slade partners white paper 2011

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2011 WHITE PAPER

Next time... Same same or different?

REFLECTIONS ON MANAGING PEOPLE THROUGH THE DOWNTURN


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Welcome to the Slade Partners EMA Executive Search White Paper: ‘Next time…Same, same or different? Reflections on managing people through the downturn.’

We are told repeatedly that Australia bypassed the global downturn with nary a scratch, however our observations of personal and organisational ‘war stories and injuries’ tell a different tale.

The headline story is thus: Globally, the financial crisis of 2007–2011 is judged by many as the worst financial crisis since the 1930’s and for many Western countries, the pain is not yet over. Large financial institutions collapsed or neared collapse as governments engineered rescue packages for major commercial institutions. Throughout the US and Europe, a prevailing uncertainty about future economic prospects, the housing market decline and high unemployment continues.

In Australia, political commentator Laurie Oakes pointed out in mid–2010 that, ‘We have a net debt dramatically lower than any other advanced economy. We will have our budget back in surplus before any of the major economies. We were one of the only two advanced economies to avoid recession after the GFC. Our economy grew by 1.3 per cent last year while advanced economies as a whole contracted by 3.2 per cent.’

And yet this national bonhomie shouldn’t override the individual and organisational pain felt by many whilst navigating the two particularly difficult years of 2008–2009.

We believe that a deep impression was made on those who were at the helm of organisations through the downturn in Australia. We also know people were hard pressed to find advisers who could be relied on to provide support and advice based on previous experience. The findings from the in-depth interviews undertaken for this White Paper deliver some absorbing insights. Perhaps the collective wisdom and observations will be filed away today to be used by others in the future.

We hope you find this White Paper interesting. If you would like more information, please don’t hesitate to contact us.

Anita Ziemer Bill SakellarisManaging Director General Manager Slade Group Slade Partners

Introduction

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The struggle that many found was the tension between being upbeat and at the same time, sharing the challenge of a doom and gloom market. Too much either way was inappropriate, and yet transparency and confidence remained critical. ”

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Next time…Same same or different?

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About us

Slade Partners EMA Executive Search is the executive search arm of Slade Group. We are an Australian-owned, full service, Human Resource and Recruitment firm, with offices in Melbourne, Sydney and Brisbane. Across the recruitment industry we are recognised for our professionalism and best practice approach to senior executive appointments and are AS9001 accredited.

We have an extensive network of both private industry and public sector clients and have managed a wide range of senior level appointments over many years. Slade Partners is also a member of EMA Partners International, an expanding global network of like-minded executive search professionals servicing the needs of clients in over 50 cities around the world.


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White Paper Highlights

Preparation for a downturnCritical thinking was applied by those in industries where an impact could be foreseen:

» Where is the likely impact going to hit us hardest and where will we feel it least? What did we do last time that worked?

» What can I do…and what can I influence? What can’t I do…and what is going to be the impact?

» How do I make myself useful?

» What is our spread of business, what is our core and what do we need to change?

Our PeopleConsiderations and observationsThe responsibility to retain staff weighed heavily on employers, although some felt they had no option but to cut headcount for overall survival.

A number of leaders remarked on the noticeable difference between the calm displayed by more mature workers who had been through previous downturns and younger staff who hadn’t. Some also said it was necessary to better understand the ‘younger generation’s’ fears of facing uncertain times.

Being aware and mindful that most people are risk averse was useful.

Short-term, manageable tasks became the focus, because as with the last downturn, nobody knew how long the downturn would last.

Where management was committed to keeping staff, working through as many flexible working options as possible was key. Typically, people appreciated this and ‘got on board’.

Talking about the cost savings required to keep people employed was found to be a powerful way to engage with employees and generate cost saving initiatives.

Some commented on the fact that their leadership team moved from consensus mode to directive mode and that motivational leaders came into their own.

Pitcher Partners reflected that their business was born out of a recession. The founding Partners were people who had left KPMG, unimpressed with the way that firm had managed the 1991 downturn. Their approach this time was strongly linked back to their collective history of managing people in the best possible way through a downturn.

CommunicationEveryone interviewed said communication with staff was a critical facet of managing through the downturn.

