Managing People on a Sinking Ship

by Amy Gallo

When your business is facing declining sales, a potential buy-out, or even certain closure, how do you manage people who are likely panicking about their future? Can you keep your team’s motivation and productivity up? The short answer is yes: Even when it’s clear that a company’s in trouble, there are ways to help team members stay focused, deliver results, and weather the storm.

What the Experts SayIn a crisis, you may think you need a whole new set of management approaches. But don’t throw out your Management 101 book quite yet. Kim Cameron, a professor at Michigan’s Stephen M. Ross School of Business and author of Positive Leadership: Strategies for Extraordinary Performance, has studied organizations that are downsizing or closing and he says that, instead of abandoning best common practices, the most skilled leaders reinforce them. “Good management is good management. Treating people well, helping them flourish, and unlocking potential are all good practices regardless of the environmental circumstances,” he says. Amy Edmondson, a professor at Harvard Business School and author of “Strategies for Learning from Failure,” says that of course it’s not easy to “keep people enthused, engaged, and working hard when they know the company may not be around.” But it’s not impossible either. Here are six principles to follow when your organization starts to feel like a sinking ship.

Look for opportunities to turn things aroundSometimes it’s clear that the end is near. Your manufacturing plant is slated to close. A larger company has bought your business unit. But in other situations, there may be a glimmer of hope. “There is often a short window of opportunity to do something differently,” Edmondson says. If there’s a chance of saving the company, focus your team on doing two things. First, seek input from customer-facing employees. Their front-line perspective could provide valuable insight into how your company needs to change. Second, do small experiments with alternative business models. Edmondson suggests you ask, “What kinds of products and services would customers welcome that we don’t offer?” The goal is to alter the organization’s course away from the one that got you into this mess.

Give your team a larger purposeTo keep people focused, give them something to work toward. “Identify a profound purpose that is more important than the individual benefit,” says Cameron. People want to believe their work matters in any situation. This can be tough when the company’s success is no longer the goal but you might select something that employees value personally — leaving a legacy or proving critics wrong. Cameron studied the manager leading a GM plant that was going to close in two years. To inspire employees who knew the end of their time with GM was near, he told them to do their very best so that senior leaders would be sorry when closing day came.

Provide reasonable incentivesFind ways to reward good work. After all, if the company is failing and employees are going to collect a paycheck anyway, why wouldn’t they spend their last three months on Facebook? “It’s the leader’s job to answer the question: What’s in it for me?” says Edmondson. Make clear what they will get if they do their best in this trying time. Will they learn a skill that will help them find their next job? Will the acquiring company be keeping some staff? How will the experience help them grow professionally? “If you can’t find a way to truthfully explain why they should help you get the job done, you’re out of luck,” says Edmondson.

Show people they matter as individualsDon’t just offer the same things to everyone, however. People want to still be seen as individuals. Tailor your message and the incentives to specific team members. Whenever possible, give them personal attention and care. When news of the crisis hits, meet with your employees one-on-one. Cameron suggests you say something like, “We want you to flourish and will do our best to take care of you even though we may not be here in the future.” Find out what matters most to them and do your best to meet those needs. There may be some people who can’t handle the uncertainty; in those cases, do what you can to help them find a position at another company.

Be honest and authentic — alwaysBoth Cameron and Edmondson are adamant that being transparent is crucial in these circumstances. “Whatever you know, share it with your employees,” says Cameron. Edmondson agrees: “Be as honest as you possibly can.” Don’t try to protect people from the truth or ignore what’s happening. “You can’t not talk about reality,” says Edmondson. And don’t say anything you don’t mean. In tough situations like these, people are on high alert for lies and inauthentic messages.

Don’t ignore emotionsPeople are going to be upset, afraid, and angry. Don’t pretend that these feelings don’t exist. Instead, make room for them. “You don’t want to dismiss emotions. It only drives them underground and makes them more deeply felt. It’s important to acknowledge feelings, especially negative ones,” says Edmondson. Tell people that you’re available to talk whenever they want. Encourage people to get together without you so that they can say things they might not want to express in front of a boss.  “The best practices I’ve seen are lots of huddles — people getting together and just having conversations about what’s going on,” says Cameron. Don’t play the role of psychologist though. If people need more specialized support to deal with what’s going on, refer them to outside help, such as trained outplacement counselors.

Principles to Remember

Do:

• Focus people on a meaningful goal
• Be 100% honest about what you know — share any information you can
• Encourage your team to get together without you to talk about what’s happening

Don’t:

• Expect that people will perform if you’re only giving them a paycheck — give them more meaningful incentives such as professional growth
• Treat people the same — remember they’re individuals with different needs and goals
• Pretend that something bad isn’t happening — be transparent and welcome expressions of emotion

Case study #1: Take care of your teamFor thirteen years, Michael Feeley worked as a recruiter at a staffing firm in New York City. He managed a small sales force and a temporary staffing division and he loved his job. “The company came first for me. I was a loyal and trusted employee,” he says. However, soon after the economic crisis in 2008, the company struggled to maintain its hiring fees and retain clients. Senior leaders decided to cut salaries in the hopes of keeping the operation afloat. They looked for a company that could possibly acquire them.

During this crisis, Michael took a transparent and supportive approach with his team. “Honesty was the only way to live and work through it,” he says. He told his team everything he knew and did his best to support them. He spent time listening to their fears and trying to give them confidence and comfort. “I wanted them to feel good about themselves and the work they had to do every day,” he says. To keep them motivated, he was clear that he was living through the same thing. “We were all in the same boat and the people I worked with wanted to know that I was right there with them — fears and all,” he says.

As a manager, Michael felt compelled to take care of his team. “I had a deep and sincere obligation to be useful and to know what they thought, felt, and wanted to do in this emergency,” he says. He focused on the facts that he thought would help them stay engaged: the company delivered a product that was well respected in the marketplace; the owner had always looked out for his employees; and the organization had survived difficult times in the past.

Despite all best efforts, however, the office did eventually close. Michael and his team members were lucky. “We were fortunate, even in a tough job market, to transition into work pretty quickly,” he says. And many, including Michael, were able to find jobs that better suited them. “That is one of the positive things that came out of the situation — people were clear about what they did and did not want to do,” he says.

Case study #2: Create an “us vs. the world” attitudeMarc Lawn was managing a global team of 100 people when sales at the company started declining. He says the business, which sold products to companies in the tech and media space, had lost touch with its customers and had ignored important changes in the way they made purchases. When it became clear that the company was in real trouble, Marc spent time with each person on his team explaining the situation and determining who might be incapable of handling the ambiguity. “Some people don’t cope well with uncertainty,” he says, so he helped those people — 12 total — find new roles outside the company.

For the people who stayed, Marc cultivated an “us vs. the world” attitude. He explained that this was an unprecedented challenge for the company and that they would not be able to succeed without all of them. “The objective of the group was to prove everyone wrong and show that we could save this thing,” he says. He focused his team’s attention on the near-term and encouraged them to accomplish specific tasks in small, manageable chunks. To ensure momentum, he celebrated successes and rewarded every job well done. When he spoke with members of his team, he conveyed a message: “Anything is possible, no matter how grim the situation, with the right skills, and with a team ready to fight for each other.”

The company was able to survive by getting rid of one part of the company and acquiring a new business unit. “Last year, the business had a record year, which shows that you can make it work with a ‘no regrets’ attitude,” he says.