Slade Partners White Paper 2011


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Reflections on Managing People through the Downturn

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Slade Partners 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? About usSlade Partners EMA Executive Search is the We have an extensive network of both privateexecutive search arm of Slade Group. We are an industry and public sector clients and have managedAustralian-owned, full service, Human Resource a wide range of senior level appointments overand Recruitment firm, with offices in Melbourne, many years. Slade Partners is also a memberSydney and Brisbane. Across the recruitment of EMA Partners International, an expandingindustry we are recognised for our professionalism global network of like-minded executive searchand best practice approach to senior executive professionals servicing the needs of clients in overappointments and are AS9001 accredited. 50 cities around the world.4
  4. 4. REFLECTIONS ON MANAGING PEOPLE THROUGH THE DOWNTURN White Paper Highlights Preparation for a downturn Talking about the cost savings required to keep Critical thinking was applied by those in industries people employed was found to be a powerful way where an impact could be foreseen: to engage with employees and generate cost saving initiatives. » 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 leadership last time that worked? team moved from consensus mode to directive mode and that motivational leaders came into their » 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. 5
  5. 5. Next time…Same same or different? The ResultsBackground Jason Murray of The Just Group (retail) expressed aReflections on Managing People through view that in Just Group’s case, they had experiencedthe Downturn two downturns (Winter 2008 and from DecemberResearcher Samantha Houston spoke to some of 2009 onwards) and that the Group is still in theAustralia’s leading organisations, in various sectors second downturn.including retail, manufacturing, employment, Ian Campbell of GUD (consumer and industrialprofessional services, publishing and entertainment. products) said that they are seeing a higher inquiryThe interviewees were all senior executives (CEO’s, rate but some residual nervousness in the minds ofMD’s, Directors and Partners), who were open and some purchasers of capital equipment remains.generous with their answers. The results provide aninsight into the strategies of organisations duringthe downturn, the outcomes of these strategies, and “learnings for the future. The majority of organisationsThe Results also indicated, as of late 2010,Discussions first established whether the recent that they were not yet throughdownturn had an impact on their business, and if ”so, how? the downturn.Answers ranged from “Absolutely!” to “It had asignificant impact, but not all negative,” to “2009was the best year ever, …so if it had an impact it Only Nadika Garber of Hinkler Books indicated thatwas a positive one.” (Zoos Victoria). The majority they had not felt the impact of the recession untilhowever, acknowledged some or significant negative very recently.impact on their business. How much the downturn impacted any particularThe majority of organisations also indicated, business seemed to be related to:as of late 2010, that they were not yet through 1. The industry in which the organisation operates;the downturn. 2. The breadth of activity within the business; andProfessional services firms such as legal andaccounting were immediately impacted as they 3. The ability to ‘change’ what they do or offer.are reliant on the business activity levels of theirclients. These transactions dried up very quickly. IndustryBoth Maddocks (lawyers) and Pitcher Partners Professional Services(accountants) indicated that while transactions have These firms were impacted because they relypicked up, they have not returned to the same levels on healthy client activity. If their clients reduceas prior to the downturn. their own activity, then this flows on directlyOther firms echoed this view. David Waldron of to professional service providers in legal andMacDonald Johnston (manufacturing and industrial) accounting. Interestingly, Greg Nielsen of Pitcherdoesn’t believe they will be out of the downturn Partners indicated that he believes the smalleruntil the 2nd quarter of 2011, as businesses have accounting firms might not have suffered as muchdeferred major capital expenditure decisions. as the larger (more prestigious) firms, due to the ‘dropdown’ effect—part of clients’ belt tighteningRichard Wilson of Landpower (agricultural process was to move from the more expensive firmsmachinery) believes they are also still experiencing to the smaller (less expensive) firms. However,the impact of the recession in Australia. he doesn’t consider this a long-term change andThe 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