The struggle that many found was the tension between being upbeat and at the same time, sharing the challenge of a doom and gloom market. Too much either way was inappropriate, and yet transparency and confidence remained critical.

One CEO reflected his frustration with this tension in communication and pitching the right message. For example, he carried the burden and stress of leadership in tough times and worked overtime to save jobs and keep the ‘ship afloat and travelling forward’. And yet he felt many of his staff seemed to take a cavalier attitude to the business’ efforts on their behalf.

» Go earlier;» Should have listened to the ‘Black Hats’;» Increase level of communication to staff;» Improve quality and pitch of communication

with staff;» Improve forecasting and modelling for a downturn;» Recruit better – now and always;

» Manage people’s performance better in the good times – always – so that habitual underperformers don’t have to be managed through bad times;

» Prepare a disaster contingency plan every year and manage with a strong memory;

» Remember that during good times, we’re too short-sighted and not courageous enough.

Reflections on ‘What They Would Do Differently’


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The Results

BackgroundReflections on Managing People through the DownturnResearcher Samantha Houston spoke to some of Australia’s leading organisations, in various sectors including retail, manufacturing, employment, professional services, publishing and entertainment. The interviewees were all senior executives (CEO’s, MD’s, Directors and Partners), who were open and generous with their answers. The results provide an insight into the strategies of organisations during the downturn, the outcomes of these strategies, and learnings for the future.

The ResultsDiscussions first established whether the recent downturn had an impact on their business, and if so, how?

Answers ranged from “Absolutely!” to “It had a significant impact, but not all negative,” to “2009 was the best year ever, …so if it had an impact it was a positive one.” (Zoos Victoria). The majority however, acknowledged some or significant negative impact on their business.

The majority of organisations also indicated, as of late 2010, that they were not yet through the downturn.

Professional services firms such as legal and accounting were immediately impacted as they are reliant on the business activity levels of their clients. These transactions dried up very quickly. Both Maddocks (lawyers) and Pitcher Partners (accountants) indicated that while transactions have picked up, they have not returned to the same levels as prior to the downturn.

Other firms echoed this view. David Waldron of MacDonald Johnston (manufacturing and industrial) doesn’t believe they will be out of the downturn until the 2nd quarter of 2011, as businesses have deferred major capital expenditure decisions.

Richard Wilson of Landpower (agricultural machinery) believes they are also still experiencing the impact of the recession in Australia. The government’s Investment Allowance had postponed some of the impact, but the impact will eventually hit.

Jason Murray of The Just Group (retail) expressed a view that in Just Group’s case, they had experienced two downturns (Winter 2008 and from December 2009 onwards) and that the Group is still in the second downturn.

Ian Campbell of GUD (consumer and industrial products) said that they are seeing a higher inquiry rate but some residual nervousness in the minds of some purchasers of capital equipment remains.

The majority of organisations also indicated, as of late 2010, that they were not yet through the downturn. ”

“Only Nadika Garber of Hinkler Books indicated that they had not felt the impact of the recession until very recently.

How much the downturn impacted any particular business seemed to be related to:

1. The industry in which the organisation operates;

2. The breadth of activity within the business; and

3. The ability to ‘change’ what they do or offer.

IndustryProfessional Services These firms were impacted because they rely on healthy client activity. If their clients reduce their own activity, then this flows on directly to professional service providers in legal and accounting. Interestingly, Greg Nielsen of Pitcher Partners indicated that he believes the smaller accounting firms might not have suffered as much as the larger (more prestigious) firms, due to the ‘dropdown’ effect—part of clients’ belt tightening process was to move from the more expensive firms to the smaller (less expensive) firms. However, he doesn’t consider this a long-term change and believes that as business picks up, organisations will again seek out leading advisers and move back to the larger firms.


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The Results

Online/Recruitment The recruitment sector is much like professional services. SEEK’s core employment business experienced a huge drop as organisations dramatically decreased hiring rates, and in turn, lower confidence levels cut the rate at which employees changed jobs. Organisations and recruiters simply no longer had many vacancies to advertise.

