This century has only just become an adult, but has managed to fit in an unprecedented amount of upheaval and disruption. From the September 11 attacks in 2001, through various wars, natural disasters, disease outbreaks and the global financial meltdown and subsequent debt crises. We’ve seen the launch of Facebook, YouTube and the iPhone – and that is just the tip of the technological iceberg that arrived on the scene. Then this year we’ve seen GDPR land, and the Brexit pendulum continues to swing causing the pound to see-saw. And all of that against the backdrop of a Trump presidency that continues to sow uncertainty on a global basis.
Is it any surprise that you might hear the sound of drawbridges being pulled up across the corporate world? Are you feeling the pinch as budgets are being tightened, again, as senior management doubles down on a strategy of retreat, keep your head down, and don’t do anything even vaguely out of the ordinary.
I’d say at this stage we should be used to managing our way and driving our business through this level of global and local disruption and change. We’ve been riding this wave for a while now, and it doesn’t seem like it’s dying out any time soon. We should accept that these crises are becoming the norm and that we need to find a way to navigate through them that positions us for growth and not decline once we emerge on the other side.
But still, too often the tendency will be to batten down the hatches.
For financial managers this usually means, tightening up on expenses. Actually, that’s putting it mildly. Control gets ratcheted up to 11 and expenses get put under the microscope. Makes sense, right? Actually, not at all, so it’s worth revisiting why this is a very bad idea.
Don’t be tempted to micromanage your way through tough economic patches
One of the most fascinating effects of a recession, or other financial turmoil, is that fear and panic turns leaders, who previously saw their people as valuable team members, into autocrats who fixate on targets and are oblivious to everything else. As a result, spending becomes lean and managers turn into checkbox-ticking watchdogs.
It doesn’t take a HR guru to tell you that this is almost always counterproductive. This is the best way to demotivate a previously well-functioning team, and, demotivated employees are less efficient than their counterparts. I’m not suggesting adopting an indulgent approach when it comes to budgeting and expense management, but to rather take a smart approach.
Instead of tightly controlling your managers, give them control over their individual budgets. After all, only the manager really knows what costs can be effectively cut without having unfortunate consequences down the line. The way to do this successfully has two parts. First, ensure your vision and strategy is both inspiring and realistic, so that the people tasked with implementing it are convinced by it. Next, ensure there is a central, user-friendly space where information can be stored and easily accessed and shared. This probably does not look like an organisation-wide ERP system, which are often too complex for managers to understand. Inevitably misinterpretations arise, or the managers develop a parallel system of their own, somewhat flawed, and definitely out of date, spreadsheets.
Empower your managers with actual performance data that relates to their budget on a daily, not monthly basis. Information is transformative – it is persuasive, it inspires action and it clarifies goals and expectations for everyone. If you want your staff to pull together as a team, especially in tough times – equip with them with the right tools and information to do their jobs.
Now, your team will be empowered to make the decisions that only they are in a position to make, but you still have enough oversight to keep a close eye on the overall financial health and spending of the company. And then, despite any downturn, you’ll have happier, loyal employees; a clear picture of where you are in the world; and the confidence to lower the drawbridge and engage with the world, while your competitors are nailing the shutters into place and becoming a distant memory in the market’s mind.