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COMMUNITY UPDATE

Criticaleye's Community Updates are read each week by Members, registered users, and subscribers globally. Click on any of the topics below to see the corresponding newsletter. If you would like to comment further on any of these topics, write to us via info@criticaleye.com.




2009 Opportunities

We're all focused on making decisions in 2009 that make the most of the opportunities out there and ensure we emerge from the current downturn in a strong position. To successfully navigate through this uncertain landscape, leaders need to be confident and consistent in their approach. Rob Woodward, CEO stv group plc and Criticaleye Member explains: "History would show that clarity and focus are the key two leadership themes. Every successful organisation needs a clarity of purpose that is easy to articulate and aligns staff and external shareholders alike. During recession the need for relentless alignment is even more acute than normal. Continue to invest in your people; reward exceptional behaviour; promote teamwork; be consistent in your messaging; be seen; do what you say; and keep your message simple."

To expand on this further, leaders gathered this week for a Criticaleye event chaired by my colleague Charlie Wagstaff, entitled 2009 And The Decisions You Should Take. Trevor Williams, Chief Economist for Lloyds TSB Corporate Markets, framed the event with an overview of the current economic situation: "The start of 2009 has seen the sharpest drop in output since the recession in the early 1980s. However, the severity of the decline should be balanced by the fact that we now have stronger levels of consumer demand and are starting from higher levels of employment. Combine this with a sustained period of low exchange rates, which will eventually make the UK more competitive and boost exports, and a strong policy response, and the ingredients for a sharp pick-up in the second half of 2010 to 2011 are in place for UK organisations."        

Clearly some industries are going to be worse hit than others. In an environment where consumer confidence, and thereby demand, is declining rapidly, any organisation involved in the production of consumer goods will be worse hit than firms in the infrastructure or chemicals sector, for example. This said, there was general agreement across the group, which represented a broad sweep of industry sectors and company sizes, that most organisations would be cutting approximately 10 per cent of labour related costs in response to the downturn.

Indeed, the discussion revealed many common issues to organisations in the current environment. As Jeremy Small, Group Company Secretary for AXA UK plc explains: "One of the biggest issues businesses will have to deal with in 2009 is lack of confidence, be it from customers, investors or employees. There is also the challenge of knowing how to rebalance things and it will be a test of nerve for companies when deciding what they will focus on, and invest in, over the next 12 months." 

Leadership is another area where the challenges and issues arising from the downturn are similar. The group agreed that leaders would have to adopt a new approach in the current climate, especially when it comes to boosting the morale and motivation of their staff. We will need to maintain an open and honest dialogue with staff if we want to engage them in driving the company through this difficult time. Leaders will also have to be a lot more transparent as Brendan Walsh, Senior Vice President, Corporate Services EMEA for American Express, outlines: "I expect that when we come through this downturn, there will be increased focus on integrity and transparency from the markets, which leaders will have to adopt in their everyday practises."

Although 'uncertainty' is the catchword of the day, there is a lot to be positive about as we build momentum in 2009. Companies are being cautious when it comes to investment but there is money out there. As Mike Lewis, Former Member of the Group Executive for Allied Irish Banks and Associate for Criticaleye explains: "Most private investors are holding on to their money at the moment, waiting for the recession to bottom-out before committing their funds. In many ways, we should think of this as being similar to previous business cycles, but because the upturn was so good over such a sustained period, the downturn is all the sharper." 

Until organisations have provided year-end reports in Q1 this year, it is difficult to make firm predictions on what will happen in 2009. As Duncan Lewis, Group Marketing Director for Land Securities pointed out: "At this time, leaders need to balance short-term prudence and cost-cutting with pursuing the long-term vision and goals. Over the next 6-12 months, and in a rapidly changing environment, it will be difficult to know if the decisions we are making will be successful."      

2009 Opportunities Insights

Please look out for the Write-up of yesterday's event which will be available soon. We also have a number of relevant Insights on this issue including Strategies for Turbulent Times by Rotterdam School of Management and, from an HR and talent perspective, Anticipating a tough 2009, companies remain selective about workforce, pay and benefits cuts, contributed by Mercer.  

Matthew Blagg, CEO, Criticaleye