Planning for the Downturn

An economic downturn is looming ... the only questions about the extent and timing. HBR asked some of its bloggers to give their perspective. What about yours?

Tom Davenport in Recession: The Next Big Thing comments:

I’m hoping this time for a more enlightened approach to recession-oriented management. Gone, I hope, will be the managerial conservatism, the mindless cutbacks, the early retirement offers to everyone with a pulse, the fire-sale pricing. We can do better, so let’s try.

He suggests that people have shown willingness to tighten their belts together. So rather than cut 10% of the workforce, can we find ways to reduce executive compensation, reduce work hours, and cut compensation costs for the short term? Notice what I started with - executive compensation. It's got to start at the top with a stronger and deeper commitment than is being asked for from the employees, and not automatically made up for in the next bonus round.

If you can retain and even engage employees through bold management moves during a downturn, it may be just the right time for innovation and change, according to Bill Taylor in Innovate for Success in a Downturn.

It all goes back to changing the game. The companies and products that make it big don’t succeed because their champions “time the market” well. They make it big because their champions believe so deeply in what they are doing that they plunge ahead, regardless of macroeconomic conditions—often in face of the worst possible macroeconomic conditions.

Global strategist Pankaj Ghemawar asks whether companies engage in counter-cylical activity and look at a downturn as a potential opportunity for investment in Global Strategies for Uncertain Times.

The truth is, many companies could do better by treating downturns as times to lay the foundations of future growth—including additional globalization—rather than as times to turn off the investment spigot. Such a shift to a more countercyclical investment pattern is aided by the fact that many companies—although there are obviously exceptions in sectors particularly exposed to the property and credit crisis—are still sitting on large piles of cash.

Business and economic cycles, whether macroeconomic or industry specific, are a reality of today's market place. The successful companies will be the ones who find a way to change their game and plan for ways to succeed when others flounder.

When You are Looking at a New Company

Harvard Business School Professor Joseph Bower, author of The CEO Within: Why Inside Outsiders Are the Key to Succession Planning writes about how leaders can, at the start of their careers, join companies that will enable them to reach the CEO position they aspire to. In interviewing him for Harvard Business Review Online, Paul Michelman uncovers the following questions you might consider asking a company before you join them.

• Why am I being hired?
  
• What kinds of career paths will be open to me?
  
• How is this company going to help me grow?
  
• What pattern of assignments am I likely to get?
  
• Will I have time to learn or will I be so rushed in my work or bouncing between assignments that I won't develop well?
  
• What kind of mentoring will I be provided?
  
• What kind of training does the company provide?
  
• How early can I gain the opportunity to run a small business?

The more specific and detailed the answers, the clearer the picture you will have of the opportunities you will have for career development. With the company behind you, it then becomes your challenge to consistently deliver against expectations and actively manage your career.

Facing the Facebook, or not?

Social networking has quickly become mainstream when it's spotlighted in a short time frame by such venerable institutions as Harvard Business Review and Newsweek, not to mention being the topic of a panel discussion at a recent Forbes conference. The question is how will social networking sites change the world of work and how companies manage themselves.

Tom Davenport at Why Facebook and MySpace Won't Change The Workplace summarizes his position on Harvard Business Online with "In short, I’m still pulling for social networks to revolutionize companies, but I still don’t think that they will. The transformation of enterprises by Enterprise 2.0 is a romantic notion, but not a very likely one."

Charlene Li in Why Your Company Needs to Be on Facebook takes the opposite view that business is about relationships, and so "Your customers, prospects, and employees are exploring and extending their relationships there. Some of you will be bolder in creating business value in these networks while others will wait for the pioneers to carve out the paths. But ignore these new communities only if you believe your customers are not there – and there are few instances where this will be the case."

The challenge for me is that there are only so many hours a day to make calls, meet people, read email, blog, write, and work. While I'm on LinkedIn, I'm struggling with the ROI. At the end of the day, will I get the value out of and can I face adding more time online by trying to keep a Facebook page up to date?

What are your views?

Is Globalization a Myth or a Reality?

As businesses increasingly become "global players", the strategic quandary is to what extent does the business operate integrate to generate synergies and match its global customers, or is a bias toward local or regional practices more effective.

