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Next time...Same same or different? REFLECTIONS ON MANAGING PEOPLE THROUGH THE DOWNTURN          2011 WHITE PAPERsladepart...
REFLECTIONS ON MANAGING PEOPLE THROUGH THE DOWNTURN                                                                      I...
Next time…Same same or different?                   REFLECTIONS ON MANAGING PEOPLE THROUGH THE DOWNTURN           About us...
Next time…Same same or different?                   REFLECTIONS ON MANAGING PEOPLE THROUGH THE DOWNTURN            The Res...
Next time…Same same or different?                                     REFLECTIONS ON MANAGING PEOPLE THROUGH THE DOWNTURN ...
Next time…Same same or different?                   REFLECTIONS ON MANAGING PEOPLE THROUGH THE DOWNTURN            The Res...
Next time…Same same or different?                     REFLECTIONS ON MANAGING PEOPLE THROUGH THE DOWNTURN            The R...
Next time…Same same or different?                  REFLECTIONS ON MANAGING PEOPLE THROUGH THE DOWNTURN            The Resu...
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Slade White Paper 2011


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Learnings from the GFC

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Slade White Paper 2011

  1. 1. Next time...Same same or different? REFLECTIONS ON MANAGING PEOPLE THROUGH THE DOWNTURN 2011 WHITE
  2. 2. REFLECTIONS ON MANAGING PEOPLE THROUGH THE DOWNTURN IntroductionWelcome to the Slade Partners EMA Executive And yet this national bonhomie shouldn’t overrideSearch White Paper: ‘Next time…Same, same or the individual and organisational pain felt by manydifferent? Reflections on managing people through whilst navigating the two particularly difficult yearsthe downturn.’ of 2008–2009.We are told repeatedly that Australia bypassed We believe that a deep impression was madethe global downturn with nary a scratch, however on those who were at the helm of organisationsour observations of personal and organisational through the downturn in Australia. We also know‘war stories and injuries’ tell a different tale. people were hard pressed to find advisers who could be relied on to provide support and advice based onThe headline story is thus: Globally, the financial previous experience. The findings from the in-depthcrisis of 2007–2011 is judged by many as the interviews undertaken for this White Paper deliverworst financial crisis since the 1930’s and for some absorbing insights. Perhaps the collectivemany Western countries, the pain is not yet over. wisdom and observations will be filed away todayLarge financial institutions collapsed or neared to be used by others in the future.collapse as governments engineered rescuepackages for major commercial institutions. We hope you find this White Paper interesting. If youThroughout the US and Europe, a prevailing would like more information, please don’t hesitateuncertainty about future economic prospects, to contact us.the housing market decline and highunemployment continues.In Australia, political commentator Laurie Oakespointed out in mid–2010 that, ‘We have a netdebt dramatically lower than any other advancedeconomy. We will have our budget back in surplusbefore any of the major economies. We were one ofthe only two advanced economies to avoid recessionafter the GFC. Our economy grew by 1.3 per cent Anita Ziemer Bill Sakellarislast year while advanced economies as a whole Managing Director General Managercontracted by 3.2 per cent.’ Slade Group Slade Partners“ The struggle that many found was the tension between being upbeat and at the same time, sharing the challenge of a doom and gloom market. Too much either way was inappropriate, and yet ” transparency and confidence remained critical. 3
  3. 3. Next time…Same same or different? REFLECTIONS ON MANAGING PEOPLE THROUGH THE DOWNTURN About us White Paper HighlightsSlade Partners EMA Executive Search is the We have an extensive network of both private Preparation for a downturn Talking about the cost savings required to keepexecutive search arm of Slade Group. We are an industry and public sector clients and have managed Critical thinking was applied by those in industries people employed was found to be a powerful wayAustralian-owned, full service, Human Resource a wide range of senior level appointments over where an impact could be foreseen: to engage with employees and generate costand Recruitment firm, with offices in Melbourne, many years. Slade Partners is also a member saving initiatives.Sydney and Brisbane. Across the recruitment of EMA Partners International, an expanding » Where is the likely impact going to hit us hardest and where will we feel it least? What did we do Some commented on the fact that their leadershipindustry we are recognised for our professionalism global network of like-minded executive search team moved from consensus mode to directiveand best practice approach to senior executive professionals servicing the needs of clients in over last time that worked? mode and that motivational leaders came into theirappointments and are AS9001 accredited. 