  6. 6. REFLECTIONS ON MANAGING PEOPLE THROUGH THE DOWNTURN The ResultsOnline/Recruitment Breadth of activity within the businessThe recruitment sector is much like professional Where an organisation was involved in a numberservices. SEEK’s core employment business of different activities within their business, manyexperienced a huge drop as organisations were able to redirect their focus, thus helping theirdramatically decreased hiring rates, and in turn, financial position.lower confidence levels cut the rate at whichemployees changed jobs. Organisations and For example:recruiters simply no longer had many vacancies » Hinkler Books redirected its focus to its Foreignto advertise. Language business (previously only a small partRetailing of the product range) because it was not beingThe retailers interviewed (ie Just Group, Landpower, impacted by the downturn.PACCAR Australia (Kenworth Trucks)) were all able » GUD has 6 totally unrelated businesses – theyto significantly reduce prices in order to move stock, were not all impacted by the downturn.although this was not enough to protect them fromthe downturn. » SEEK’s educational business was counter cyclical and improved during the downturn (although itManufacturing didn’t completely counter the downturn in theManufacturing companies were significantly online job advertising business).impacted as it is more difficult for them to transformor quickly adapt and change what they do. This » Pitcher Partners was able to review the industriesappears to be exacerbated if the product is a capital it worked in and focus on areas of growth.purchase that can be postponed e.g. MacDonald It did not rely solely on transaction work as someJohnston, PACCAR and Dexion (part of GUD). accounting firms did and continue to do.Organisations in industry sectors that were » Maddocks was somewhat protected by theperceived as being ‘needed’ or could position breadth of its client base, and the fact that fiftythemselves as ‘needed’ seemed to suffer less. per cent of its work comes from government projects. As David Rennick said, “The machine ofFor example: government needs to keep going.” » VECCI – the importance of its role as an advocate and support for business owners and managers An organisation’s flexibility helped raise their profile during this time, which A number of the business leaders spoke about being was beneficial for the organisation. able to ‘reinvent’ themselves to suit the downturn. » Zoos Victoria – Victorian people were looking for Zoos Victoria presented itself as ‘good value for local, good value entertainment as they were money.’ “We went into a really big repositioning travelling less. The Zoo fitted this profile. exercise. It was brought about by more than the financial crisis…it led us to repositioning ourselves as a Conservation Organisation…and we focused on the Membership product which was great value,”“ said Jenny Gray CEO. Jenny also observed, “When It was an opportunity to finances are tough you need to know why you exist.” reinforce all the fundamentals VECCI was also in the middle of a Business Re- with our management team – engineering Process. It was a three-year process and if anything, the downturn helped them to get the for example that cash changes through. ” generation is the key. 7
  7. 7. Next time…Same same or different? GFC Time Line 2007–2008Time Line Information key March◊ Global events Investment bank Bear Stearns is acquired by rival JP Morgan Chase for US$240m in a deal backed by US$30bn of central bank loans.◊ Australian events A year earlier it would have been worth US$18bn. September Mortgage lenders Fannie Mae and Freddie Mac, which account for nearly half of the outstanding mortgages in the US are rescued by the US government in one of the largest bailouts in US history. Investment banking giant Lehman Brothers files for bankruptcy, after US officials decided not to bail it out. It would be the largest and highest-profile casualty of the global credit crisis. 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 2001 9/11 attacks. Icelandic bank Glitnir is nationalised at US$1bn. The other two largest Icelandic banks follow on October 7 (Landsbank) and October 9 (Kaupthing). The banks’ total liabilities are ten times the country’s GDP; the stock market falls by 90%, along with the krona.April OctoberNew Century Financial, which specialises in sub-prime mortgages, files Germany announces a 50bn euro plan to save one of the country’sfor Chapter 11 bankruptcy protection and cuts half of its workforce. biggest banks – Hypo Real Estate.The Australian stock market (ASX 200) reaches its peak after four years The Reserve Bank of Australia (RBA) lowered official rates by a full 1%,of double digit growth from April 2003 to April 2007. more than double what most analysts were predicting. 