Essential Strategies For Leading Through A Downturn
Essential Strategies For Leading Through A Downturn

Written by Brent Mullins

Jan 26, 2023

One lesson seems eternally true; there will always be hard times, and those times will eventually pass. But right now, leaders are wrestling with rising inflation, global supply constraints, escalating labor costs, abnormally high attrition, and many more concerns.

And since hard times have been here before, we can leverage the practices that helped leaders preserve employee commitment and successfully steer their workforce through economic whitewater to achieve their short and long-term goals.

This article answers the questions, “What are a handful of leadership practices that exemplary leaders have employed to navigate uncertain economic times, including the great recession?” “What can a leader do to retain key talent, create the conditions for employees to sustainably give their best performance, and earn the confidence of those they lead?”

Here are some tangible steps for all leaders looking for success in tumultuous periods.

5 Strategies For Effective Leadership During An Economic Downturn

1. Take Action for Short-Term Results without Sacrificing the Big Picture

Take Action for Short-Term Results without Sacrificing the Big Picture

Stress from an economy laden with uncertainty combined with the pressure to deliver short-term results can produce leadership “nearsightedness.” It’s a condition where a leader or leadership team focuses solely on the immediate challenges with far less consideration for the intermediate or long term. Tension mounts like an avalanche waiting to happen; stress piles up, the natural strengths a leader has relied on no longer seem to work, and what’s out of control is a much longer list than what’s in control. When triggered by this nearsightedness, leaders can lose connection with how they’ve successfully managed complex challenges.

Consider Dave Cote, former CEO of Honeywell, whose leadership is now a case study in successfully navigating the great recession.

“I’ve been a leader during three recessions, and I’ve never heard a management team talk about how the choices they make during a downturn will affect performance during a recovery.” 

“There will be a recovery, and we need to be prepared for it.”

Economic uncertainties, slowdowns, or recessions don’t last forever. As leaders decide how to manage the tough times, they’re also setting the stage for either success or further difficulties following the end of the economic cycle. The pressure to deliver results in the short term elevates the risk that decisions made to claw out results inadvertently puts the enterprise into a long-term predicament that is not easily solved.

An executive challenge during this adversity is influencing the big-picture discussion and leadership team decisions to balance the pain across critical stakeholders. In Cote’s perspective, that meant customers, investors, and employees.

For customers, what does the organization need to do to continue doing a great job with customers? What customer promises must the organization deliver despite the times? What projects or product investments must continue to meet customer expectations?

For employees, how do leaders inspire confidence that the organization has a viable, healthy future? What actions will help retain key leadership, thought leaders, or critical contributors in your value-creation processes? How will you protect talent essential to future value creation?

These questions are the start of what executives and leadership teams need to ask. Determining the right questions for your organization and gaining alignment for solutions appropriate to your challenges is the first step in balancing short-term pain with the enterprise’s long-term big picture.

2. Your Leadership Contribution in Uncertain Times

Your Leadership Contribution in Uncertain Times

Colin Powell, the distinguished statesman, and military leader, is credited with saying, “Leadership is the art of achieving more than the science of management says is possible.” At the heart of this quote is the truth that leadership can inspire and motivate people to give their best at a level they didn’t know they could reach.

Competent management gets things done, and it’s extremely valuable. But it’s not what people look for when the chips are down. Difficult times produce a bevy of unwanted negative emotions like frustration, fear, and anxiety lurking below the waterline or, in some cases, dramatically expressed. On the other hand, leadership is the positive emotional antidote to the frayed emotions experienced in tough times.

A leader’s steady, positive presence in the face of hardship inspires courage and brings out the best in people. It taps deep, personal motivation and brings hope for what can be. And while leadership is a big topic, let me address a few specific actions for stormy seasons.

Vision Enlists Commitment

Extraordinary measures to contain costs summons uncertainty that can permeate all corners of an organization. If there is a certainty, it’s that there will be more extraordinary actions until costs are tamed.

