Leading through a downturn

The dreaded “r” word has been thrown around with increasing frequency these days. Whether or not we are officially in a recession, it’s clear that a market correction is happening — especially in the tech industry.?

Market cycles are natural and inevitable. But sometimes we forget the impact of downturns, especially when we experience booming upturns in markets like we did in the last few years. The tech industry has been largely insulated from recent downturns, and many tech workers take for granted the seemingly endless flow of capital, lavish perks, highly competitive salaries, and benefits. The recent spate of layoffs and hiring freezes have been a cold, hard wake up call for both leaders and employees: it’s time to tighten our belts.

As someone who’s been in the industry long enough to have weathered previous downturns, my perspective is that this correction is expected and perhaps even overdue. That doesn’t make it less concerning for leaders and employees, of course. But there are steps tech companies can take to make it through this downturn, and to keep themselves recession-proof in the future.?

• Raise expectations and reward high performers. Your team knows about the downturn, whether they’re reading the news or hearing about a friend’s layoff. Be straight with them about the state of the industry and the need to operate at 110%. And when you see someone going above and beyond? Make sure you show them—and the rest of the team—that you recognize and reward their hard work. This is an opportunity to raise the bar, and inspire your employees to reach it. And be sure to be a role model in your own expectations.
• Operate lean. This may seem obvious, but it’s essential: now is the time to cut any non-critical spend. That might mean postponing that big company party, of course, but it could also mean putting the brakes on a branding campaign, reviewing the platforms and tools you’re paying for, and rethinking your hiring schedule.?
• Focus on building a differentiated product with real user value. Companies aren’t the only ones impacted by a recession—your customers will be, too. They’ll be doing their own belt-tightening, and anything they’re paying for that isn’t providing value won’t make the cut. Your team should be maniacally focused on building a unique product that provides your customers with real utility, now more than ever.?
• Invest in upskilling/reskilling. A cost-conscious corporate landscape isn’t all bad news for employees. Instead of bringing in a new (and expensive) executive, look for opportunities to upskill and reskill the employees you have. This is a great way to celebrate your high performers while giving them an opportunity to reach the next rung on the career ladder. Upskilling and reskilling doesn’t have to be expensive, either—career development clubs are one cost-effective way to grow your future leaders.
• Stay connected with your teams. People are worried, and they need leaders to instill confidence in them, while being open and transparent about the challenges the industry is facing. They’ll appreciate your honesty and feel inspired by your faith in them and the company you’re building together. Don’t sugar coat your message, be straightforward and show empathy.

?Any other tips on weathering a recession?