2007 2008September OctoberThe UK’s fifth largest mortgage lender, Northern Rock, was granted The UK Government announced a massive bailout package, worth moreemergency financial support by the Bank of England in the latter’s role than US$64bn for the country’s struggling banking lender of last resort. A day later, depositors withdraw £1bn, in whatis 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 ratesDecember as far as possible and spend as much as they can afford, and to do itKevin Rudd elected Prime Minister. now, there is clearly no time to be lost. The US taps into the $700bn available from the Emergency Economic Stabilization Act and announces the injection of $250bn of public money into the US banking system. November Barack Obama is elected the 44th president of the United States. The US government agrees to rescue Citigroup after an attack by investors causes the stock price to plummet 60% over the previous week under a detailed plan that included injecting another $20bn of capital into Citigroup, bringing the total infusion to $45bn. December French President Nicolas Sarkozy unveils a 26bn euro stimulus plan to help France fend off financial crisis, with money to be spent on public sector investments and loans for the country’s troubled carmakers. The RBA lowers the cash rate by 100 basis points to 4.25%. Australian inflation is at 5% in late October. The Australian dollar has fallen 28% against the US dollar since end-July. 8
  8. 8. REFLECTIONS ON MANAGING PEOPLE THROUGH THE DOWNTURN GFC Time Line 2009–2010JanuaryThe Bank of England cuts interest rates to 1.5%, the lowest level in its315-year history, as it continues efforts to aid an economic recovery inthe UK.China’s exports register their biggest decline in a decade.German Chancellor Angela Merkel unveils an economic stimuluspackage worth about 50bn euros to kick-start Europe’s largesteconomy.FebruaryThe Rudd Government’s $42bn economic stimulus package passesin the Senate, paving the way for promised cash bonuses for workersaround the country.President Obama signs the US$787bn stimulus plan into law. The planaims to spur job creation and industry growth, particularly in health Januarycare and green energy. Spain announces a plan to save 50bn euros, including government spending cuts totalling 4% of GDP. The plan includes 4% cuts in publicMarch sector pay.President Obama instructs Treasury Secretary Timothy Geithner toblock AIG from spending $165m on executive bonuses. Taxpayers had Maythus far given AIG $165m in aid. European governments and the IMF agree to make available up to 750bn euros in loans to halt the spread of the Greek debt crisis.Australia’s economy slumps 0.5%, its first quarter of negative growthin 8 years. Australian Bureau of Statistics figures show the current account deficit has improved from almost $18.5bn in the December quarterApril to $16.55bn in the March quarter, although this was worse thanUS car giant Chrysler files for bankruptcy in an effort to clear the final market forecasts.hurdles before its alliance with Fiat. 2009 2010May MayTreasurer Wayne Swan announced that projected government revenue Italy’s cabinet approves a 24bn euro austerity package withhad 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 from$57.6bn. 5.3% in 2009.June Spain wins parliamentary approval for its 15bn euro austerityGeneral Motors Corporation files for bankruptcy. package by just one vote.Australia avoids a recession after the Australian Bureau of Statistics Junereveals the economy for the March quarter grew by 0.4% from the final Julia Gillard becomes Prime Minister.quarter of 2008. NovemberJapan’s economy contracted at an annualised rate of 14.2% in the first Concerns about sovereign debt in Europe continued to weigh on globalthree months of 2009, a record rate of decline. investors’ minds, with Ireland resisting pressure to take funds from the US$1 trillion European rescue fund set up in May.Unemployment in Australia peaked during the global financial crisis at5.8%, whereas in the US it rose above 10%.JulyCiting insufficient regulation as a cause of the current economic crisis,President Obama proposes increasing the government’s authority overfinancial institutions. The plan would give more power to the FederalReserve, create a Consumer Financial Protection Agency and takemeasures to discourage risky lending.NovemberGreece’s new government says the 2009 budget deficit will be 12.7%of GDP – more than double the previously published figure.DecemberIn 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 serviceswas a deficit of $1.7bn in November, seasonally adjusted, from arevised deficit of $2.08bn in October. 9
