How did you survive the great crash of 2008-09?
Last October -- after Lehman Brothers' collapse, the US Congress passed the Troubled Asset Relief Program in an attempt to shore up the banking system, and the bottom dropped out of global stock markets -- people got very scared. There was no shortage of pundits predicting a "Great Depression 2.0," and all was doom and gloom as the world braced for rounds of massive downsizings and bankruptcies.
The economic mood is a lot better now, but there are lessons gained from the whole white-knuckle experience of managing through a global economic crisis. Namely, how do you keep your workforce productive and focused on your organization's mission when they're consumed with fears about their jobs and financial security?
At DuPont -- with its global product lines of chemicals, materials and coatings -- it was inevitable that the company would take a major pounding in such a rough-and-tumble economy. DuPont had its share of pain, with at least 2,500 layoffs in December 2008 and another 2,000 in May 2009 in response to the global slowdown in demand.
To help employees through this painful period, Ellen Kullman, who took over as DuPont CEO in January, helped calm plenty of nerves, keep everyone focused on their jobs, and keep things on track. In a recent presentation at the annual Wharton Leadership Conference, she shared the four key principles that helped the global giant navigate through the worst of the global economic crisis. (And no, one of them was not hiding in the cellar...)
Focus on what you can control. "Last October, I saw a lot of people who looked scared and didn't know what to do," Kullman said. So, she directed DuPont's management to "figure out those things we can do something about, and get about doing them." Keeping employees focused was essential to the financial stability of the company, and the main focus during the period was the preservation of cash, mainly through spending cuts and boosting sales. Something that helped immensely was the company's continuing blistering pace of innovation -- which resulted in 901 new product launches last year and a record 500 in the first quarter of this year. "There's nothing like a new product, a new innovation that allows you to go out and talk to that customer," she said.
Rethink your business model. It's much easier to sell change during times of turbulence, Kullman points out. "For DuPont, that meant "getting people to think differently" about a business model -- from an emphasis on plant capacity and capital investment to greater high-value customer service. Since this change in emphasis was no small task in a global organization with 60,000 employees in more than 70 countries, Kullman seeded the effort through smaller pilot projects.
Communicate, communicate, communicate. Communication makes a real, material difference in organizations in a noisy world. "Getting through to employees is vital because their natural tendency is to 'hunker down,' hoping the crisis will pass and 'everything will go back to normal,'" Kullman said. She insisted that DuPont executives "get out in front of the troops" with a consistent message," especially at a time when cuts were being made across the board.
Maintain pride around the company's mission. DuPont's mission, Kullman said, is "sustainable growth" through reducing the company's environmental footprint. However, during bad times, people question if the company is fully committed to the mission -- and often think it has been replaced by a new mission, to reduce costs. "That's a tactic, that's not our mission," Kullman said. Making sure that people understand the true mission -- and link their daily activities to the company's broader purpose -- is essential to reducing fear, maintaining morale and keeping employees motivated, Kullman said.
Tough times bring about a great deal of uncertainty and unease, and cause employees to lose focus -- making a slowdown a self-fulfilling prophesy. It's smart business to be as open as possible with employees not only during bad times, but during robust times as well. What was your experience managing through the economic crisis? Was your company torn apart in a state of panic, with everyone running for cover? Or did your management respond positively, reinforcing its long-term mission and reaching out to employees?
This post was originally published on Smartplanet.com