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Leaders' Behavior Determines Survival in Recession

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Wed Apr 15 2009

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PROVO, Utah--(BUSINESS WIRE)--New research from VitalSmarts reveals the way leaders and employees behave in four crucial moments is a predictor of an organization's ability to respond effectively and quickly to financial threats. According to the study, the four behaviors every organization encounters during financial downturns are denial, silence, protection of pet projects and irrational slashing. Leaders who hold candid and effective conversations when these behaviors arise are:

  • More than five times more likely to respond within days or weeks of the crisis.

  • More than 10 times more likely to respond in a way that positions their company for future success.

The study, titled Financial Agility: The Four Crucial Conversations for Uncertain Times, was conducted in December via an online poll of more than 2,000 managers, leaders and executives from more than 400 different companies. It was conducted by Joseph Grenny and the VitalSmarts research team. Grenny is the coauthor of the New York Times bestseller Crucial Conversations (McGraw-Hill), a consultant to the Fortune 500, and cofounder of VitalSmarts, an innovator in corporate training and organizational performance. The research also found that less agile teams are more than 360 percent more likely to miss millions of dollars in lost opportunities due to irrational or hasty solutions.

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"As the economy weakens, leaders are forced to bolt expenses to revenues," says Grenny. "To accomplish this they instinctively impose top-down, across-the-board solutions. Our research shows these common strategies result in a fifty-fifty chance of damaging the company's long-term ability to thrive."

Instead of taking a gamble during the recession, Grenny says leaders can guarantee fiscal survival by engaging in candid and effective dialogue. Companies that encourage and foster crucial conversations during high-stakes moments are not just a little more agile-they are many times more responsive and able to succeed in tough times.

(Read the four behaviors of uncertain times.)

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