Trust to get through the downturn, strategy to move beyond it
By Matt Golosinski
If an economic recession is like a rocky sea, destroying flimsy boats and battering even strong ones, the emergence from bad times can feel like a return to safe harbor.
But is that really the case?
Professor J. Keith Murnighan says that without clear strategic direction, organizations can run aground even as the market rebounds. Those that do advance thoughtfully, however, may discover new opportunities — but only if they've laid the groundwork earlier, even while struggling perhaps with layoffs, division closings and priorities dictated by diminished resources.
In short, a company needs "multifaceted vision" as it looks toward the future, says Murnighan, the Harold H. Hines Jr. Professor of Risk Management. "It should use the downturn to make hard decisions about its options so that the firm can invest resources in more promising possibilities," Murnighan says.
He also believes a downturn offers a chance to build trust throughout an organization, since people are more likely to be on their best behavior and want to keep their jobs.
"It may seem counterintuitive, giving your people more leeway and trust during a downturn, but this can be a time to find out what they can really do," says Murnighan, whose research includes negotiations and decision-making.
If the company has had to fire people during tough times, he adds, it's best to do so "diplomatically, humanely and with a lot of support." But the question about who to rehire after the market recovers also demands serious thought.
There may be lingering bad feelings if a company brings back former employees, Murnighan says. And rehiring the same people may limit an organization's chances to pursue new options in a new economic landscape.
"This is a time to take not just financial risks," Murnighan says, "but risks in people too. You want to discover how you can leverage the people you have to build a new organization that sets you up for the future."