50 cities around the world. » What can I do…and what can I influence? own. What can’t I do…and what is going to be Pitcher Partners reflected that their business was the impact? born out of a recession. The founding Partners were » How do I make myself useful? people who had left KPMG, unimpressed with the way that firm had managed the 1991 downturn. » What is our spread of business, what is our core Their approach this time was strongly linked back and what do we need to change? to their collective history of managing people in the best possible way through a downturn. Our People Communication Considerations and observations Everyone interviewed said communication with The responsibility to retain staff weighed heavily on staff was a critical facet of managing through the employers, although some felt they had no option downturn. but to cut headcount for overall survival. The struggle that many found was the tension A number of leaders remarked on the noticeable between being upbeat and at the same time, difference between the calm displayed by more sharing the challenge of a doom and gloom market. mature workers who had been through previous Too much either way was inappropriate, and yet downturns and younger staff who hadn’t. Some transparency and confidence remained critical. also said it was necessary to better understand the ‘younger generation’s’ fears of facing One CEO reflected his frustration with this tension uncertain times. in communication and pitching the right message. For example, he carried the burden and stress of Being aware and mindful that most people are risk leadership in tough times and worked overtime to averse was useful. save jobs and keep the ‘ship afloat and travelling Short-term, manageable tasks became the focus, forward’. And yet he felt many of his staff seemed because as with the last downturn, nobody knew to take a cavalier attitude to the business’ efforts how long the downturn would last. on their behalf. Where management was committed to keeping staff, working through as many flexible working options as possible was key. Typically, people appreciated this and ‘got on board’. Reflections on ‘What They Would Do Differently’ » Go earlier; » Manage people’s performance better in » Should have listened to the ‘Black Hats’; the good times – always – so that habitual underperformers don’t have to be managed » Increase level of communication to staff; through bad times; » Improve quality and pitch of communication » Prepare a disaster contingency plan every year with staff; and manage with a strong memory; » Improve forecasting and modelling for a downturn; » Remember that during good times, we’re too » Recruit better – now and always; short-sighted and not courageous enough.4 5
  4. 4. Next time…Same same or different? REFLECTIONS ON MANAGING PEOPLE THROUGH THE DOWNTURN The Results The ResultsBackground Jason Murray of The Just Group (retail) expressed a Online/Recruitment Breadth of activity within the businessReflections on Managing People through view that in Just Group’s case, they had experienced The recruitment sector is much like professional Where an organisation was involved in a numberthe Downturn two downturns (Winter 2008 and from December services. SEEK’s core employment business of different activities within their business, manyResearcher Samantha Houston spoke to some of 2009 onwards) and that the Group is still in the experienced a huge drop as organisations were able to redirect their focus, thus helping theirAustralia’s leading organisations, in various sectors second downturn. dramatically decreased hiring rates, and in turn, financial position.including retail, manufacturing, employment, lower confidence levels cut the rate at which Ian Campbell of GUD (consumer and industrial For example:professional services, publishing and entertainment. employees changed jobs. Organisations and products) said that they are seeing a higher inquiryThe interviewees were all senior executives (CEO’s, recruiters simply no longer had many vacancies » Hinkler Books redirected its focus to its Foreign rate but some residual nervousness in the minds ofMD’s, Directors and Partners), who were open and to advertise. Language business (previously only a small part some purchasers of capital equipment remains.generous with their answers. The results provide an Retailing of the product range) because it was not beinginsight into the strategies of organisations during The retailers interviewed (ie Just Group, Landpower, impacted by the downturn.the downturn, the outcomes of these strategies, and PACCAR Australia (Kenworth Trucks)) were all able » GUD has 6 totally unrelated businesses – they “learnings for the future. to significantly reduce prices in order to move stock, The majority of organisations although this was not enough to protect them from were not all impacted by the downturn.The Results also indicated, as of late 2010, the downturn. » SEEK’s educational business was counter cyclicalDiscussions first established whether the recent and improved during the downturn (although itdownturn had an impact on their business, and if that they were not yet through Manufacturing didn’t completely counter the downturn in the ” Manufacturing companies were significantlyso, how? the downturn. impacted as it is more difficult for them to transform online job advertising business).Answers ranged from “Absolutely!” to “It had a or quickly adapt and change what they do. This » Pitcher Partners was able to review the industriessignificant impact, but not all