You can alleviate anxiety and uncertainty by sharing a vision with your business or function that clarifies what it looks like to navigate these difficult situations. It illustrates the path forward, such as “how you will work differently,” “what remains important, what’s not changing, etc.” It creates hope and provides a roadmap or a scene that informs people of what you are enlisting them to do or how they are to behave.

If you expect your leaders to get closer to mission-critical work, paint the picture of motivating and encouraging vs. micromanaging and unintentionally disempowering. What does good look like if you expect better cross-department consultation and collaboration for crucial decisions? If you are making changes to contain workforce costs, such as reorganizations, budget reallocations, etc., dive deeply into an open dialog. Discuss your expectations regarding key behaviors like speed in prioritization, changes in decision-making rights, and how decisions align with your short and long-term priorities.

Integrating these dialogs into your operating rhythm helps your leaders cascade similar but appropriate discussions through their teams.

Pay More Attention to Relationships

Behavior often described as “classic or traditional” management rears its head during times of high stress. Leaders start compulsively wanting to bring answers instead of framing the right questions. Empowering turns into dictating. Instead of encouraging experimentation, demanding rigid conformity takes over. Perfection — the morale killer — is the new expectation and becomes the enemy of work that needs to be “good enough.”

If you catch yourself in these behaviors, stop and take a breath. No matter how good your intentions are, the risk of communicating distrust or unempowering independent teams and leaders far outweighs what you get for embracing these classic tactics and a maniacal focus on the task.

Build trust, commitment, and engagement by paying close attention to your key relationships. Your peers want to know that you’re all rowing together and you’re “two in a boat,” as the saying goes. Your directs, in particular, want their challenges to be understood, not necessarily solved, by you. Focusing on understanding doesn’t mean agreement; it means communicating that you get what they’re going through. Take your 1-on-1’s to a new quality level and make each 1-on-1 count; coach, empower, and encourage them through their challenges. Talent that’s a flight risk is more likely to leave due to the relationship with the leader (classic tactics) or because they lose faith in the company. It’s far less likely they’ll quit because of hard work.

3. Invest In Your Senior Leaders

Invest in your senior leaders

Consider this startling finding from The Definitive Series on Employee Engagement published by Marcus Buckingham and the research team at ADPRI, who asked, “when a leader is not fully engaged, what percent of their team is fully engaged?” Answer – 0.04%. It’s incredible to see how intrinsically linked leaders and directs are regarding “the emotional state of mind that causes people to do their best work, sustainably,” ADPRI’s engagement definition. Imagine the additional risk you face if your leaders don’t foster a culture of engagement down to the front line.

Cutting off or postponing development experiences for senior leaders is a common tactic when containing costs. However, learning and growth are key drivers of engagement and a culture of continuous improvement. Developing strategic capabilities in the appropriate leaders is a crucial ingredient to stimulating growth during uncertainty. Leaders need strong technical and relationship capabilities in tough economic situations to navigate choppy economic whitewater. It’s knowing what to do and cultivating relationship power and influence to inspire commitment and action.

Translating strategic opportunities to the organization is an act that propels employee engagement long after hard times have passed into something you might again call normal times. Make the investment, and support your senior leaders.

4. Open Communication Prevents Dumpster Fires

Open Communication Prevents Dumpster Fires

Cost containment measures are disruptive. They’re often very disruptive. Company-wide shockwaves emanate from reorganizations, reallocating resources and headcount between projects, or reducing a workforce by any number. These changes could be a tire blowout on the highway without the right communication strategy.

It’s understandable why leaders delay important communication; there are often far more questions than answers. And, understandably, leaders worry about making things worse by communicating incomplete information.

That said, not communicating is like throwing gas on the “anxiety fire,” leaving your leaders and employees to seek answers and make meaning where they can – the misinformed and inaccurate gossip channels. The rumors and speculation spread like wildfire, causing even more worry, uncertainty, and stress.

Transparent, frequent, and honest communication is the best way to extinguish those rumors and provide your team with the information they need to understand, feel more secure, and build solidarity for the challenges at hand. Honest, direct communication, even when the answers feel negative or incomplete, is a major contributor to building trust, the currency of leadership.

