female employees discussing in office

In mid-March, a Roy Morgan survey found most Australian businesses agreed we were in a recession. This was before the more stringent government-mandated social distancing policies were put in place. We are now navigating our organisations through a widespread health and economic crisis that is being likened to the great depression.

While managing a business or industry downturn isn’t a new phenomenon for most company directors, it’s a very different proposition when this downturn is fast, deep and nationwide. In more stable economic circumstances having to let employees go is painful, but it can be done with the knowledge that they’re likely to find employment with another organisation – even if it's with a competitor. Now, that competitor is probably in the same boat you find yourself in.

Such struggles are being experienced globally but, ironically, Australia’s adept economic management and good fortune has in some ways put its workforce on a more disadvantageous footing. By some estimates, 60 per cent of our workforce was too young to work when Australia last experienced a recession. For many others, that recession happened long before they held senior positions.

This means many of our executives are, very understandably, grappling with how to manage in a situation that’s like nothing they’ve ever experienced before. They need guidance.

This is where company directors and boards come in. As this situation has unfolded, business leaders have swiftly devised new plans. More often than not these plans include difficult decisions made for the long-term benefit of the company and its employees.

It’s likely that many company directors supported their executive teams by providing guidance as decisions were made and plans were developed. The next challenge is successfully communicating these plans in a way that will secure buy-in from their employees and they’re still looking to their company directors to help them do this successfully.

Leaders need to lay out the difficult choices that have been made, explain why they’ve made them and show genuine empathy for the challenges people at all levels within the organisation are facing. Part of doing this successfully is being as honest as possible. This doesn’t just build trust; it ensures people understand the situation that we’re all collectively facing.

Imagine a situation where your executive team has communicated a rosier commercial picture than was true, or at the very least, tended to focus more on the positives than the negatives. In this current crisis, when things change day to day, that could mean soon after a display of optimism, management needs to negotiate temporary wage cuts. Chances are it will find that its people react poorly. Some would suspect the company is taking advantage of the current situation. On the other hand, if the business’ circumstances are communicated clearly people are more likely to have been mentally prepared and understand why this is being asked of them.

Of course, honesty does not mean scaring employees with worst case scenarios. This approach causes its own backlash.

So, what is the middle ground between optimism and pessimism? It is acknowledging uncertainty. It is okay and appropriate to say that you do not know what is around the corner, so long as you calmly assert you have a plan in place and that you’re focused on the long-term success of your business and people.

It’s also important to regularly communicate. The situation is changing day by day and keeping people up to date on what these changes mean for the business, and for their jobs, is important. Make sure your leadership team is on the same page with what they are communicating to ensure everyone, at every level, is hearing a single message.

HR leaders are well versed in best practice, and can help any leader formulate the framework and messaging that will best suit the culture and situation of any particular company. It is important that leaders are leveraging the skills that their HR teams provide, and that HR are in a leadership position within an organisation so they’re properly empowered to provide this guidance.

One final thing I would urge every leader to keep in mind. There is a tremendous difference between communicating negative job changes – stand downs, redundancies, pay cuts – when you are in a workplace as compared to when employees are at home.

Usually learning that your job is not secure happens when you are surrounded by colleagues and you can contextualise your feelings before you head home. With social distancing, this is not possible. Employees will be hearing often quite stressful things while near their immediate family. Leaders need to be sensitive to this fact. Make sure any distressing news isn’t a one-off video chat – a nail in the coffin – but rather a series of authentic conversations.

What leaders do now will echo in the minds of employees for decades. When the next crisis inevitably comes, and today’s employees are the leaders of their own businesses, you want to make sure that you’ve helped your executive team set an example that they’d want to match.