negative,” to “2009 appears to be exacerbated if the product is a capital it worked in and focus on areas of growth.was the best year ever, …so if it had an impact it Only Nadika Garber of Hinkler Books indicated that purchase that can be postponed e.g. MacDonald It did not rely solely on transaction work as somewas a positive one.” (Zoos Victoria). The majority they had not felt the impact of the recession until Johnston, PACCAR and Dexion (part of GUD). accounting firms did and continue to do.however, acknowledged some or significant negative very recently. Organisations in industry sectors that were » Maddocks was somewhat protected by theimpact on their business. perceived as being ‘needed’ or could position breadth of its client base, and the fact that fifty How much the downturn impacted any particularThe majority of organisations also indicated, business seemed to be related to: themselves as ‘needed’ seemed to suffer less. per cent of its work comes from governmentas of late 2010, that they were not yet through projects. As David Rennick said, “The machine of 1. The industry in which the organisation operates; For example:the downturn. government needs to keep going.” 2. The breadth of activity within the business; and » VECCI – the importance of its role as an advocateProfessional services firms such as legal and and support for business owners and managersaccounting were immediately impacted as they 3. The ability to ‘change’ what they do or offer. An organisation’s flexibility helped raise their profile during this time, which A number of the business leaders spoke about beingare reliant on the business activity levels of their was beneficial for the organisation.clients. These transactions dried up very quickly. Industry able to ‘reinvent’ themselves to suit the downturn.Both Maddocks (lawyers) and Pitcher Partners » Zoos Victoria – Victorian people were looking for Zoos Victoria presented itself as ‘good value for Professional Services(accountants) indicated that while transactions have local, good value entertainment as they were money.’ “We went into a really big repositioning These firms were impacted because they relypicked up, they have not returned to the same levels travelling less. The Zoo fitted this profile. exercise. It was brought about by more than the on healthy client activity. If their clients reduceas prior to the downturn. their own activity, then this flows on directly financial crisis…it led us to repositioning ourselvesOther firms echoed this view. David Waldron of to professional service providers in legal and as a Conservation Organisation…and we focused onMacDonald Johnston (manufacturing and industrial) accounting. Interestingly, Greg Nielsen of Pitcher the Membership product which was great value,” “doesn’t believe they will be out of the downturn Partners indicated that he believes the smaller said Jenny Gray CEO. Jenny also observed, “Whenuntil the 2nd quarter of 2011, as businesses have accounting firms might not have suffered as much It was an opportunity to finances are tough you need to know why you exist.”deferred major capital expenditure decisions. as the larger (more prestigious) firms, due to the reinforce all the fundamentals VECCI was also in the middle of a Business Re- ‘dropdown’ effect—part of clients’ belt tighteningRichard Wilson of Landpower (agricultural process was to move from the more expensive firms with our management team – engineering Process. It was a three-year processmachinery) believes they are also still experiencing and if anything, the downturn helped them to get the to the smaller (less expensive) firms. However, for example that cash changes through.the impact of the recession in Australia. ” he doesn’t consider this a long-term change and generation is the key.The government’s Investment Allowance had believes that as business picks up, organisationspostponed some of the impact, but the impact will will again seek out leading advisers and move backeventually hit. to the larger firms.6 7
  5. 5. Next time…Same same or different? REFLECTIONS ON MANAGING PEOPLE THROUGH THE DOWNTURN GFC Time Line 2007–2008 GFC Time Line 2009–2010Time Line Information key March January◊ Global events Investment bank Bear Stearns is acquired by rival JP Morgan Chase The Bank of England cuts interest rates to 1.5%, the lowest level in its for US$240m in a deal backed by US$30bn of central bank loans. 315-year history, as it continues efforts to aid an economic recovery in◊ Australian events A year earlier it would have been worth US$18bn. the UK. September China’s exports register their biggest decline in a decade. Mortgage lenders Fannie Mae and Freddie Mac, which account for German Chancellor Angela Merkel unveils an economic stimulus nearly half of the outstanding mortgages in the US are rescued package worth about 50bn euros to kick-start Europe’s largest by the US government in one of the largest bailouts in US history. economy. Investment banking giant Lehman Brothers files for bankruptcy, February after US officials decided not to bail it out. It would be the largest and The Rudd Government’s $42bn economic stimulus package passes highest-profile casualty of the global credit crisis. in the Senate, paving the way for promised cash bonuses for workers around the country. Bank of America takes over rival