Business During Downturn: The Chain Of Trust
Business during economic downturns brings to the surface the tiny fractures that were unnoticeable during the good times. It is a fertile ground to relearn some of the lessons of the past & form wisdom for the future. I am going to try and capture some of the learning during this new series Business During Downturn.
The past few months have convinced me that individuals & organizations that pay close attention to the basics fare better going into a economic downturn. In particular, establishing and maintaining the sanctity of the chain of trust is very essential. The chain of trust is a relationship aspect of interdependent entities. It is based upon the credibility, accuracy and timeliness of business inputs like data, forecasting & assumptions which are then sent up the chain to act as inputs for decision making. An economic downturn breeds anxiety, performance pressures and uncertainty & so maintaining trust is essential for survival. I have recently felt the need for paying attention to 3 chains of trust in particular.
First is the trust between a salesman and sales management. Revenue forecasting is the key activity that helps the organization plan to survive and adapt to change. On the basis of this projection further trust (say with creditors) is established. The sales team need to redouble their efforts to adhere to the sales basics and stabilize projections within parameters acceptable to the org. I have observed that this is one of the biggest self-feeding problems. Wrong projections quickly add additional pressure to the relationship between a salesperson and their manager. Sales managers in turn find their relationship with their managers deteriorate leading to increased supervision, more administrative tasks, less flexibility… all the undesirables during a tough period. Sales people successful in good times but inaccurate in bad times find it hard to gain back the trust when conditions improve for the better.
Second is the trust between an organization and their suppliers/creditors. Some organizations misrepresent the situation to their creditors or set up false expectations with them. In my opinion, people forget that they are dealing with other people. People working for the creditor also have accountabilities and are much less likely to support you during a downturn and the subsequent upturn if they feel that they have been misled, their time abused or subjected to unnecessary stress. I saw a CEO deal with this effectively by instructing his staff to always answer a creditors inquiry in a timely manner, give a conservative payment schedule, share the assumptions that may positively or negatively impact the information and most importantly reiterate how they were committed to long-term relationship (and how their behavior was different than the competition). The CEO ensured the message was consistent across ranks and this had the added benefit of improving morale within his org. It better prepared his staff for taking calls from creditors. Everyone knows that talking to your creditor is like visiting your dentist.
Third is the trust delegated to the employees especially the sales force. Very often managers will ask employees to take tough decisions or be creative only to second guess the decision. This erodes the trust the employee has in his management and increases the sense of chaos. The manager needs to examine his issues around control & trust or to take back the decision making authority. The long term implications of this for a sales person is that they lose credibility with the client and eventually the client knows that negotiated agreements with the sales person are not the final negotiated position. Their boss will play game…
I’d be very interested in your observations and lessons in this economic cycle. Feel free to drop me a note.
- akshayExplore posts in the same categories: Business, Leadership