What`s a Leader to do?
by Randy G. Pennington

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Welcome to the first economic crisis of the new millennium.

The U.S. unemployment rate jumped to 4.9% in August with the loss of 113,00 jobs. Another well-known company announces a new round of layoffs every day, and high-flying dot.coms just keep disappearing. Consumer confidence continues to drop suggesting a growing reluctance to spend our way out of the current slowdown.

What`s a leader to do?

First things first - stop and take a deep breath. There will be a recovery. I am still hoping for the fourth quarter, but no one can be sure. This is the first truly global slowdown in over 60 years. Improved corporate earnings and reduced inventories will help, but economics is influenced by more than the numbers. The psychology of expectations will play a role in getting us back on track.

Second, never forget that your organization`s best chance for survival and success rests with your people. That`s right. The only things that separate you from your competitors are the knowledge, skills, and commitment of the people who work with you every day.

The key phrase this month is "work with you every day." Many of your people are not giving anywhere close to that level of commitment because they are worried. If your organization has not experienced a layoff, they are wondering when the odds will catch up with them. If you have already experienced a layoff, they are worried that they will be next.

Even your stars are worried, but not about finding a new job. Their concern is their ability to take at least a few days off before starting that new job. Remember great companies are always looking for great employees.

Here are three things you should do immediately to calm the fears, reconnect with the passion, and prime the productivity pump that will make everyone laugh at the notion of a recession:

Focus externally. The Los Angeles Lakers were one of the most talented underachieving teams to every play the game until the last part of the 2001 season. Their stars squabbled over playing time, shots taken, and a host of other things other than winning games. I believe the key to the repeat as NBA Champions was their late season decision to become externally focused. Having superior talent helps, but unfocused talent does not win championships in sports or business.

The main thing is to make the main thing the main thing. It boils down to attracting and retaining loyal customers who will send you money on a regular basis because they love what you do for them. Concentrate every individual on making customers successful and watch your performance and profitability improve.

Make it safe. Remember Abraham Maslow from your introduction to psychology class? He`s the guy with the hierarchy of needs. Maslow`s Hierarchy says that humans will fulfill their most basic needs - food, shelter, and security - first. Only then will they pay attention to relationships and higher level activities that differentiate those who are driven by fear from those who act from a sense of purpose and strength.

Employees that do not feel safe in their jobs do just what it takes to get by. They don`t do anything wrong, but they won`t come up with the innovative idea that will make you money either. Sales people become anxious to close the business so they give away margins. Service and production people stick to the policy rather than risk a mistake and alienate customers in the process.

Do everything in your power to make your organization safe for new ideas and initiative. A "no layoff" policy may be impossible, but you can create an environment that operates from a position of strength and purpose.

Give them control. The worst part of working in today`s economy is the loss of control. Eighteen months ago employees felt in control of the world. Jobs were plentiful. Incentives were a way of life. And stock options were actually worth something. The shift has been sudden and profound. Every sincere effort to help your employees feel more in control of their future will be rewarded.

Begin with information. A good rule of thumb is the more accurate information you can provide in a timely manner the better. This is not a suggestion to disclose confidential information. It is a realization that the rumor mill exponentially exaggerates the size of everything. Be honest and proactive.

Don`t forget those barriers to success either. The capital-spending budget has probably been slashed forcing you to look for other ways to help employees succeed. One area to examine is your incentive program especially for individuals that generate revenue.

Incentive programs that cap bonuses potentially send the message that the company only wants you to produce to a point. Consider revising your plan to remove the barriers that hold people back. What`s the worst that could happen - your employees go out and produce a record year?