5 Reasons Why Superior Leadership is Critical in these Difficult Economic Times

In the business that I own, I am fortunate everyday to have the opportunity to meet with other business owners, executives and leaders from a broad cross-section of industries.  Up until about 60 days ago, there continued to be a sense of optimism and confidence that they would survive and even prosper in, what was becoming, a soft economy.  They continued to make strategic investments in their businesses, were hiring additional staff, (where warranted), and still planned for 2009 and beyond.

 We all know that as each day passed, the economic conditions worsened dramatically; more than anyone could have anticipated or planned for.  Orders were put on hold, projects were delayed, receivables began to be unpaid by multiple clients and thinking with an investment mentality became an afterthought.  Survival became the rule of thumb!  As if overnight, the question for most became “What do I need to do to make sure I can keep the doors of my business open and my lights on?” 

It is my belief and experience that these are the times when Superior Leadership is called to the table; “in fact, not just called, demanded to come!” These are the times when leaders who possess the skills and experience to bring their businesses through hard times are the ones who excel. 

So, what are the five reasons why Superior Leadership is critical in these times?

 1)      Employees need to see hope and feel a real sense of optimism.  They need to be presented with a picture of a more positive future.  A future filled with opportunity for growth and success; against the present environment of negativity and uncertainty.  Superior Leaders will continuously present a vision of the future with both short-term and long-term objectives clearly defined.  They understand that they must still look out to the future.  They will rise above the current challenges.  They will share how the company made it through prior periods of economic hardship and how it came out stronger and more prepared to take advantage of market opportunities.  They will repeat this message as many times as they need to in order to encourage hope and boost morale. 

Leaders need to be optimists. Their vision is beyond the present – Rudy Giuliani

 2)      Superior Leaders understand that incremental margin growth is essential to maintain a positive cash flow.  Incremental margin growth starts with a review of customer by customer profitability.  It continues with a review of all overhead items and all current processes to determine where efficiencies can be created.  During all of this, Superior Leader will still encourage new ideas - not necessarily use them - but be sure to keep them “on file” for another time. This is a time, more than ever when leaders need to engage their employees; when employees need to feel as though they have a stake in the company. 

 The general who wins the battle makes many calculations in his temple before the battle is fought. The general who loses makes but few calculations beforehand – Sun Tzu 

3)      Superior Leaders will not allow an environment of mediocrity to prevail.  They will not allow external conditions to be used as an excuse for underperformance.  They will demand an immediate review of all personnel.  They understand that there is no room for “compliance” alone – just meeting expectations is not enough.  “Discretionary Effort” is a requirement – exceeding expectations needs to become the standard. “Top performers” will need to be supported and incentivized, “high potentials” will need to be trained and coached and “C” players will need to be let go.  Superior Leaders understand how critical it is to make these tough & unpopular decisions during these times: cut excess overhead, salary, benefits, etc.   

Executives owe it to the organization and to their fellow workers not to tolerate nonperforming individuals in important jobs – Peter Drucker

 4)      Superior Leaders will use their high level of Emotional Intelligence to engage and support their staffs.  Dan Goldman defines Emotional Intelligence as “the capacity to recognize our own feelings and those of others, to motivate ourselves, to manage emotions well in us and in our relationships.”  In these difficult economic times, it is important that the leaders leverage their “EI.”  They need to stay sensitive to the messages that they put out, remain confident and in control of their emotions and be particularly empathetic of others’ thoughts and feelings.  It is a time when Leaders need to actively listen but at the same time, they need to lead.  As during any time of great crisis people need a “leader.” The balance of the two (listening and leading) makes for a Superior Leader. 

Outstanding leaders go out of their way to boost the self-esteem of their personnel. If people believe in themselves, it's amazing what they can accomplish – Sam Walton

 Teamwork and even higher levels of accountability to agreed upon actions are critical at all levels during these difficult economic times. 

A leader has the vision and conviction that a dream can be achieved.

He inspires the power and energy to get it done – Ralph Nader

 The months ahead will be even more challenging and filled with uncertainty.  As a business leader you need to ask yourself some important questions:

 Am I projecting confidence and presenting a clear vision?

• Are we doing what it takes to maintain our margins?
• Are we accepting “mediocrity” anywhere in our company?
• Am I listening at a higher level to the thoughts and emotions of my staff?
• Are expectations crystal clear?
• Am I leading my company?

The answers to these questions lie within the minds and experiences of your managers and employees.  Survey them and get your answers. 

I've been blessed to find people who are smarter than I am, and they help me to

execute the vision I have – Russell Simmons