RetailingThe retailers interviewed (ie Just Group, Landpower, PACCAR Australia (Kenworth Trucks)) were all able to significantly reduce prices in order to move stock, although this was not enough to protect them from the downturn.

ManufacturingManufacturing companies were significantly impacted as it is more difficult for them to transform or quickly adapt and change what they do. This appears to be exacerbated if the product is a capital purchase that can be postponed e.g. MacDonald Johnston, PACCAR and Dexion (part of GUD).

Organisations in industry sectors that were perceived as being ‘needed’ or could position themselves as ‘needed’ seemed to suffer less.

For example:

» VECCI – the importance of its role as an advocate and support for business owners and managers helped raise their profile during this time, which was beneficial for the organisation.

» Zoos Victoria – Victorian people were looking for local, good value entertainment as they were travelling less. The Zoo fitted this profile.

Breadth of activity within the businessWhere an organisation was involved in a number of different activities within their business, many were able to redirect their focus, thus helping their financial position.

For example:

» Hinkler Books redirected its focus to its Foreign Language business (previously only a small part of the product range) because it was not being impacted by the downturn.

» GUD has 6 totally unrelated businesses – they were not all impacted by the downturn.

» SEEK’s educational business was counter cyclical and improved during the downturn (although it didn’t completely counter the downturn in the online job advertising business).

» Pitcher Partners was able to review the industries it worked in and focus on areas of growth. It did not rely solely on transaction work as some accounting firms did and continue to do.

» Maddocks was somewhat protected by the breadth of its client base, and the fact that fifty per cent of its work comes from government projects. As David Rennick said, “The machine of government needs to keep going.”

An organisation’s flexibilityA number of the business leaders spoke about being able to ‘reinvent’ themselves to suit the downturn.

Zoos Victoria presented itself as ‘good value for money.’ “We went into a really big repositioning exercise. It was brought about by more than the financial crisis…it led us to repositioning ourselves as a Conservation Organisation…and we focused on the Membership product which was great value,” said Jenny Gray CEO. Jenny also observed, “When finances are tough you need to know why you exist.”

VECCI was also in the middle of a Business Re-engineering Process. It was a three-year process and if anything, the downturn helped them to get the changes through.

It was an opportunity to reinforce all the fundamentals with our management team – for example that cash generation is the key. ”

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GFC Time Line 2007–2008

April New Century Financial, which specialises in sub-prime mortgages, files for Chapter 11 bankruptcy protection and cuts half of its workforce.

Time Line Information key◊ Global events◊ Australian events

September The UK’s fifth largest mortgage lender, Northern Rock, was granted emergency financial support by the Bank of England in the latter’s role as lender of last resort. A day later, depositors withdraw £1bn, in what is the biggest run on a British bank in more than a century.

October The UK Government announced a massive bailout package, worth more than US$64bn for the country’s struggling banking sector.

The International Monetary Fund, famous for its fiscal and monetary conservatism, effectively encourages governments to cut interest rates as far as possible and spend as much as they can afford, and to do it now, there is clearly no time to be lost.

The US taps into the $700bn available from the Emergency Economic Stabilization Act and announces the injection of $250bn of public money into the US banking system.

November Barack Obama is elected the 44th president of the United States.

The US government agrees to rescue Citigroup after an attack by investors causes the stock price to plummet 60% over the previous week under a detailed plan that included injecting another $20bn of capital into Citigroup, bringing the total infusion to $45bn.

December French President Nicolas Sarkozy unveils a 26bn euro stimulus plan to help France fend off financial crisis, with money to be spent on public sector investments and loans for the country’s troubled carmakers.

2007 2008

The Australian stock market (ASX 200) reaches its peak after four years of double digit growth from April 2003 to April 2007.

March Investment bank Bear Stearns is acquired by rival JP Morgan Chase for US$240m in a deal backed by US$30bn of central bank loans. A year earlier it would have been worth US$18bn.

September Mortgage lenders Fannie Mae and Freddie Mac, which account for nearly half of the outstanding mortgages in the US are rescued by the US government in one of the largest bailouts in US history.

Investment banking giant Lehman Brothers files for bankruptcy, after US officials decided not to bail it out. It would be the largest and highest-profile casualty of the global credit crisis.

