Why Good People Skills Matter in a Recession

I spend a great deal of my time coaching executives on how to become more effective leaders and managers. An important part of this work is to help them develop good relationships with their key staff and stakeholders. We explore different ways of influencing, motivating, and leading people and by extending their skills — I help executives to get the best out of their people.

A common response when I ask executives about their leadership or management styles is: "I just focus on tasks and results," or, "I'm a people person." It can take a while to convince them that to be really successful, executives have to master both sides of the equation. Fortunately, I am not the only one passing on this message — the best companies reinforce this by promoting and developing senior executives on the strength of both sets of skills.

However, I have noticed that the financial crisis has undermined these good practices. Command-and-control leaders are back in fashion and companies appear to be condoning it. I had my first direct confirmation of this last year, when I called a German CFO to check on how she had been progressing with her action plan following our coaching sessions. When we met in London three months earlier, she had complained of a lack of motivation and accountability in her team. We had agreed that she should focus her efforts on active listening, coaching, and more delegation to galvanise the team. "How are you getting on with your team?" I asked. "Have your new approaches worked?" "I didn't need them," she shot back. "I just got rid of the difficult ones and told the rest what I wanted them to do. It's very simple. The recession is great for me because I can act exactly as I want — I don't have to bother with complicated people management."

This was rather disquieting. We had spent a lot of time together working out strategies that would help her mature as a leader and develop her people. Her feedback indicated that her tough, abrasive style annoyed her peers and her team disliked and feared her. She had acknowledged that she needed to change if she was to advance in the organisation and fulfil her career ambitions. Yet just three months on, she had ditched all thoughts of changing her style and was evidently delighted that the crisis was allowing her to carry on as before.

There is increasing evidence that the recession has allowed some managers and leaders to jettison everything they have learned about people management in favour of a more instrumental style. This is a pity since they should be doing the exact opposite to motivate and get the best from their staff. Of course, the economic environment makes it more challenging to do the right thing by people, especially when cuts are required and tough decisions have to be made. And it looks like we may be in crisis for a good while longer as a double dip recession and further economic chaos are on the horizon.

It's critically important that companies develop strategies to manage their people through the crisis if they are to survive and prosper in the long term. There's a lot of good information about how to manage in a recession, but much of this overlooks the subtler aspects of keeping people engaged and committed to the organisation. Employee loyalty, motivation, and trust in the organisation will all suffer if leaders and managers are careless about the way they treat people in a recession. Read More Here