  9. 9. Next time…Same same or different? The ResultsWhat was the impact of the downturn? Some of those interviewed also observed anThe key impact on most businesses was on sales increase in ‘risk averse behaviours’. For example,revenue and therefore the ability to generate profit. according to Greg Nielsen, there was zero mobility. “You couldn’t prise good people out of firms, andHowever, there were other impacts. people’s focus became much shorter.” Much of thisFor some organisations the downturn was an was not seen as a good outcome, but rather leadingopportunity to refocus the organisation, returning to bad consequences. David Rennick believes,their attention to core values. “People forgot that one day this would be over and they didn’t ask themselves what is the longer termIan Campbell, MD of GUD Ltd said, “It was an impact of these decisions?”opportunity to reinforce all the fundamentals withour management team – for example that cash Finally, some of those interviewed experienced ageneration is the key.” Joe Powell of SEEK said, positive impact from the downturn. The Sunbeam“The downturn forced us to question a lot of things, business (part of GUD) experienced a positiveto go back to our roots.” impact. ‘Sales demand did not fluctuate greatly from other years, but the downturn in the US and EuropeAt Pitcher Partners it prompted ‘an introspective meant that our suppliers in China were less busylook at what parts of the business could do with fine and so suddenly they were more interested in us.’tuning…sometimes an economic crisis gives youpause to stop and look at your business.’ What did interviewees do to manage theirRichard Wilson of Landpower believes that, “…this is organisations through the downturn?a healthy process. We continued to make money, not By and large organisations were very consideredas much as usual, but it brought us back to our core about what actions to take in the face of theprinciples.” downturn.Similarly, a few of the organisations interviewed David Rennick advised, “Firstly, we didn’t doused the downturn as a catalyst for implementing anything precipitously. We were very consideredorganisational change that was already needed about what actions we would take. We planned andand/or planned. then worked on it quickly.”At MacDonald Johnston, (Australian subsidiary of Jason Murray MD, The Just Group indicated that,a European parent) MD David Waldron ‘used the “During the first downturn (2008) our view was thatdownturn to implement major projects needed by the right response was not purely cost focused…the organisation to become stronger.’ we had to focus on three things. One, where doThere were also human impacts, particularly in the we really make our money – sales. Two, the wayway individuals behaved. For the younger generation out was growth and this extra pain might createthis was the first downturn they had experienced. opportunities. Three, cost control.”This created fear and uncertainty, as they saw Most of those interviewed indicated their primaryothers being retrenched. concern was to avoid redundancies wherever possible. This was a very different approach to“ Very early on, because our culture, previous downturns. Wayne Kayler-Thomson said that in the past, the immediate query from engagement and people are so members contacting VECCI was, ‘How to manage important, we decided not to redundancies and downsizing?’ The significant change was that calls were coming in as usual but do redundancies. Redundancies this time they were about ‘how can I keep my staff, 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 and are typically only a short- response, it was also because the downturn came ” term benefit. off the back of a keenly-felt skills shortage and10
  10. 10. REFLECTIONS ON MANAGING PEOPLE THROUGH THE DOWNTURN The Results companies were unsure how long the downturn Some firms made a conscious decision that people would last and didn’t want to overreact. initiatives would not be cut, although they may be reduced. For example, SEEK and Pitcher Partners David Rennick [Maddocks] said, ”We agreed as still held their Christmas parties; The Just Group a partnership we would do everything we could, still held their Annual Awards nights. including reducing profit, before making people redundant.” Fundamentally, organisations were looking to make cuts without significantly impacting people. Richard Wilson of Landpower said, “The first Therefore cuts were made to expenses such as: decision was that we wanted to protect our staff.” This was not purely altruistic. He felt he had » Marketing; invested a lot in recruitment and the selection of his » Travel; team and he wanted to keep them. » Tea, coffee, biscuits; SEEK made a decision, “Very early on, because our culture,engagement and people are so important, » Gardening; we decided not to do redundancies. Redundancies » Christmas gifts; and have a dreadful impact on culture and are typically only a short-term benefit.” » Project budgets However, ultimately some firms needed to make Landpower initiated ‘Project Save $1million’ looking redundancies. at how they could take costs out of the business Greg Nielsen (Pitcher Partners) said, “We didn’t without reducing head count. By talking about cost actually have redundancies but we had long and savings in terms of