This morning I received the quarterly newsletter from McKinsey.
In it was an article called Leadership Lessons for Hard Times that caught my eye.
McKinsey has interviewed 14 CEOs and Chairmen to unearth their views on how best to lead a company through the current global recession.
The interviews, which focused on what these executives did and learned, has been distilled into six lessons.
Here they are:
Confront Reality.
Few predicted the magnitude of the current crisis.
But those in the corporate world who first detected—and accepted—the fact that something was amiss had a distinct advantage in implementing strategies to help weather the storm.
Getting into a position of advantage meant taking a hard look at what the future might hold, and that requires a degree of courage.
(The point made by some of the executives is how difficult it can be for leaders to take action—and to persuade others to follow their lead—if a business seems to be thriving.)
In addition, it entails having the mechanisms and governance models that allow companies to confront realities unimaginably different from those they would ordinarily expect.
Monitoring systems that pick up warning signs are important.
So too is an environment, both physical and psychological, where alternative interpretations of the signs can be aired and considered with care and interest.
At board meetings, put strategy center stage.
The way CEOs work with their boards has changed fundamentally during the past year. In tough times, difficult decisions must be made quickly. This depends upon frequent and open communication with boards so that directors are fully-briefed and are better placed to offer timely support. Where strategy was once resigned to an annual retreat, now its center-stage, with many companies moving it into primary position on the board agenda papers.
Be transparent with employees.
Being open about what is happening in a company is partly a question of integrity: employees deserve honesty. Openness also builds respect, trust, and solidarity, all of which in turn help employees stay focused on the task of running the business at a time when financial rewards might be limited and the future uncertain. Openness helps build morale as well. A CEO cannot mislead people and certainly shouldn’t panic them, but explaining problems and the actions being taken to deal with them builds confidence in the quality of the CEO’s leadership.
Be transparent with Investors.
In times of crisis, there can be a tendency to focus entirely on short-term results—a tendency CEOs should counter. While acknowledging current difficulties, it is just as important to emphasize what is being done to build a company’s longer-term health.
Build and protect the culture.
A healthy company enjoys not only strong financials but also a culture and values that bind it together. Several CEOs chose to highlight how a strong culture had helped them in hard times and how important it is not to sacrifice that culture when a company comes under pressure.
Keep faith with the future.
CEOs and their leadership teams need to remain forward looking despite the near-term pressures their businesses might be facing. There are opportunities in a crisis, even though that notion is too lightly bandied around when companies and their employees come under real stress. Many of the CEOs McKinsey interviewed were determined to ensure that their companies emerge from this recession with a competitive advantage by setting the course for higher productivity, acquiring a footprint in a new market, or not squandering a company’s talent or reputation in pursuit of lower costs.
For the full article, head to McKinsey. You’ll need to be a subscriber to access it (it’s free to sign up) but it’s worth the 2 minutes of your time to do it.
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