In the face of rapidly changing market conditions, what worked for your company yesterday may not work tomorrow.
Economic headwinds and uncertainty can take their toll on company morale. Even if your team feels confident in the stability of the company, doubts and fears can still creep in — especially when customers or partners are struggling with their own businesses.
As the CEO of a global company, it’s my job to steer progress forward, even amidst challenging outside pressures. While it would be foolish to believe that an organization can skate through challenging times unscathed, being too reactionary or overly cautious toward market changes can cause its own problems.
Over the course of my nearly 40-year career, I’ve been in numerous leadership roles where I’ve needed to help teams navigate a wide variety of crises, many due to external financial pressures. What I’ve learned is that consistency is critical. In chaotic times, people have a natural tendency to find new ways to occupy themselves. In business, the best way to occupy people is often to have a clear, consistent focus on internal goals and metrics, which can then result in a drumbeat of success.
Goals are important — so much so that they often drown out the equally-important metrics necessary to measuring progress. Goals are the catalyst for creating achievement and metrics are how you measure progress made toward achieving your goals. How you define those metrics and how you communicate them to your team will often dictate just how well you weather challenging times in order to achieve your goals in the first place.
As a baseline, metrics must have buy-in from employees and they must be both realistic (achievable both in good economic times or tough ones) and adaptable during periods of growth or decline. How you get to those metrics, and how you keep them relevant and meaningful to your business, is where leadership comes into play. Below are three important considerations when defining the metrics that matter for your organization.
Engage and Expand Your Stakeholders
Leaders sometimes instinctively close ranks during a crisis, thinking it will minimize risks. This approach can end up stifling innovation from departments and team members. McKinsey, in an analysis of how companies were rethinking their approaches during the pandemic, pointed out that encouraging bottom-up innovation resulted in healthier companies overall.
Flexibility in the sourcing of new ideas allows for greater company adaptability as a whole. A leader may have the big picture, but rank-and-file employees understand the finer details of their specific areas. Including them as stakeholders gives them a better sense of control over their work and increases confidence — giving leaders realistic insights into what’s possible even in a tough situation. Employees on the front lines offer the dimension and nuance fundamental to making sure metrics are both achievable and meaningful, creating a positive feedback and engagement loop between employees, leaders, and the metrics both are measured against.
This intangible loop comes with tangible benefits to a company. Feeling in control leads to more employee engagement and drives growth to the tune of over 20% more profitability. When employees are highly engaged, they work harder, smarter, and more effectively, creating a stronger position for the company overall.
Actively Manage Performance Expectations
The length of the expected economic recession is the subject of debate. What is known, however, is that changing economic circumstances will require companies to be flexible in how they define their metrics. Goals may not change, but how they’re achieved may need more than one reset of expectations.
From employees to the board, diversity of opinions and viewpoints can be invaluable when evaluating what kind of pace is realistic given current market conditions. Success is not a static destination; what matters more is your team’s ability to adapt and redefine in the face of external pressures. As you set and reset performance expectations, the more stakeholders on board, the easier it is to keep everyone aligned towards the same goals.
Defining achievable expectations will look different from business to business. It requires taking a full-throated analysis of your company. It may mean reverting back to business fundamentals, rethinking your corporate culture, adjusting what customer acquisition looks like, or how you manage growth. This is where expanded stakeholders like department heads can be particularly helpful, as they can offer a deeper understanding of current capabilities in service of the bigger picture.
Avoid Tunnel Vision
Avoiding tunnel vision requires the same flexibility as managing expectations, but applying it to the metrics themselves. In the face of rapidly changing market conditions, what worked for your company yesterday may not work tomorrow. Rigidly sticking to outdated metrics can lead to crippling tunnel vision, where companies become so fixated on specific goals they fail to recognize shifting market dynamics and emerging opportunities.
One way to overcome tunnel vision is by embracing a culture of experimentation. Encouraging employees to explore alternative metrics, even as they’re actively working to deliver on the existing ones, can lead to valuable insights and innovative approaches. More than simply embracing failure, this is about embracing the fundamentals of agility within the business.
The challenge for every leader is knowing when to stay the course—providing that much-needed stability that people crave—and when to pivot to a new and more practical set of metrics. Essential to success is staying focused on decision-making and identifying those metrics that must evolve to set the company up for future success. Leaders must be clear in their communication to reinforce why the metrics were valid and, more importantly, why now is the time for them to change.
As leaders, we can never know where the next global shock will come from. It may be an effect of climate change; it may be a knock-on effect of a distant war. Regardless of when it comes, or if there are any warning signs, companies must be willing to use new data to reinform their metrics and right the ship.
By allowing metrics that matter to take center stage during turbulent times, you’ll help your team better focus and feel empowered by achievement, even in the face of economic uncertainty.
NOTE: This post was adapted from an article that appeared in Fast Company, July 10, 2023.