keeping people employed, the difficult discussions with those who were not business uncovered a powerful way to engage their working out. We came to the realisation that these people. ‘Project Save $1million’ ultimately found people were not developing and by allowing them $2m in cost savings. to plod along, we were actually hurting their future The Just Group focused on their suppliers to ensure opportunities to develop…When times were good, the burden was shared, before any head count was we could afford to carry people we shouldn’t carry. affected. We weren’t necessarily doing them a favour.” At an employee level, many of the organisations During the second and more protracted downturn interviewed did one or more of the following: The Just Group looked at roles that had been » asked or insisted that people use up their created during good times but had become less holidays; relevant in difficult times. They did make some redundancies but also used natural attrition to » enforced holidays over the Christmas period reduce headcount. e.g. a two week closure; Other responses to address the downturn were » asked for volunteers to take leave of absence/a more tactical. Organisations: sabbatical e.g. to study or travel, and in the case » Reviewed their hiring – often looking to hire of SEEK, offered a percentage of salary during better/more experienced people who would ‘get this time; them through the downturn’. GUD changed some » asked people to take long service leave; of their management team to ‘slightly harder- » moved people between offices (Maddocks); nosed business people’. “I don’t like taking people out and I don’t do it lightly, but it was the right » moved people into new jobs in different areas thing to do for the business.” (MacDonald Johnston); and » Employed HR Managers where they had » moved people to a four-day week (MacDonald previously had none. Johnston and PACCAR). » Delayed recruitment. 11
  11. 11. Next time…Same same or different? The Results“ Past experience had taught many of those interviewed ‘not to panic’ and the importance of leadership at a time of recession. Nadika Garber at Hinkler Books was a sales executive during a previous downturn and so understood what it was like from an employee’s perspective. “Now my role is motivational, you want people to be ” more engaged than ever.”What drove them to make these decisions KPMG when 14 Partners didn’t like how the firmor follow this strategy? was handling the 1991 recession. “So move to 2008 and these Senior Partners are the most vocal inDid past experience play a part? saying ‘we will have Christmas parties, we will haveThe fact that all those interviewed had experienced biscuits in the tea room.’”an economic downturn in their working lives, as Past experience also impacted how quickly peoplebusiness leaders or in their early career roles, responded. “I think I was too slow to react thehad a significant impact on their approach. And in first time. I have learnt to consult, but also to backmost cases their organisations had too. As Andrew my own instinct as well,” said Richard Wilson ofHadjikakou put it, “PACCAR (US owned) operates in Landpower.a cyclical environment…this company knows what itneeds to do in a cyclical downturn.” What were their feelings going into thePast experience had taught many of those downturn?interviewed ‘not to panic’ and the importance ofleadership at a time of recession. Nadika Garber Many of those interviewed went into the downturnof Hinkler Books was a sales executive during a with mixed feelings.previous downturn and so understood what it was There was definitely a sense of uncertainty andlike from an employee’s perspective. “Now my role nervousness, but at the same time, many of thoseis motivational, you want people to be more engaged interviewed saw the downturn as an opportunity.than ever.” 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 dothe past was in the back of his mind but this was and we do it quickly.”his first time as an MD and he realised his role Others shared a sense of ‘professionalwas now to guide the organisation. It was a year in disappointment’. Richard Wilson said, “It had beenwhich he worked harder than ever, analysing every such a stellar time, we were all enjoying greatopportunity and communicating with staff. KPI success and reporting was getting better andFor Jason Murray of The Just Group, his previous better…we felt frustrated… ‘not yet surely’ weexperience as a Management Consultant gave him wanted to say.”the background knowledge to help him calibrate Another common feeling was one of responsibility.what a downturn does to a business: “What’s a good Andrew Hadjikakou from PACCAR summed updrop and what’s a bad drop and which levers to pull this feeling. “I felt a huge responsibility on myto compensate.” shoulders. It’s all about incoming orders and I knewHistory and culture also impacted how companies it was going to get tough…it was going to have direchose 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