Metaphorically speaking, trust is like a bank account where a high balance equals excellent leadership capital that funds remarkable achievements. Leaders earn it by openly sharing problems and remedies while not misleading or causing panic. The yield is employee confidence that can enhance productivity and retain talented staff even in times of hardship when drop-offs in bonuses, salary cuts, and layoffs are common.

When you are communicating important matters, look to William Bridges, change management master and author of the influential book Managing Transitions; his “Four Ps” is a potent communication structure:


Describe why the change is occurring. What problem does it solve? What will it accomplish? Understanding the logic of a change can accelerate the change.


Describe what the future looks like. What’s the end game? How’s it going to work? What is and isn’t changing? Imagining what the change will look like helps people give their all to make it real.


Describe the steps needed to get to the picture. What’s the road map? What’s going to happen over X time frame? What’s the first action, second, and third? Leaders and employees want a clear path to get to the destination.


Describe the part specific people play. What’s my role? What will I do? How will I provide input into the plan? Clarify how people will tangibly contribute.

The 4 Ps are a highly effective structure that lends itself to a thorough communication plan or template easily shared through your organization. Simple feedback loops from team meetings allow you to manage ongoing communications to correct misinformation and gossip while helping your people navigate the changes.

5. Well-Being: Stack The Deck In Favor Of Optimal Performance


Leading during the good times asks less of a leader than the hard times. If ever there’s a time when your best is needed, it’s during a rocky economy. What if your real need is to recover from exhaustion, cynicism, or demoralization? What intrapersonal conditions do you need to recover or be at your best, given all that makes you uniquely you?

If nothing else, you know at an intuitive level that it won’t come from trading long work hours at the expense of your physical, mental, social, and spiritual health. Neglecting just one of these interconnected pillars creates a foundational strain on the remaining base.

The absence of ailments or diseases does not define good health and well-being. Good health and well-being are about your ability to act with energy, vigor, and agency for a meaningful work and personal life. It requires attending to your whole self, not fractions of yourself.

Each pillar resides on a continuum; therefore, assessing them is not a measure of yes or no, healthy or not healthy. Your growth and discovering your optimal placement comes from experimenting with actions to move further (positively) up the continuum. From a performance point of view, experimenting to find the right balance leads to personal thriving and the opportunity for your most profitable performance. Start with a simple gut check and consider how satisfied you are with each pillar. Take regular small steps to make positive inroads and discover where more harmony impacts your well-being.

It can be difficult to pay attention to what’s been ignored. Consider that a positive because you can’t be courageous without experiencing some trepidation. Sometimes there’s more than a little reluctance; feeling stuck or overwhelmed can thwart even the most minor steps forward. Remember, you don’t have to go it alone. Seek out a trusted friend or confidant for advice and perspective. If that’s not enough, reach out to a coach to learn how a coaching partnership can help you navigate these challenges and accelerate toward what you want.

Final Thoughts

Despite the current economic situation, there are opportunities out there for those who are willing to seize them. If you can take action for short-term results without sacrificing the big picture, share your vision and pay more attention to your relationships, invest in your senior leaders, and work on open communication, you put yourself in a great position to not just weather this storm but come out on the other side even stronger.

Achieving balance is the key to performing optimally while leading – providing the energy necessary to maintain a strong organizational culture rooted in purposeful values and priorities. As the saying goes, if you don’t put your own oxygen mask on first, you won’t be able to help anyone else!

If you would like help implementing these essential strategies in your organization, please don’t hesitate to book a call.

About The Author

Brent Mullins is a Certified Executive Coach serving successful senior leaders in global organizations to create positive, sustained change and achieve breakthrough performance. Brent’s extensive real-life experience includes executive leadership serving as Global Head of Human Resources at Fortune 200 companies and 25+ years in leadership roles. His expertise in navigating complex differences in assumptions, values, beliefs, and core culture is at the heart of his work.

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