For most of the United States, particularly the coastal states of the Contiguous US, these are decent economic times. Unemployment rates are low, wage growth has (finally) started to set in, gross tax and business receipts are up, and housing markets are healthy. However, if you’re living in the resource based economies of the upper Mountain West, West Virginia, Wyoming, or my adopted state of Alaska, your state’s either in or nearing recession. In Alaska, low oil prices have reduced state oil and gas revenues by 90 percent. Even though Alaska cut general funding spending from over $8 billion per year to roughly $4 billion per year, the state is still running a multi-billion-dollar annual deficit. The legislature’s refusal to diversify revenue streams has left Alaska with just one year left of budget reserves and a state economy lacking the confidence needed to keep it moving forward. Alaska is likely to lose 2 percent of its jobs this year and 2017 shows no signs of being any better. Job losses started in the oil, oil support, and construction industries, moved to state employment, and have now spread to other sectors especially professional services.
Besides searching for new revenue sources, what’s a leader to do when the backlog is shrinking, costs are up, and uncertainty is higher than it’s been in 30 years? Here are some strategies helping me and my company work towards a brighter tomorrow.
Being thankful and saying thank you
It’s significantly less fun leading in lean times than in leading in fat. The stress is much higher and even small errors and mistakes are magnified without the salve of healthy revenues to cover them up. Being thankful is one way to remind oneself that even though business could be better, you’re still in business and you’re surviving to fight another day. Focusing on thankfulness is also a great way to identify what’s going right in your business whether it’s the effort of peers, the completion of recent project, or winning a small job from a new client. When you find things that are going right make a practice of saying “thank you.” Most people don’t hear those words enough these days.
Communicate, communicate, communicate
Employees are the lifeblood in any organization and particularly so in professional services. If you own a professional services company you don’t have any fancy manufacturing equipment or patents, and you’re very likely selling the time, effort, and gifts of the people you’re blessed to lead. In tough times, it’s essential to keep all employees engaged helping the company survive and thrive; clear communication can feed that engagement. At my firm, all our employees see our financial information on a regular basis. They know when work is slowing and when it’s about to slow further. In our case, we saw our business slowing significantly mid-year and we formulated a multi-step plan for controlling costs. We asked our staff for feedback on the plan and made it clear that preserving positions while reducing costs was our top priority. With this approach, we laid aside our employees’ number one question, “Am I going to lose my job?”, crowdsourced ideas from them, and achieved buy-in. Each time we’ve had to take a step under our plan we’ve openly communicated that we were taking that step and why. While many of the cuts have been painful, our staff has responded by drawing closer together and working harder than ever to make it through the downturn.
Provide a positive vision
Never underestimate the value of a leader who can provide a positive vision in dire times. If you’ve ever listened to speeches by Roosevelt, Churchill, or Thatcher you know the power of providing a positive vision when times are tough. Even today, those speeches can send a chill down your spine and inspire you to do great things even though you don’t face similar danger. Most of us aren’t those great leaders, but we still have a duty to provide a positive vision of how the company can survive challenging times and then thrive. A positive vision, built on a company’s values, gives everyone purpose and eases decision making. If a decision doesn’t align with the positive vision and your values, then it’s likely not the right one.
Take the pain
Karen and Henry Kimsey-House of the Coaches Training Institute described five styles of leadership: from in front, from behind, from beside, from within, and from a field. When it comes time to make cuts that fall across the entire company, leaders need to realize that it’s an occasion to lead from the front and make sure that the cuts fall heaviest on those that benefit the most in good times and are most able to weather to the storm. Leaders should be prepared to cut their salaries and show up full-time if you’re putting everyone else on reduced hours. Recently, a peer outside my organization told me of cuts where he worked. The company’s highest paid employee, the President, was making three times the next highest paid employee, a troublesome signal itself, and decided the firm needed to reduce costs. The President suggested similar size cuts for all employees even though the salary distribution in the company was sharply skewed. The President saw it as a fair and equitable solution, but the employees saw someone who could spare to give more keeping his own pocket whole, while their own cuts were deeply painful. Shortly thereafter, turnover at the company skyrocketed. The company couldn’t hold its best employees because they knew that the President was looking out only for himself.
Acknowledge the potential for failure
Projecting a positive vision doesn’t mean being Pollyanna. People are smart enough to know when the chance of business failure is real. They can feel the tenor of the office change and the pace of work slow. They see the look of worry on management’s face and they know that something isn’t right. It’s okay to acknowledge that the plan to save the company might fail and it’s imperative for leaders to separate failing from being a failure. You can try your best and still fail. Open and honest communication about the potential for failure can raise a leader up in employees’ eyes because it humanizes them and opens the door further for honest two-way communication in the future.
My crystal ball doesn’t tell me what the economy has in store for firms like mine, but I do know that the strategies above are keeping our team cohesive and focused at a time when we need those attributes the most.
Jonathan King is Vice President and Senior Economist at Northern Economics. Jonathan has been a professional economics consultant for 20 years, specializing in both fisheries and land use issues he also has a strong presence in projects involving surveys, rural transportation, aviation, taxation, forecasting, and customer satisfaction. For more information about Northern Economics you may visit their website.