Managers unprepared for the recovery

Apr 24 2009 by Nic Paton Print This Article

We're certainly not out of the economic and financial woods yet but, with more and more observers relatively upbeat about the prospects for next year, managers need to start thinking for the future rather than managing day by day.

With everyone from Federal Reserve Chairman Ben Bernanke to Barack Obama talking up the prospects for the U.S economy next year, and firms such as consultancies Watson Wyatt and Vistage yesterday highlighting growing optimism among business leaders that the worst in now behind us, managing the recovery needs to be moving up the executive priority list, according to author and management guru Suzanne Bates.

Similarly, after months focusing on cutting posts and managing redundancies, managers may now need to start thinking once again about skills and talent management, and in particular whether they have all the talent in place that they need to hit the ground running when the recovery comes, the UK Institute of Learning and Management has said.

Bates, author of Motivate Like a CEO: Communicate Your Strategic Vision and Inspire People to Act and chief executive of consultancy Bates Communications, has argued that, even if the recovery is six months or more away, managers still need to be starting to adjust their thinking.

"Companies need to start putting leaders, policies and programs in place to fully capitalize on the recovery when it is in full swing," she said.

Bates cited the latest McKinsey Quarterly survey which has suggested that, for the second quarter in a row there has been no increase in the percentage of global executives who feel their national economic conditions have become worse.

However there was a widespread acceptance that we are unlikely to see any recovery this year, with barely a third saying they were expecting an upturn to take place during 2009, down from four out of 10 in the prior quarter.

Just as importantly, the percentage of employees who forecast a promising future with their employers increased to 52 per cent, up 6 percentage points from 46 per cent in August, according to the latest Modern Survey Employee Engagement Index.

The Fed's Bernanke has also pointed to increases in home sales, new home construction and improvements in consumer spending.

The most recent Beige Book summary of the 12 Federal Reserve Districts has noted that some sectors, such as housing and spending on necessities, had improved from the previous quarter in almost half of the bank's regions.

Even more upbeat evidence has emerged from recruitment firm The Ken Blanchard Companies in its latest annual Corporate Issues Survey.

This has suggested that more than seven out of 10 international companies are optimistic about the economy rebounding this year, with just a quarter of the 1,700 executive, line managers, HR and learning and development professionals polled worldwide believing the downturn would continue unabated into 2010. Yet, despite all these early signs that the recovery may be beginning, many companies are not ideally positioned in critical areas for when it kicks into full gear, especially regarding leadership, employee motivation and career development, warned Bates.

"Due to layoffs of more experienced and higher-salaried managers, some employees have been promoted from within to replace them who do not have the necessary leadership, management and motivational capabilities to capitalize on the recovery," she said.

"Some employees who were promoted may have the technical and functional skills required to perform their new jobs, but may be lacking in the finer interpersonal and career development skills," she added.

There will also be increased pressure on businesses to retain and attract their best people during a recovery, when job opportunities will be more plentiful than now for current workers and desired new recruits, said Bates.

"If your company downsized with an axe rather than using a scalpel, you may now have some gaping holes you need to fill," she forecast.

She recommended companies that were serious about putting in place the building blocks to make the most of the economic recovery needed to assess the motivational capabilities of their leaders and their ability to develop others, make managing the emotional side of their organisation a top priority and recognise and reward employees by using low-cost and no-cost incentives such as personal e-mails, newsletter articles, verbal praise and thank-you notes.

The Institute of Learning and Management research, meanwhile, has argued that more than a quarter of CEOs see good people management and communications skills as the key attributes that their managers need to get their organisations safely through the recession.

In fact these were now even more important now than financial aptitude and budgeting skills, put at the top of the list by around a fifth of the CEOs polled.

Penny de Valk, ILM chief executive, said: "The findings emphasise the need to continue focusing on leadership and management development, even during in a downturn, when budgets are tight."

If businesses were not only to survive the recession but emerge well placed to take advantage of the recovery, they needed to focus on improving core skills, she emphasised.