theirs. This needs to be done often and with precision.
Good luck in this chaotic time. Drop me an e-mail and tell me what is especially problematic at your place of business.
Jerald F. Robinson, Ph.D., is Professor Emeritus – International Management, Pamplin College of Business of Virginia Tech in Blacksburg, Va. He can be reached at (540) 449-5870 or by e-mail: JFR@vt.edu
This article originally appeared in the November 2008 issue.