Bank of America takes over rival Merrill Lynch. AIG, once the world’s top insurer, was on the brink. Wall Street suffers its worst day since the 2001 9/11 attacks.

Icelandic bank Glitnir is nationalised at US$1bn. The other two largest Icelandic banks follow on October 7 (Landsbank) and October 9 (Kaupthing). The banks’ total liabilities are ten times the country’s GDP; the stock market falls by 90%, along with the krona.

October Germany announces a 50bn euro plan to save one of the country’s biggest banks – Hypo Real Estate.

The Reserve Bank of Australia (RBA) lowered official rates by a full 1%, more than double what most analysts were predicting.

DecemberKevin Rudd elected Prime Minister.

The RBA lowers the cash rate by 100 basis points to 4.25%. Australian inflation is at 5% in late October. The Australian dollar has fallen 28% against the US dollar since end-July.


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GFC Time Line 2009–2010

JanuaryThe Bank of England cuts interest rates to 1.5%, the lowest level in its 315-year history, as it continues efforts to aid an economic recovery in the UK.

China’s exports register their biggest decline in a decade.

German Chancellor Angela Merkel unveils an economic stimulus package worth about 50bn euros to kick-start Europe’s largest economy.

January Spain announces a plan to save 50bn euros, including government spending cuts totalling 4% of GDP. The plan includes 4% cuts in public sector pay.

May European governments and the IMF agree to make available up to 750bn euros in loans to halt the spread of the Greek debt crisis.

Australian Bureau of Statistics figures show the current account deficit has improved from almost $18.5bn in the December quarter to $16.55bn in the March quarter, although this was worse than market forecasts.

March President Obama instructs Treasury Secretary Timothy Geithner to block AIG from spending $165m on executive bonuses. Taxpayers had thus far given AIG $165m in aid.

Australia’s economy slumps 0.5%, its first quarter of negative growth in 8 years.

April US car giant Chrysler files for bankruptcy in an effort to clear the final hurdles before its alliance with Fiat.

June General Motors Corporation files for bankruptcy.

Australia avoids a recession after the Australian Bureau of Statistics reveals the economy for the March quarter grew by 0.4% from the final quarter of 2008.

Japan’s economy contracted at an annualised rate of 14.2% in the first three months of 2009, a record rate of decline.

Unemployment in Australia peaked during the global financial crisis at 5.8%, whereas in the US it rose above 10%.

May Italy’s cabinet approves a 24bn euro austerity package with the aim of cutting the deficit to 2.7% of GDP in 2012 from 5.3% in 2009.

Spain wins parliamentary approval for its 15bn euro austerity package by just one vote.

November Concerns about sovereign debt in Europe continued to weigh on global investors’ minds, with Ireland resisting pressure to take funds from the US$1 trillion European rescue fund set up in May.

July Citing insufficient regulation as a cause of the current economic crisis, President Obama proposes increasing the government’s authority over financial institutions. The plan would give more power to the Federal Reserve, create a Consumer Financial Protection Agency and take measures to discourage risky lending.

November Greece’s new government says the 2009 budget deficit will be 12.7% of GDP – more than double the previously published figure.

December In Ireland, the budget delivers savings of over 4bn euros. Public service pension age rises to 66 from 65.

ABS results showed that the Australian balance of goods and services was a deficit of $1.7bn in November, seasonally adjusted, from a revised deficit of $2.08bn in October.

2009 2010

February The Rudd Government’s $42bn economic stimulus package passes in the Senate, paving the way for promised cash bonuses for workers around the country.

President Obama signs the US$787bn stimulus plan into law. The plan aims to spur job creation and industry growth, particularly in health care and green energy.

MayTreasurer Wayne Swan announced that projected government revenue had fallen by $200bn since the last budget with an anticipated deficit of $57.6bn.

June Julia Gillard becomes Prime Minister.


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What was the impact of the downturn?The key impact on most businesses was on sales revenue and therefore the ability to generate profit.

However, there were other impacts.

For some organisations the downturn was an opportunity to refocus the organisation, returning their attention to core values.