  12. 12. REFLECTIONS ON MANAGING PEOPLE THROUGH THE DOWNTURN The ResultsHow did people react? Interestingly, a number of organisations indicatedThe organisations interviewed placed a significant that they were surprised by people’s reactions sinceemphasis on communicating with staff, and this coming out of the downturn. Many of the youngerseems 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 quicklyexample, PACCAR cut out tea, coffee and biscuits. an organisation would recover.When it was communicated that this equated to 2–3 There was also a hint that perhaps somepeople keeping their jobs, it was accepted. employees hadn’t appreciated the lengths toMost staff felt concerned and uncertain but were which organisations had gone in order to avoidinterested to hear how their organisation was going manage through the downturn, and the impact onthem. If anything, people’s response was that they What would you do differently next time?wanted to hear more. Most of the executives interviewed were satisfied Methods of communications included: with the way they led their organisations through the downturn and many wouldn’t do anything » Newsletters; significantly different. “What we did got us through » Blogs; and it has got us through before.” (Andrew Hadjikakou, PACCAR). » Team meetings; Amongst those who would do things differently » Video conferences; the most common responses were ‘go earlier’ and » All-of-company meetings; and ‘increase the level of communication even more’. “Even though we did a lot and I think the Town Hall » One-on-one meetings as needed. style is good, you need to get right down to individualIn some organisations such as Maddocks, they people and do this in a more coordinated way. Myasked staff to contribute ideas on how the firm could Practice Group Heads could have been trained up asave money and they received a lot of input. People bit better, and got out there a lot more and talked togot into the spirit of it. people.” David Rennick [Maddocks].Some generational differences were evident. Another response was to make tougher decisions inIt was widely felt that the younger generation the good times, ie better manage underperformingneeded more reassurance than older generations people, and to have better forecasting tools in placeor needed more information on why initiatives were in order to ‘get a better read’ on what is happening.being implemented. How has the downturn impacted the culture of the organisation ? The majority of those interviewed indicated that the“ downturn had no long-term impact on their culture. The cultural change has been However, a few indicated that it had made them our understanding that you can’t more performance-driven, more of a short-term take anything for granted. driven culture, and less courageous. The downturn exposed the Wayne Kayler-Thomson said, “The cultural change fact that we are part of a global has been that you can’t take anything for granted. The downturn exposed the fact that we are part of a ” economy. global economy.” 13
  13. 13. Next time…Same same or different? The Results How will you prepare for the next time?While some of those interviewed felt that they » 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 weadditional changes and preparations for future trying to achieve? What does success look like?downturns. Know this and you will know what you are chasing’;Some 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; we recruit; » We will retain a file and roll up learnings into» We have embedded the learnings into our values, the Strategic Review. Actually plan for the next 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 meetings; also being able to turn things on and off as needed.“ We will start with a more strategic orientation and from that, clarify financial and brand goals. We ask more often… ‘What is our business? What are we trying to achieve? What does success look ” like? Know this and you will know what you are chasing.’14
  14. 14. REFLECTIONS ON MANAGING PEOPLE THROUGH THE DOWNTURN AcknowledgementsWe would like to thank the following organisationsand specific individuals for their involvement in thedevelopment of this research:Greg Nielsen David WaldronExecutive Director Managing DirectorPitcher Partners MacDonald JohnstonDavid Rennick Joe PowellManaging Partner Managing DirectorMaddocks SEEK Employment (Aust & NZ)Nadika Garber Wayne Kayler-ThomsonManaging Director Chief Executive OfficerHinkler Books VECCIJason Murray Jenny GrayManaging Director Chief Executive OfficerThe Just Group Zoos VictoriaIan Campbell Andrew HadjikakouManaging Director Director Sales and MarketingGUD Holdings Limited PACCAR AustraliaRichard WilsonGroup CEOLandpower Aust & NZResearchersSamantha HoustonJulian DohertySarah LawDesign & LayoutKim Bear 15
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