Some problems are relatively difficult and can be fixed, ignored or coped with. Others are more substantial and can place the entire enterprise at risk. Covid certainly struck some industries harder than others and we have seen many venerable establishments disappear. The Japanese government wisely made low-interest loans available to many companies on the basis that keeping the doors open and the staff employed would be a better outcome for the economy. In 2008, during the Global Financial Crisis, the Australian government pumped money into the economy and the country sailed through that crisis unscathed. This works at the macro level but what about what is going on inside the organisations?
Staff realise that business is bad and they become concerned about the ability of the organisation to survive. When something like Covid affects a whole industry, there may be no real alternatives for those staff thinking of leaving. A case of “am I jumping out of the frying pan into the fire?”. What should the leader do, though? Is transparency about the actual financial situation the right move? Will a clearer knowledge of how bad things are spur the team on to work harder or will they collapse into lethargy, as nothing seems it will make a difference, because things are so bad?
This is a broad stereotype, but in Japan, staff are loyal and willing to work hard to preserve the enterprise. I believe transparency is a good idea up to a certain point. It must be matched with a solid communication package of hope to go with it. The boss must be upbeat, no matter how depressed they are about the financial situation. They cannot share those feelings with anyone. Even your spouse or partner has to be kept in the dark about how you are really feeling. That may sound like bad marital advice, but scaring the family about the security of the family source of income doubles the stress levels. Somehow, the boss has to be positive in every environment, no matter how dark their feeling or their sense of doom and gloom.
Exhortations to work harder is a fine thing for the boss to disseminate to the team, but that won’t be enough. The team needs a plan of action. Actually, they need to be told about Plans A, B and C. They also need to see these plans being rolled out and they need to be kept up to date on progress, no matter how humble.
Preserving cash has to be the number one goal. Cash is not King, as we often hear. That designation only applies when things are going well. In bad times, cash is oxygen. We can last quite a long time with just water, but only a few minutes without oxygen and so that is the better metaphor. There may be a call to be made over how transparent the boss is about the financial situation. Explaining the current profit and loss situation is one level of transparency. Revealing the cash burn rate and the cash reserve situation is another entirely different level of openness. I don’t have a good answer on this one, because it will depend on so many things. How much cash is left and how severe is the burn rate? What is the revenue forecast for the coming months? What monies can we stop paying for a while until things get better?
The danger is when some sectors in the industry recover faster than yours or when other industries are hiring and there are escape routes for those team members worried about the firm’s longevity. This is when the communication skills of the leader are really tested. Explaining that there is a future for the business and that this too will pass becomes critical for keeping people on board. It is a delicate balance between expressing a strong sense of urgency without it beginning to sound like panic. That is the needle we have to thread as leaders. Be realistic but upbeat, open but not gloomy.
All of this has to be done against a background of sleepless nights and constant worries about the collapse of the enterprise. The key is to protect our mental health. We need to be directly working on managing our stress and inserting positive messages into our brain. The negative messages will find their way in on their own without us helping them, so we need to accentuate the positive as a counterbalance. We need to read positive texts and work on conditioning our brain to have hope and belief that we can pull through this period of turmoil. Listening to positive motivational messages is a good thing to be doing, so we need to find those authors and then pump that good stuff into our mind. None of these are instant fixes, but they will rally our hopes, change our perspectives and coalesce our strengths for the fight.
One of the simplest tools is this three-part analysis:
1. Very carefully clarify, in minute detail, what is the worst thing which could happen
2. Stop kidding yourself and accept that the worst will happen and you cannot stop it
3. Try to find as many ways as possible to improve on the worst case scenario
Again, there is no panacea here. What we can do is switch our mental framework from falling apart while facing oblivion, to forging some degree of hope. We have to look for how to survive the looming apocalyptic meltdown.