Ian Campbell, MD of GUD Ltd said, “It was an opportunity to reinforce all the fundamentals with our management team – for example that cash generation is the key.” Joe Powell of SEEK said, “The downturn forced us to question a lot of things, to go back to our roots.”

At Pitcher Partners it prompted ‘an introspective look at what parts of the business could do with fine tuning…sometimes an economic crisis gives you pause to stop and look at your business.’

Richard Wilson of Landpower believes that, “…this is a healthy process. We continued to make money, not as much as usual, but it brought us back to our core principles.”

Similarly, a few of the organisations interviewed used the downturn as a catalyst for implementing organisational change that was already needed and/or planned.

At MacDonald Johnston, (Australian subsidiary of a European parent) MD David Waldron ‘used the downturn to implement major projects needed by the organisation to become stronger.’

There were also human impacts, particularly in the way individuals behaved. For the younger generation this was the first downturn they had experienced. This created fear and uncertainty, as they saw others being retrenched.

Some of those interviewed also observed an increase in ‘risk averse behaviours’. For example, according to Greg Nielsen, there was zero mobility. “You couldn’t prise good people out of firms, and people’s focus became much shorter.” Much of this was not seen as a good outcome, but rather leading to bad consequences. David Rennick believes, “People forgot that one day this would be over and they didn’t ask themselves what is the longer term impact of these decisions?”

Finally, some of those interviewed experienced a positive impact from the downturn. The Sunbeam business (part of GUD) experienced a positive impact. ‘Sales demand did not fluctuate greatly from other years, but the downturn in the US and Europe meant that our suppliers in China were less busy and so suddenly they were more interested in us.’

What did interviewees do to manage their organisations through the downturn?By and large organisations were very considered about what actions to take in the face of the downturn.

David Rennick advised, “Firstly, we didn’t do anything precipitously. We were very considered about what actions we would take. We planned and then worked on it quickly.”

Jason Murray MD, The Just Group indicated that, “During the first downturn (2008) our view was that the right response was not purely cost focused…we had to focus on three things. One, where do we really make our money – sales. Two, the way out was growth and this extra pain might create opportunities. Three, cost control.”

Most of those interviewed indicated their primary concern was to avoid redundancies wherever possible. This was a very different approach to previous downturns. Wayne Kayler-Thomson said that in the past, the immediate query from members contacting VECCI was, ‘How to manage redundancies and downsizing?’ The significant change was that calls were coming in as usual but this time they were about ‘how can I keep my staff, how can I reduce hours to keep them?’ Wayne’s view is that whilst this was partly a compassionate response, it was also because the downturn came off the back of a keenly-felt skills shortage and

The Results

Very early on, because our culture, engagement and people are so important, we decided not to do redundancies. Redundancies have a dreadful impact on culture and are typically only a short- term benefit.

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The Results

companies were unsure how long the downturn would last and didn’t want to overreact.

David Rennick [Maddocks] said, ”We agreed as a partnership we would do everything we could, including reducing profit, before making people redundant.”

Richard Wilson of Landpower said, “The first decision was that we wanted to protect our staff.” This was not purely altruistic. He felt he had invested a lot in recruitment and the selection of his team and he wanted to keep them.

SEEK made a decision, “Very early on, because our culture,engagement and people are so important, we decided not to do redundancies. Redundancies have a dreadful impact on culture and are typically only a short-term benefit.”

However, ultimately some firms needed to make redundancies.

Greg Nielsen (Pitcher Partners) said, “We didn’t actually have redundancies but we had long and difficult discussions with those who were not working out. We came to the realisation that these people were not developing and by allowing them to plod along, we were actually hurting their future opportunities to develop…When times were good, we could afford to carry people we shouldn’t carry. We weren’t necessarily doing them a favour.”

During the second and more protracted downturn The Just Group looked at roles that had been created during good times but had become less relevant in difficult times. They did make some redundancies but also used natural attrition to reduce headcount.

Other responses to address the downturn were more tactical. Organisations:

» Reviewed their hiring – often looking to hire better/more experienced people who would ‘get them through the downturn’. GUD changed some of their management team to ‘slightly harder-nosed business people’. “I don’t like taking people out and I don’t do it lightly, but it was the right thing to do for the business.”

