In the face of an economic crisis, companies that show more concern for their employees consistently pull ahead.
When the economic crisis hit in 2008, John Cassaday, the founding CEO of Corus Entertainment Inc., proposed a plan to all of his employees. If they would agree to a few key elements – a wage freeze, between two and five unpaid days off (salary dependent), a pension hiatus, a hiring freeze, and no executive bonuses – then he would guarantee their jobs and, together, they would survive the recession. Cassaday took the same wage rollbacks and unpaid leave as everyone else.
According to a recent study by the Boston Consulting Group (BCG) and the World Federation of People Management Associations (WFPMA), this style of leadership works. The study found a direct link between a company’s way of handling workforce issues and its level of performance. More specifically, the global online survey of more than 5,500 HR and business-unit executives in 109 countries found that high-performing companies put much more effort and imagination into dealing with crises such as economic downturns than low-performing ones.
The results of the survey show that high-performing companies are more likely to measure workforce performance, to transform HR into a strategic partner of senior management, to brand themselves as good employers, and to invest in leadership development. Such companies also tend to recruit at least half of their top executives internally, compared to the mere 13 per cent that are hired internally at low-performing companies.
The study also showed that when faced with financial difficulties, the low performers are far more likely to cut their workforces across the board, while high performers are more flexible. High-performing companies are more likely to streamline processes, flatten hierarchies, and consult the workers to find out what they would be willing to do to preserve their jobs. Germany’s short-time model of allowing workers to work less for less pay has proven extremely effective during the downturn.
BCG’s managing director Grant Freeland says, “Managing talent, leadership development, strategic workforce planning, and employee engagement are the most critical topics around the world.” Based on my 30 years of experience working with thousands of clients in Asia, Europe, South America, the United States, and the Middle East, I would have to agree.
Cassaday understood that if you cut people’s resources, tools, and livelihood you need to provide them with leadership instead, offering them a realistic alternative plan they can rally around. While many companies simply demand and expect that their personnel “do more with less,” Cassaday showed genuine compassion for his employees, listening, caring, and putting himself on the line for them by guaranteeing their jobs. Despite difficult times, Cassaday signalled that he and his employees were in it together.
Those companies that have had the knee-jerk reaction to “cut cut cut” will pay the price as they emerge from the downturn. Even the employees who have remained at these companies throughout the crisis know that their employers are not loyal to them. Such employers are foolish if they think that their workers aren’t examining their options, eager to move on the instant an opportunity presents itself.
These companies will be the losers as the economy recovers. I see it happening already, and so do others. For example, corporate labour lawyer Guy Dancosse was recently quoted in the Globe and Mail as saying, “My feeling is that some employers may have taken advantage of the [recession] without doing some long-term thinking. That may have created some kind of resentment and unbalance.”
CEOs like Cassaday, who faced their employees, answered their questions, openly discussed the dimensions of the problems, and shared the pain with them personally, are now reaping the rewards of their courage.
Now that advertising sales in broadcasting are recovering, Corus Entertainment has emerged with an energized, cohesive, and formidable workforce. The company is among Canada’s Top 100 Employers and has no trouble attracting the best and the brightest employees.
In the face of turbulent times and great uncertainty, it’s not easy to do what Cassaday did. But that is what courageous leadership demands.