Pankaj Ghemawat, the Anselmo Rubiralta Professor of Global Strategy at IESE Business School and the Jaime and Josefina Chua Tiampo Professor of Business Administration (on leave) at the Harvard Business School, argues in his recent columns on Harvard Business Online that the actual levels of globalization fall close to 10%. This reality is less of the issue than surveys indicating an average management belief that globalization is near 30%.

Such a gap would be less of a concern if trend lines indicating that the "flattened world" is nearing quickly. Ghemawat challenges all of these beliefs as "globaloney", and raise concerns these myths may be leading companies and economists to make incorrect strategic decisions.

What are your experiences with the challenges of global integration?

Developing High-Potential Employees

In this article, we explore the role of coaching in the development of high-potential employees and its link to retention of these key staff members.

What is a high-potential employee? A generic definition is an individual expected to excel at a position X levels above their current role. Companies often make this more specific to their needs, incorporating a specific leadership level, within a particular time horizon, and most importantly, based on the foreseeable needs of the business. High potential employees demonstrate capabilities in the functional requirements of the business and their specific roles (can do), the personal motivation and drive to excel now and in the future (will do), and the behaviors that ongoing delivery of results (how do).

Marshall Goldsmith, as one of the world's foremost executive coaches has identified the key characteristics and needs of high potential employees (known as hi-pos) ("Coaching Free Agents" audio presentation). Hi-pos see themselves as free agents running their careers as "ME, Inc.", not limiting themselves to being a corporate employee. Retaining and developing these hi-pos brings special requirements. When dealing with hi-pos as free agents, it is most effective to:

1. Treat the high-potential employee, not as a subordinate, but as a partner in their work and career.


2. Recognize that "team-player" from their perspective means that this is a win-win result.


3. Deal openly with their self-interest.


4. Demonstrate candor in your interactions.


5. Go out of your way to demonstrate flexibility (see Mass Career Customization for more suggestions in this area).

A well-designed and implemented high-potential program include systems for identification, communication about being viewed as a high-potential, moving through clearly defined roles in the organization, mentoring by senior leaders, accelerated development, and continually feedback.

Coaching has the goal of accelerating leadership growth and delivery of business objectives. Adults learn most effectively through a cycle of experience - reflection - generalization - experimentation. A coach, whether an executive coach or the manager, consciously moves the person through these phases. In the case of a successful outcome, no matter how large or small, the employee will learn through receiving positive, concrete feedback in combination with the opportunity to reflect and gain their own insights. Useful questions to begin this dialogue include:

• Would you like to give yourself feedback here?


• Tell me about one new thing you learned about yourself through this project.


• Tell me about the two challenges you faced and overcame.


• What new skills or management muscles did you discover, develop or strengthen through this project?
  
  

When a high-potential employee is placed into a stretch assignment, the opportunity for less than stellar results and even failure are greatly increased. It is critical that the high-potential program provide a sponsor, champion or person otherwise capable of providing a safety net. Failure, or less than expected success is an enormous opportunity for learning. By applying similar questions to the above, the hi-pos can reflect on their experience, identify the strengths that supported them, the areas of growth that are needed, and put in place a plan for developing new habits, behaviors and/or skills.

While the effective focus is on building on strengths, there are often areas that may limit performance now or into the future. Rather than tell people what they did wrong, lead them to their own insights. It is best to start with asking for permission to engage in a discussion on how you might be able to help the person fulfill their potential. Once the issue is identified, it is often best to have the employee develop awareness of how others work and behave, and then to compare what they observe to their own style. Ask the person to pick one specific change and work with them to implement the change.

High-potential employees are strongly engaged in their own development and careers. When you, as a manager, company or coach, work with people to develop their capability and deliver stronger results, they become more engaged, more effective and exhibit higher retention rates.

As a final note, effective ways of working with high-potential employees and those identified in research on Gen Y'ers (see Retaining Young Talent). Perhaps the lesson is that management and leadership skills need to evolve in order to get the best of our people in today's world.

What are your thoughts on effective ways of dealing with high-potential employees and young talent?