The Harvard Business Review conducted a study on organizations that roared out of the last United States recession in the late 80’s through early 90’s  to achieve success. They compiled this data to determine the survival rate and attributes of companies that might emerge strong from the current recession. According to HBR, the clock started ticking on the current recession in 2007.

According to the study, only 9% of the nation’s businesses from the late 80’s recession came out strong and healthy. The rest limped through or failed miserably. Will it be the same dismal results for companies in the current recession recovery? 

HBR findings suggest that businesses that thrive through the turmoil of economic downturns have a formula for success. Businesses that fail, however,  merely ride on the shirt tails of a robust economy until it stumbles and falters. Management teams that struggle with “switching gears” when times aren’t so grand often take the position that negative economic impacts are out of their control.  Nothing could be farther from the truth.

Common Characteristics of Successful Organizations

There are common characteristics of companies who emerged unscathed from the late 80’s, early 90’s recession:

• They were transparent and took care in how they downsized and let people go.
• They invested internally to make sure that remaining staff were not over burdened.
•  They invested in restructuring so that staff, product, and opportunity were all lined up for a quick sprint out of the gate at the end of the recession.
• Management teams with the foresight to place leaders in the right seats during downturns inspired employees to champion change.

Unfortunately, an alarming number of companies didn’t have the right individuals at the helm to communicate change to employees. According to a summary of 40 research studies, the success rate of corporate change programs is 33%. This means that 2/3 of all change efforts fail.

Empowered Employees as Catalysts of Change

When company cultures are progressive, employees are empowered to make day to day decisions about their work, how it is accomplished and to correct problems when they see them. If the leaders manage their budgets skillfully… meaning everyone takes a payroll hit if the company profits drop including C-Suite executives… and are transparent about the business threats and opportunities, these organizations tend to survive and profit through recessions.

To Manage or to Lead?

So what’s the difference between organizations that fail and those that thrive? It’s who is in charge – managers or leaders. But aren’t these terms interchangeable? Not by a long shot. Simply put, managers manage and leaders…well…they lead. Both have skills sets that are viable for very different workplace environments and economic conditions. 

Managers recruited to run systems tend to have personality profiles that are really good at managing and tracing systems, but not leading people. They excel in taking the inconsistencies out of systems so they run smoothly and efficiently. However, there is nothing like a recession to throw a wrench in the system and to turn their world upside down. So, instead of innovating and looking for solutions to address the new variables, people who manage work hard to bring things back under their control. Individuals with manager skill sets thrive when the economy is full steam ahead. 

During recessions, it takes leaders to inspire and encourage the workforce to be creative in dealing with new variables and innovations. To survive a recession every employee must be catalyzed to support and commit to the change process in order for the company to survive. Individuals with leadership skill sets bring emotion and intuitive applications to the table for a successful change effort. This means that people who are heading up the change must be very good communicators. Change execution requires high levels of strategic communications that is driven from the C-suite down and from the front line up. 

So just what is the difference between manager and leader skill sets? Here are the attributes, personality types, and characteristics of individuals who are leaders and those who are managers: 

Leaders:

• Innovators and creators of new opportunities around every corner and through every downturn
• Proactively develop new activities to take their company to the next level and remain a leader in the industry
• Excellent communicators with good people skills. They show high interest in employees and management teams.
• Go beyond analytical results and includes human intuition to lead a business
• Sees the “big picture” and are visionaries and dreamers
• Create and communicate the vision 

Managers:

• Manages resources wisely
• Interested in systems, structures, analysis, and controlled outcomes
• Result oriented and loves “plans”
• Detail oriented and tactical
• Work is based on goals, tasks, and projects
• Follows the vision
• Employees are the resources and means to reaching a goal
• Seeks external data
• Level headed, practical, realistic 

Managers like control and are needed after change transpires to rebuild the systems altered through change. Leaders help employees forge a shared vision and communicates that vision to embrace change. Managers then implement the vision by breaking it down in incremental goals, projects, and tasks and providing the necessary resources for moving forward. Both managers and leaders bring unique skill sets to the change arena, but it takes a leader to catalyze employees to champion change and a new course of direction during tough economic times.

Copyright TIGERS Success Series  By Dianne Crampton

About TIGERS Success Series, Inc.

TIGERS® sets the standard for achieving a thriving, successful and collaborative team culture. TIGERS provides TIGERS Team Wheel Game and Facilitation Certification workshops for internal and external consultants, customized team building events, and leadership team development consulting and facilitation services. The goal is attaining optimum team performance – surprisingly fast.

For more information on training topics that help companies with employee engagement, retention and growth out of the recession check out this teleconference and consulting summit.