• header 3

Managing change in a recession

We are going through as tough an economic period as many people can remember.  The fun of the Olympics aside, I keep hoping for light at the end of the tunnel – but I can’t see it yet! For lots of organisations the difficult times are far from over, and in some sectors the situation is actually worsening. In this article I want to stray away from pure project management – to a related topic: managing change. I do this because I think there are lessons for project managers.

Are we still in recession? The formal answer to this question is based on GDP growth, and that formal answer right now, is yes. An alternative is an informal assessment, based on asking individuals how they feel, and critically, how their business is doing. The informal answer varies from person to person. For me, this personal answer is more helpful than the global picture. The world is made up of individual situations, not averages. As a change practitioner I am conscious that I work with people in specific circumstances. Change always takes place within a distinct context with its own unique characteristics.

Even in the worst recession there are organisations that thrive. They may be superb at what they do. Perhaps they saw the storm coming and got some key decisions right in advance. Often they offer a service which is more in demand in recessions. Shoe menders and insolvency practitioners spring to mind. On the other hand, there are firms that continue to struggle even after the recession is formally over. Many organisations are not yet seeing too much light on the horizon. 

Let’s focus on those organisations which are finding the recession difficult.

When a business is struggling, managers search relentlessly for solutions to their problems. Some of these solutions end up as change initiatives of some form or another. There are many general points to be made about change initiatives. But I want to focus on how difficult times influence change initiatives – and, perhaps surprisingly, what opportunities difficult times provide. 

My experience of the latest recession and of working in other challenging circumstances shows me that such times have a direct impact on the shape, approach to and numbers of change initiatives. This impact is felt in a variety of areas, but there are three which are most significant:

 

  • The choice of change initiatives
  • How resources are allocated to change initiatives
  • The attitudes to change within an organisation

Let’s look at each one of these in turn.

The choice of change initiatives adjusts as companies move from boom to challenging times. In a recession, not surprisingly, the focus of management attention alters. Selected change initiatives are concerned with organisational survival rather than building for the future. Cost reductions and efficiency drives typically become primary. This rather obvious point is supported by one that is perhaps less evident. 

There is an old argument amongst management theorists. Do organisations shape their destiny through successful strategy, or are those who are successful the ones who respond to the situation most effectively? I think it is a balance of these two factors. We may like to think we are fully shaping our company’s future, but there are too many external factors we cannot predict to be completely in control. What is definitely true is that for most organisations a difficult time means managers feel less in control than usual. More time is spent assessing and responding to the situation. Less emphasis is placed on creating innovative strategic visions. Achieving strategic goals and visions when, in reality, you are responding to an out-of-control situation, is always going to be difficult.

Does this provide any opportunity? In a way it does. Often the most difficult periods are the times to pursue bold and innovative plans. Of course the risk is high, but optimising your position in the recession can give you a significant competitive advantage in the recovery period when it arrives. Being successful in the next boom times are based on pushing forward with innovative ideas now. This might just seem like some easy words to say, but there is an important supporting factor to consider. The critical resources you need to fulfil your bold change plan will usually be more widely available at more economic rates than they were previously or will be in future.   

Whatever change initiatives an organisation decides to pursue resources are needed. Typically, this comes down to money and skilled people. In a recession, investment is typically scarcer and investment decision making tends to become more onerous. Often it is this latter point which slows down and stops change initiatives. When risk is high and money is scarce, it can be hard to be decisive. This results in slow decision making. Change initiatives thrive on pace and momentum. Slow decision making is regularly the most effective killer of a change initiative. The sad thing is that many of the decisions that are slowed down are ones that there is limited choice over – and limited impact of getting wrong. The cost of no decision can be higher than the cost of a poor decision.

However, it is not only change initiatives that stall during a recession. Many other projects and investments are stopped. This means if you search around an organisation carefully you will find people with more free time to work on the change initiative. Such people will not automatically raise their hands when you ask for a team. Showing you are not busy when an organisation is in difficulty is an easy way to a fast exit. But persevere and you will locate the team you need, (as long as you have not already made them redundant). You will often find those key specialists, whose expertise you really wanted on the change initiative for a long time, are suddenly available. In turn, this can increase the viability of your initiative by reducing the costs of external resources such as consultants.

Resource bottlenecks are, ironically, one aspect of a recession that can give a real impetus to a change initiative. Generally, I believe organisations pursue too many initiatives, programmes and projects at once. An organisation which undertakes 100 projects in parallel, will almost always take significantly longer to complete all 100 projects than one that pursues 10 batches of 10 projects at a time. Organisations focus too much on keeping everyone busy and not enough on the most efficient way to get work done. Of course, real life is messy and it is not always easy to slim down project and change portfolios. However, often businesses waste time and resources pursuing too many projects in parallel. There are many ways to show the inefficiency of excessive parallel tasking.  The opportunity of the recession is therefore to focus, for once, on the few things the business really needs to do – and to do them well and quickly.

Everyone who has been involved in change initiatives, and anyone who has read about change management, understands the impact of the attitudes of the employees of an organisation. Successful change is not just about organisation design, processes, systems and tools – they may be required but will not alone achieve change. Change can be made to seem extremely complex, but at its heart successful change is about people in the organisation modifying what they do and how they do it. Attitudes impact the willingness and speed with which new ways of working are adopted. Recessions make people more tense than usual. The words “change initiative” often translate in people’s heads into “job losses”. No one likes losing their job – and this aversion increases when their belief is that it will be harder to find a new one. 

This tense attitude can be compounded by the pressure to produce results quickly. Often demands are made by senior managers which seem unrealistic. Where teams manage to achieve these demands, they are rewarded by yet another seemingly impossible demand. This apparently endless cycle of “thanks for achieving that goal, here’s the prize – another goal” can be depressing for many staff. 

So what is the opportunity? There are change initiatives that organisations would really like to pursue, but never have done. These initiatives are just a bit too difficult. They will challenge some central belief held by too many people in the organisation. The change medicine is just too hard to swallow. I previously said about people being tense in a time of recession, and this tension needs careful handling. But in reality, when an organisation is struggling it is far easier to get alignment around change initiatives that require tough decisions. Consider the extreme situation of an organisation that is going bankrupt. Everyone in this situation accepts that change must be made and often that change must be radical. Making those changes when the same company was booming can often seem impossible. Ironically, it is often the most successful organisations that are hardest to change fundamentally.

I do not want to paint a naively optimistic picture. Recessions are difficult times for most businesses. Bold change initiatives can seem risks that require impossible degrees of courage to take. But even the most difficult situations have some hidden opportunities in terms of what changes you choose and how you can tackle them. 

Take advantage of the scarce resources that are available in the difficult period to push your initiatives forward. Those resources won’t be available for ever. Slim down your project portfolios. Focus on those really important changes and get them completed well and quickly. Finally, press on with those difficult changes that in the good times are just too painful a challenge to undertake. No one likes a recession, but the most successful organisations are those that find opportunities in any situation.

Read 44997 times

Leave a comment

Make sure you enter all the required information, indicated by an asterisk (*). HTML code is not allowed.

Choose an article