» Employed HR Managers where they had previously had none.

» Delayed recruitment.

Some firms made a conscious decision that people initiatives would not be cut, although they may be reduced. For example, SEEK and Pitcher Partners still held their Christmas parties; The Just Group still held their Annual Awards nights.

Fundamentally, organisations were looking to make cuts without significantly impacting people. Therefore cuts were made to expenses such as:

» Marketing;

» Travel;

» Tea, coffee, biscuits;

» Gardening;

» Christmas gifts; and

» Project budgets

Landpower initiated ‘Project Save $1million’ looking at how they could take costs out of the business without reducing head count. By talking about cost savings in terms of keeping people employed, the business uncovered a powerful way to engage their people. ‘Project Save $1million’ ultimately found $2m in cost savings.

The Just Group focused on their suppliers to ensure the burden was shared, before any head count was affected.

At an employee level, many of the organisations interviewed did one or more of the following:

» asked or insisted that people use up their holidays;

» enforced holidays over the Christmas period e.g. a two week closure;

» asked for volunteers to take leave of absence/a sabbatical e.g. to study or travel, and in the case of SEEK, offered a percentage of salary during this time;

» asked people to take long service leave;

» moved people between offices (Maddocks);

» moved people into new jobs in different areas (MacDonald Johnston); and

» moved people to a four-day week (MacDonald Johnston and PACCAR).


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What drove them to make these decisions or follow this strategy?Did past experience play a part?

The fact that all those interviewed had experienced an economic downturn in their working lives, as business leaders or in their early career roles, had a significant impact on their approach. And in most cases their organisations had too. As Andrew Hadjikakou put it, “PACCAR (US owned) operates in a cyclical environment…this company knows what it needs to do in a cyclical downturn.”

Past experience had taught many of those interviewed ‘not to panic’ and the importance of leadership at a time of recession. Nadika Garber of Hinkler Books was a sales executive during a previous downturn and so understood what it was like from an employee’s perspective. “Now my role is motivational, you want people to be more engaged than ever.”

Similarly, for David Waldron of MacDonald Johnston the past was in the back of his mind but this was his first time as an MD and he realised his role was now to guide the organisation. It was a year in which he worked harder than ever, analysing every opportunity and communicating with staff.

For Jason Murray of The Just Group, his previous experience as a Management Consultant gave him the background knowledge to help him calibrate what a downturn does to a business: “What’s a good drop and what’s a bad drop and which levers to pull to compensate.”

History and culture also impacted how companies chose to address the downturn.

For example, Pitcher Partners was born out of a recession. The founding Partners split from

KPMG when 14 Partners didn’t like how the firm was handling the 1991 recession. “So move to 2008 and these Senior Partners are the most vocal in saying ‘we will have Christmas parties, we will have biscuits in the tea room.’”

Past experience also impacted how quickly people responded. “I think I was too slow to react the first time. I have learnt to consult, but also to back my own instinct as well,” said Richard Wilson of Landpower.

What were their feelings going into the downturn?Many of those interviewed went into the downturn with mixed feelings.

There was definitely a sense of uncertainty and nervousness, but at the same time, many of those interviewed saw the downturn as an opportunity.

Jason Murray’s view was, “We can manage our way through this as long as we know what we have to do and we do it quickly.”

Others shared a sense of ‘professional disappointment’. Richard Wilson said, “It had been such a stellar time, we were all enjoying great KPI success and reporting was getting better and better…we felt frustrated… ‘not yet surely’ we wanted to say.”

Another common feeling was one of responsibility. Andrew Hadjikakou from PACCAR summed up this feeling. “I felt a huge responsibility on my shoulders. It’s all about incoming orders and I knew it was going to get tough…it was going to have dire consequences on those working here and those who supply to us.”

Past experience had taught many of those interviewed ‘not to panic’ and the importance of leadership at a time of recession. Nadika Garber at Hinkler Books was a sales executive during a previous downturn and so understood what it was like from an employee’s perspective. “Now my role is motivational, you want people to be more engaged than ever.” ”

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The Results


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The Results

How did people react?The organisations interviewed placed a significant emphasis on communicating with staff, and this seems to have had a positive impact on how their staff reacted to the downturn initiatives. For example, PACCAR cut out tea, coffee and biscuits. When it was communicated that this equated to 2–3 people keeping their jobs, it was accepted.