Merrill Lynch. AIG, once the world’s top insurer, was on the brink. Wall Street suffers its worst day since the President Obama signs the US$787bn stimulus plan into law. The plan aims to spur job creation and industry growth, particularly in health January 2001 9/11 attacks. care and green energy. Spain announces a plan to save 50bn euros, including government Icelandic bank Glitnir is nationalised at US$1bn. The other two largest spending cuts totalling 4% of GDP. The plan includes 4% cuts in public Icelandic banks follow on October 7 (Landsbank) and October 9 March sector pay. (Kaupthing). The banks’ total liabilities are ten times the country’s GDP; President Obama instructs Treasury Secretary Timothy Geithner to block AIG from spending $165m on executive bonuses. Taxpayers had May the stock market falls by 90%, along with the krona. European governments and the IMF agree to make available up to thus far given AIG $165m in aid. 750bn euros in loans to halt the spread of the Greek debt crisis.April October Australia’s economy slumps 0.5%, its first quarter of negative growthNew Century Financial, which specialises in sub-prime mortgages, files Germany announces a 50bn euro plan to save one of the country’s in 8 years. Australian Bureau of Statistics figures show the current accountfor Chapter 11 bankruptcy protection and cuts half of its workforce. biggest banks – Hypo Real Estate. deficit has improved from almost $18.5bn in the December quarter April to $16.55bn in the March quarter, although this was worse thanThe Australian stock market (ASX 200) reaches its peak after four years The Reserve Bank of Australia (RBA) lowered official rates by a full 1%, US car giant Chrysler files for bankruptcy in an effort to clear the final market forecasts.of double digit growth from April 2003 to April 2007. more than double what most analysts were predicting. hurdles before its alliance with Fiat. 2007 2008 2009 2010September October May MayThe UK’s fifth largest mortgage lender, Northern Rock, was granted The UK Government announced a massive bailout package, worth more Treasurer Wayne Swan announced that projected government revenue Italy’s cabinet approves a 24bn euro austerity package withemergency financial support by the Bank of England in the latter’s role than US$64bn for the country’s struggling banking sector. had fallen by $200bn since the last budget with an anticipated deficit of the aim of cutting the deficit to 2.7% of GDP in 2012 fromas lender of last resort. A day later, depositors withdraw £1bn, in what $57.6bn. 5.3% in the biggest run on a British bank in more than a century. The International Monetary Fund, famous for its fiscal and monetary conservatism, effectively encourages governments to cut interest rates June Spain wins parliamentary approval for its 15bn euro austerityDecember as far as possible and spend as much as they can afford, and to do it General Motors Corporation files for bankruptcy. package by just one vote.Kevin Rudd elected Prime Minister. now, there is clearly no time to be lost. Australia avoids a recession after the Australian Bureau of Statistics June The US taps into the $700bn available from the Emergency Economic reveals the economy for the March quarter grew by 0.4% from the final Julia Gillard becomes Prime Minister. Stabilization Act and announces the injection of $250bn of public quarter of 2008. money into the US banking system. November Japan’s economy contracted at an annualised rate of 14.2% in the first Concerns about sovereign debt in Europe continued to weigh on global November three months of 2009, a record rate of decline. investors’ minds, with Ireland resisting pressure to take funds from Barack Obama is elected the 44th president of the United States. the US$1 trillion European rescue fund set up in May. Unemployment in Australia peaked during the global financial crisis at The US government agrees to rescue Citigroup after an attack by 5.8%, whereas in the US it rose above 10%. investors causes the stock price to plummet 60% over the previous week under a detailed plan that included injecting another $20bn of July capital into Citigroup, bringing the total infusion to $45bn. Citing insufficient regulation as a cause of the current economic crisis, President Obama proposes increasing the government’s authority over December financial institutions. The plan would give more power to the Federal French President Nicolas Sarkozy unveils a 26bn euro stimulus plan to Reserve, create a Consumer Financial Protection Agency and take help France fend off financial crisis, with money to be spent on public measures to discourage risky lending. sector investments and loans for the country’s troubled carmakers. November The RBA lowers the cash rate by 100 basis points to 4.25%. Australian Greece’s new government says the 2009 budget deficit will be 12.7% inflation is at 5% in late October. The Australian dollar has fallen 28% of GDP – more than double the previously published figure. against the US dollar since end-July. December In Ireland, the budget delivers savings of over 4bn euros. Public service pension age rises to 66 from 65. ABS results showed that the Australian balance of goods and services was a deficit of $1.7bn in November, seasonally adjusted, from a revised deficit of $2.08bn in October. 8 9
