With a difficult economy forecast for 2023, C-level executives should focus their efforts on a blend of "back to basics" and strategic opportunities.
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With recession lights flashing on the horizon, C-level executives are bracing for a slowdown in 2023. However, while a sizable majority of senior executives (79 percent) say they expect a recession this year, 47 percent are only partially prepared for one and 18 percent have done little or no recession planning at all, according to a recent Aon survey.
Among the "prepared" C-level executives in the survey are those planning to keep up their long-term investments during a recession.
"Despite a looming recession, confident companies are resisting the impulse to slow hiring or delay capital investment," the AON study stated. "While they are concerned about short-term risks such as inflation and rising energy costs, they are not losing sight of more long-tail risks," including disruptions in the market.
So how can CEOs and other top execs navigate a company through a recession while still planning for the future? Experts say the answer is to look at tough times as a blend of "back to basics" and strategic opportunities.
"As the old saying goes, in every crisis lies an opportunity," said Philippe Humeau, CEO of CrowdSec, a cybersecurity services company. "A good example of that adage [was] the companies that, during COVID lockdowns, decided to book airports' advertisement spaces and billboards for the next five to 10 years at a very discounted price. A year or two sounded like a cautious bet, so paying for those spots with a 60 percent discount rate was beyond smart."
In the same way, companies that bought oil futures contracts when they were trading at $0 a few years ago spotted the aberration and leveraged it.
The Best Use of Executives' Time
With this anticipated slowdown looming, what are C-level executives' best strategies to deploy for the short and long term? Management experts recommend these six actions:
1. Consider a start/stop/continue assessment.
Senior executives should meet with top staffers to get a fresh outlook—current and future—and do so on a weekly basis.
"Focus on what activities you need to start and when," said Nicky Espinosa, a former C-level executive and author of the book No Apology Needed: The Career-Transforming Power of Authenticity for Women Leaders (self published, 2021). "Establish what activities are no longer contributing and how might you shift away from failed policies and strategies. Figure out what's working now, and anticipate any changes needed after the downturn passes."
If senior management doesn't take this time to self-assess, C-level executives could find their organization ill-prepared on the other side of the downturn.
"Engaging your teams in the discussion where it makes sense, and being transparent where possible, can pull your teams together during this difficult time," said Espinosa, who noted that during recessions, new competitors often spring up and old competitors strike quickly.
"That's why some downtime necessitates conducting a full strategic and operational review. Revisit everything, even your core mission. Assess your team structure, your succession plan and your communication channels," Espinosa said.
2. Keep in touch with current customers and reassure them they remain the top priority.
"Arrange for more leisurely meetings and share in-depth discussions of their needs, what they see as their industry needs and directions, and what you have been working on," said Peter Lucash, CEO of Biopharma Connex and a lecturer at Northeastern University in Boston. "Focus on ideas for new and improved products and services."
Executives can also use employees as focus groups for new ideas to improve operations or current products.
3. Continue learning—and get your management team learning, too.
C-level executives and their managers should use any quiet time to go to conferences; listen to business podcasts; and read helpful management books, journals, studies and industry articles.
"This is a time to catch up, think about what you have today and be working on what you will be doing tomorrow," Lucash said. "Time after time, the companies that learned from and pushed through the last downturns devoted time and resources preparing for the ensuing uptick."
4. Seek out opportunities.
"A recession is one of the best times to look for opportunities," said Julie Bee, founder of a business consulting and coaching firm in Charlotte, N.C. "When things are good, we can get lulled into complacency. So even if your company doesn't suffer dramatic losses during a recession, it does force you to play the 'what if' game."
That's why leveraging a recession to review the mission, vision and core values of a company isn't a luxury—it's a necessity. This process also involves observation and education.
"Now is a good time to make changes," Bee said. "Study your industry and similar industries. Look for trends that could indicate possible opportunities. Talk to your team and ask them what you should stop doing."
5. Avoid getting bogged down in "crisis management" mode.
C-level executives should resist the urge to over-focus on the company's recession response.
"During an economic downturn, many leaders miss opportunities because they focus all of their efforts on responding to the recession's most immediate consequences," Espinosa said. "It's too easy to get wrapped up in the uncertainty of the situation and miss opportunities that may benefit the organization."
Historically, companies are best positioned after the recession when senior decision-makers focus on sustaining current business and planning for the future during the downturn.
"Consequently, be deliberate in setting aside time to look forward, rather than spending 100 percent of your time in crisis management," Espinosa advised.
6. Focus on three management tenets.
If C-level executives stray from their management basics, they should hit the reset button and remember what got them this far as a company leader. Espinosa recommended keeping it simple and doing three things every day:
"When things get challenging, bring yourself back to this foundation," Espinosa advised.
Brian O'Connell is a freelance writer based in Bucks County, Pa. A former Wall Street trader, he is the author of the books CNBC Creating Wealth (John Wiley & Sons, 2001) and The Career Survival Guide (McGraw Hill, 2004).
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