When people suffer from chronic medical conditions, such as back or joint pain, our response is to treat those symptoms with analgesic responses. We take pills for pain, wear support braces and seek out chiropractors and therapies to minimize our suffering. In many cases, those symptoms are treated for years with minimal personal effort to identify the underlying root cause. Eventually, when pain becomes severe enough, we might rely upon surgical solutions that are invasive, disruptive, and expensive.
However, during this whole process, it is not uncommon for doctors to investigate root causes behind the symptoms and suggest solutions that would avoid a surgical response. Losing weight may ease the burden on a tortured knee. Core exercises can strengthen back muscles and protect nerves that are under constant pressure. Changes in diet can have dramatic positive effects on countless chronic conditions.
What does this have to do with business problems?
We do the same thing in business. We have all kinds of business “problems” that could be avoided if we were to take preventative measures as a doctor would suggest with our personal health issues. The big difference is that the business world tends to self-diagnose our conditions and “medicate” by liberally treating symptoms.
Sales issue? Sales training. Profit issue? Cut costs. Accountability issues? KPI’s. Lack of progress? Time management training. The list goes on.
However, many of the common business issues we face are more like symptoms than actual problems. All that is required to determine the difference between a symptom and a problem is to look for one defining characteristic – symptoms are always outcomes.
While there are many business symptoms to focus on, there are four outcomes that are likely to be big over the next 12-18 months. As we head into a recessionary period, it is almost a lock that many companies will be facing profitability issues, workforces that are far too busy, concerns with employee agency and turnover. Turnover? Yes. Turnover.
The Four Outcomes
Profitability is a wide-ranging business outcome the same way that fatigue is a sweeping medical symptom. Individuals with sedentary lifestyles, weak immune systems, and poor nutrition often suffer from fatigue. At the opposite end of the spectrum, very active people can eat healthy and still be fatigued because they are burning the candle at both ends. Just like fatigue, profitability issues accelerate at the extremes.
As we enter a recessionary period, we will initially see slowdowns in business followed by the eventual recovery and subsequent increases in business. Depending on your industry and your organization’s position in the marketplace, the economic shifts will have varying impacts on the severity of profitability pressures. This stress and the deftness with which your company adjusts to changes in the marketplace will affect the degree of profitability strain your organization experiences.
The rate of change of decreases in sales, increases in variable costs or accounts receivable aging (to name a few) are indicators to pay attention to as external stresses impact your organization.
What many leaders fail to recognize in challenging economic times is that it is often the best time to grow. During downturns, companies that exploit the weaknesses of competitors can often outpace the growth they see in better economic times. At times, this type of opportunistic growth can counter-intuitively add profit pressures by introducing scaling issues at a time when your organization is not structurally prepared for a sudden change of fortune.
The takeaway is that profitability is an outcome of factors such as the health of your business and the nature of your reactions to a changing landscape.
Economists are always late with declarations that we are in a recession. Perhaps the first real indication that we are in recession is when we witness waves of layoffs. This first wave of cost-cutting measures usually trims “excess fat” from organizations that have over-hired or made bad hires in better times. When subsequent waves hit, organizations trim into lean muscle. What is fascinating is that organizations typically overcorrect. And while “survivors” are fortunate to be employed, they are often pushed to do more with less. Increases in stress and “busyness” last well into the recovery period of the economy.
And while increased busyness can be “blamed” on the economy, that is not the root cause of problems. We tend to stress our remaining employees with additional meetings to stay abreast of exigent circumstances and new initiatives to address a changing landscape. What we don’t do is strip away other responsibilities or go back and examine why we had so many bad hires in the first place.
Once again, excessive busyness is an outcome of factors such as the health of your business and the nature of your reactions to a changing landscape.
Employee agency is always an issue when there is a common crisis to blame for lack of results. The looming recession offers the perfect insurmountable obstacle to justify falling short of objectives. Many employees and leaders will fail to realize that opportunities lie in the problems everyone is having. Instead, they will focus all their energy on the limiting effects of circumstances that have been cast upon them. This scarcity mindset guarantees mediocrity if not failure. What typically ensues next is a heavy dose of micromanagement that does nothing more than guarantee lower levels of ownership and further underperformance.
In the end, employee agency is not the problem. It is an outcome of an unhealthy outlook on how to deal with challenges and poor reactions to a changing landscape.
The final counter-intuitive symptom we should be aware of in the coming months is turnover. Two aspects should be of particular interest. First, your best employees – the ones with the greatest mobility – will leave companies that react poorly to the recession. Whether they are overworked, or micromanaged, great employees will not tolerate bad management practices and will seek safe harbor elsewhere. Furthermore, your worst employees will be content to endure management practices that should not be allowed to persist.
Making matters worse is that turnover will generally decline in a recession. A bad boss with a history of turnover problems may suddenly appear to improve as turnover declines. Numerically, there is improvement, but the reality is that the quality of the manager has not changed. In many cases, conclusions are drawn that performance is improving or that micromanagement is actually working. Turnover, or lack thereof, is an outcome that requires context to fully understand.
In the end, it is important that we don’t jump to conclusions and treat symptoms rather than deal with the true underlying issues. And the first step in keeping from the distracting allure of treating symptoms is to recognize that all symptoms are outcomes.
Written by Jim Vaselopulos.
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