  6. 6. Next time…Same same or different? REFLECTIONS ON MANAGING PEOPLE THROUGH THE DOWNTURN The Results The ResultsWhat was the impact of the downturn? Some of those interviewed also observed an companies were unsure how long the downturn Some firms made a conscious decision that peopleThe key impact on most businesses was on sales increase in ‘risk averse behaviours’. For example, would last and didn’t want to overreact. initiatives would not be cut, although they may berevenue and therefore the ability to generate profit. according to Greg Nielsen, there was zero mobility. reduced. For example, SEEK and Pitcher Partners David Rennick [Maddocks] said, ”We agreed as “You couldn’t prise good people out of firms, and still held their Christmas parties; The Just GroupHowever, there were other impacts. a partnership we would do everything we could, people’s focus became much shorter.” Much of this still held their Annual Awards nights. including reducing profit, before making peopleFor some organisations the downturn was an was not seen as a good outcome, but rather leading redundant.” Fundamentally, organisations were looking toopportunity to refocus the organisation, returning to bad consequences. David Rennick believes, make cuts without significantly impacting people.their attention to core values. “People forgot that one day this would be over and Richard Wilson of Landpower said, “The first Therefore cuts were made to expenses such as: they didn’t ask themselves what is the longer term decision was that we wanted to protect our staff.”Ian Campbell, MD of GUD Ltd said, “It was an impact of these decisions?” This was not purely altruistic. He felt he had » Marketing;opportunity to reinforce all the fundamentals with invested a lot in recruitment and the selection of hisour management team – for example that cash Finally, some of those interviewed experienced a » Travel; team and he wanted to keep them.generation is the key.” Joe Powell of SEEK said, positive impact from the downturn. The Sunbeam » Tea, coffee, biscuits;“The downturn forced us to question a lot of things, business (part of GUD) experienced a positive SEEK made a decision, “Very early on, because ourto go back to our roots.” impact. ‘Sales demand did not fluctuate greatly from culture,engagement and people are so important, » Gardening; other years, but the downturn in the US and Europe we decided not to do redundancies. RedundanciesAt Pitcher Partners it prompted ‘an introspective » Christmas gifts; and meant that our suppliers in China were less busy have a dreadful impact on culture and are typicallylook at what parts of the business could do with fine and so suddenly they were more interested in us.’ only a short-term benefit.” » Project budgetstuning…sometimes an economic crisis gives youpause to stop and look at your business.’ However, ultimately some firms needed to make Landpower initiated ‘Project Save $1million’ looking What did interviewees do to manage their redundancies. at how they could take costs out of the businessRichard Wilson of Landpower believes that, “…this is organisations through the downturn? without reducing head count. By talking about costa healthy process. We continued to make money, not Greg Nielsen (Pitcher Partners) said, “We didn’t By and large organisations were very considered actually have redundancies but we had long and savings in terms of keeping people employed, theas much as usual, but it brought us back to our core about what actions to take in the face of the business uncovered a powerful way to engage theirprinciples.” difficult discussions with those who were not downturn. working out. We came to the realisation that these people. ‘Project Save $1million’ ultimately foundSimilarly, a few of the organisations interviewed people were not developing and by allowing them $2m in cost savings. David Rennick advised, “Firstly, we didn’t doused the downturn as a catalyst for implementing anything precipitously. We were very considered to plod along, we were actually hurting their future The Just Group focused on their suppliers to ensureorganisational change that was already needed about what actions we would take. We planned and opportunities to develop…When times were good, the burden was shared, before any head count wasand/or planned. then worked on it quickly.” we could afford to carry people we shouldn’t carry. affected.At MacDonald Johnston, (Australian subsidiary of We weren’t necessarily doing them a favour.” Jason Murray MD, The Just Group indicated that, At an employee level, many of the organisationsa European parent) MD David Waldron ‘used the “During the first downturn (2008) our view was that During the second and more protracted downturn interviewed did one or more of the following:downturn to implement major projects needed by the right response was not purely cost focused… The Just Group looked at roles that had beenthe organisation to become stronger.’ » asked or insisted that people use up their we had to focus on three things. One, where do created during good times but had become less holidays;There were also human impacts, particularly in the we really make our money – sales. Two, the way relevant in difficult times. They did make someway individuals behaved. For the younger generation out was growth and this extra pain might create redundancies but also used natural attrition to » enforced holidays over the Christmas periodthis was the first downturn they had experienced. opportunities. Three, cost control.” reduce headcount. e.g. a two week closure;This created fear and uncertainty, as they saw Most of those interviewed indicated their primary Other responses to address the downturn were » asked for volunteers to take leave of absence/aothers being retrenched. concern was to avoid redundancies wherever more tactical. Organisations: sabbatical e.g. to study or travel, and in the case possible. This was a very different approach to » Reviewed their hiring – often looking to hire of SEEK, offered a percentage of salary during“ previous downturns. Wayne Kayler-Thomson this time; Very early on, because our culture, better/more experienced people who would ‘get said that in the past, the immediate query from them through the downturn’. GUD changed some » asked people to take long service leave; engagement and people are so members contacting VECCI was, ‘How to manage of their management team to ‘slightly harder- important, we decided not to redundancies and downsizing?’ The significant » moved people between offices (Maddocks); nosed business people’. “I don’t like taking people change was that calls were coming in as usual but out and I don’t do it lightly, but it was the right » moved people into new jobs in different areas do redundancies. Redundancies this time they were about ‘how can I keep my staff, thing to do for the business.” (MacDonald Johnston); and have a dreadful impact on culture how can I reduce hours to keep them?’ Wayne’s view is that whilst this was partly a compassionate » Employed HR Managers where they had » moved people to a four-day week (MacDonald and are typically only a short- response, it was also because the downturn came previously had none. Johnston and PACCAR). ” term benefit. off the back of a keenly-felt skills shortage and » Delayed recruitment.10 11
  7. 7. Next time…Same same or different? REFLECTIONS ON MANAGING PEOPLE THROUGH THE DOWNTURN The Results The Results“ Past experience had taught many of those interviewed ‘not to panic’ How did people react? Interestingly, a number of organisations indicated The organisations interviewed placed a significant that they were surprised by people’s reactions since and the importance of leadership at a time of recession. Nadika emphasis on communicating with staff, and this coming out of the downturn. Many of the younger Garber at Hinkler Books was a sales executive during a previous seems to have had a positive impact on how generation expected immediate salary increases; their staff reacted to the downturn initiatives. For they had unrealistic expectations as to how quickly downturn and so understood what it was like from an employee’s example, PACCAR cut out tea, coffee and biscuits. an organisation would recover. perspective. “Now my role is motivational, you want people to be When it was communicated that this equated to 2–3 There was also a hint that perhaps some ” more engaged than ever.” people keeping their jobs, it was accepted. employees hadn’t appreciated the lengths to Most staff felt concerned and uncertain but were which organisations had gone in order to avoid interested to hear how their organisation was going redundancies. to manage through the downturn, and the impact onWhat drove them to make these decisions KPMG when 14 Partners didn’t like how the firm them. If anything, people’s response was that they What would you do differently next time?or follow this strategy? was handling the 1991 recession. “So move to 2008 wanted to hear more. Most of the executives interviewed were satisfied and these Senior Partners are the most vocal in with the way they led their organisations throughDid past experience play a part? Methods of communications included: saying ‘we will have Christmas parties, we will have the downturn and many wouldn’t do anythingThe fact that all those interviewed had experienced biscuits in the tea room.’” » Newsletters; significantly different. “What we did got us throughan economic downturn in their working lives, as and it has got us through before.” (Andrew Past experience also impacted how quickly people » Blogs;business leaders or in their early career roles, Hadjikakou, PACCAR). responded. “I think I was too slow to react thehad a significant impact on their approach. And in » Team meetings; first time. I have learnt to consult, but also to back Amongst those who would do things differentlymost cases their organisations had too. As Andrew my own instinct as well,” said Richard Wilson of » Video conferences; the most common responses were ‘go earlier’ andHadjikakou put it, “PACCAR (US owned) operates in Landpower. ‘increase the level of communication even more’.a cyclical environment…this company knows what it » All-of-company meetings; andneeds to do in a cyclical downturn.” “Even though we did a lot and I think the Town Hall What were their feelings going into the » One-on-one meetings as needed. style is good, you need to get right down to individualPast experience had taught many of those downturn?interviewed ‘not to panic’ and the importance of In some organisations such as Maddocks, they people and do this in a more coordinated way. Myleadership at a time of recession. Nadika Garber