Most staff felt concerned and uncertain but were interested to hear how their organisation was going to manage through the downturn, and the impact on them. If anything, people’s response was that they wanted to hear more.

Methods of communications included:

» Newsletters;

» Blogs;

» Team meetings;

» Video conferences;

» All-of-company meetings; and

» One-on-one meetings as needed.

In some organisations such as Maddocks, they asked staff to contribute ideas on how the firm could save money and they received a lot of input. People got into the spirit of it.

Some generational differences were evident. It was widely felt that the younger generation needed more reassurance than older generations or needed more information on why initiatives were being implemented.

Interestingly, a number of organisations indicated that they were surprised by people’s reactions since coming out of the downturn. Many of the younger generation expected immediate salary increases; they had unrealistic expectations as to how quickly an organisation would recover.

There was also a hint that perhaps some employees hadn’t appreciated the lengths to which organisations had gone in order to avoid redundancies.

What would you do differently next time?Most of the executives interviewed were satisfied with the way they led their organisations through the downturn and many wouldn’t do anything significantly different. “What we did got us through and it has got us through before.” (Andrew Hadjikakou, PACCAR).

Amongst those who would do things differently the most common responses were ‘go earlier’ and ‘increase the level of communication even more’.

“Even though we did a lot and I think the Town Hall style is good, you need to get right down to individual people and do this in a more coordinated way. My Practice Group Heads could have been trained up a bit better, and got out there a lot more and talked to people.” David Rennick [Maddocks].

Another response was to make tougher decisions in the good times, ie better manage underperforming people, and to have better forecasting tools in place in order to ‘get a better read’ on what is happening.

How has the downturn impacted the culture of the organisation ?The majority of those interviewed indicated that the downturn had no long-term impact on their culture.

However, a few indicated that it had made them more performance-driven, more of a short-term driven culture, and less courageous.

Wayne Kayler-Thomson said, “The cultural change has been that you can’t take anything for granted. The downturn exposed the fact that we are part of a global economy.”

The cultural change has been our understanding that you can’t take anything for granted. The downturn exposed the fact that we are part of a global economy.

”

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The Results

We will start with a more strategic orientation and from that, clarify financial and brand goals. We ask more often… ‘What is our business? What are we trying to achieve? What does success look like? Know this and you will know what you are chasing.’ ”

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While some of those interviewed felt that they couldn’t do a lot to prepare for a downturn, others recognised that their organisation could make additional changes and preparations for future downturns.

Some of the responses were:

» We have learnt to be a lot more careful about how we recruit;

» We have embedded the learnings into our values, systems, processes, goals and culture;

» We openly talk about the downturn in management meetings;

» We will start with a more strategic orientation and from that, clarify financial and brand goals. We ask more often… ‘What is our business? What are we trying to achieve? What does success look like? Know this and you will know what you are chasing’;

» We will maintain the ‘disaster plan/contingency plan’ as part of the planning process each year;

» We will retain a file and roll up learnings into the Strategic Review. Actually plan for the next downturn; and

» We are now better at planning a year ahead and also being able to turn things on and off as needed.

How will you prepare for the next time?


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We would like to thank the following organisations and specific individuals for their involvement in the development of this research:

Greg NielsenExecutive Director Pitcher Partners

David RennickManaging Partner Maddocks

Nadika GarberManaging Director Hinkler Books

Jason MurrayManaging Director The Just Group

Ian CampbellManaging Director GUD Holdings Limited

Richard WilsonGroup CEO Landpower Aust & NZ

David WaldronManaging Director MacDonald Johnston

Joe PowellManaging Director SEEK Employment (Aust & NZ)

Wayne Kayler-ThomsonChief Executive Officer VECCI

Jenny GrayChief Executive Officer Zoos Victoria

Andrew HadjikakouDirector Sales and Marketing PACCAR Australia

Acknowledgements

ResearchersSamantha Houston Julian Doherty Sarah Law

Design & LayoutKim Bear

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