Many of those interviewed went into the downturn asked staff to contribute ideas on how the firm could Practice Group Heads could have been trained up aof Hinkler Books was a sales executive during a with mixed feelings. save money and they received a lot of input. People bit better, and got out there a lot more and talked toprevious downturn and so understood what it was There was definitely a sense of uncertainty and got into the spirit of it. people.” David Rennick [Maddocks].like from an employee’s perspective. “Now my role nervousness, but at the same time, many of those Some generational differences were evident. Another response was to make tougher decisions inis motivational, you want people to be more engaged interviewed saw the downturn as an opportunity. It was widely felt that the younger generation the good times, ie better manage underperformingthan ever.” needed more reassurance than older generations people, and to have better forecasting tools in place Jason Murray’s view was, “We can manage our waySimilarly, for David Waldron of MacDonald Johnston through this as long as we know what we have to do or needed more information on why initiatives were in order to ‘get a better read’ on what is happening.the past was in the back of his mind but this was and we do it quickly.” being implemented.his first time as an MD and he realised his role How has the downturn impacted the Others shared a sense of ‘professionalwas now to guide the organisation. It was a year in disappointment’. Richard Wilson said, “It had been culture of the organisation ?which he worked harder than ever, analysing every The majority of those interviewed indicated that the such a stellar time, we were all enjoying great “opportunity and communicating with staff. downturn had no long-term impact on their culture. KPI success and reporting was getting better and The cultural change has beenFor Jason Murray of The Just Group, his previous better…we felt frustrated… ‘not yet surely’ we However, a few indicated that it had made themexperience as a Management Consultant gave him wanted to say.” our understanding that you can’t more performance-driven, more of a short-termthe background knowledge to help him calibrate take anything for granted. driven culture, and less courageous. Another common feeling was one of responsibility.what a downturn does to a business: “What’s a gooddrop and what’s a bad drop and which levers to pull Andrew Hadjikakou from PACCAR summed up The downturn exposed the Wayne Kayler-Thomson said, “The cultural change this feeling. “I felt a huge responsibility on my has been that you can’t take anything for compensate.” shoulders. It’s all about incoming orders and I knew fact that we are part of a global The downturn exposed the fact that we are part of a ”History and culture also impacted how companies it was going to get tough…it was going to have dire economy. global economy.”chose to address the downturn. consequences on those working here and those whoFor example, Pitcher Partners was born out of supply to us.”a recession. The founding Partners split from12 13
  8. 8. Next time…Same same or different? REFLECTIONS ON MANAGING PEOPLE THROUGH THE DOWNTURN The Results Acknowledgements We would like to thank the following organisations How will you prepare for the next time? and specific individuals for their involvement in theWhile some of those interviewed felt that they development of this research: » We will start with a more strategic orientation andcouldn’t do a lot to prepare for a downturn, others from that, clarify financial and brand goals. We askrecognised that their organisation could make more often… ‘What is our business? What are we Greg Nielsen David Waldronadditional changes and preparations for future trying to achieve? What does success look like? Executive Director Managing Directordownturns. Know this and you will know what you are chasing’; MacDonald Johnston Pitcher PartnersSome of the responses were: » We will maintain the ‘disaster plan/contingency» We have learnt to be a lot more careful about how plan’ as part of the planning process each year; David Rennick Joe Powell we recruit; » We will retain a file and roll up learnings into Managing Partner Managing Director» We have embedded the learnings into our values, the Strategic Review. Actually plan for the next Maddocks SEEK Employment (Aust & NZ) systems, processes, goals and culture; downturn; and » We are now better at planning a year ahead and» We openly talk about the downturn in management Nadika Garber Wayne Kayler-Thomson meetings; also being able to turn things on and off as needed. Managing Director Chief Executive Officer Hinkler Books VECCI Jason Murray Jenny Gray Managing Director Chief Executive Officer“ The Just Group Zoos Victoria We will start with a more strategic orientation and from that, clarify financial and brand goals. We ask more often… ‘What is our Ian Campbell Andrew Hadjikakou business? What are we trying to achieve? What does success look Managing Director Director Sales and Marketing ” like? Know this and you will know what you are chasing.’ GUD Holdings Limited PACCAR Australia Richard Wilson Group CEO Landpower Aust & NZ Researchers Samantha Houston Julian Doherty Sarah Law Design & Layout Kim Bear14 15
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