Your organisation is currently struggling.  Revenues are down, profits are down and if the current trend persists the business may end up making a loss at the end of the year.

While putting the brakes on expenditure may be the only option the business has, depending on how this is approached can make a big difference to the motivation, commitment and engagement of managers and staff who have to implement it.

Consider the following scenario:

Your business invested in a leadership development programme for its middle and senior managers last year.  The focus of the programme has been on developing the skills, capabilities and behaviours of the management cadre to lead and empower their staff more effectively to generate greater engagement and change the organisation’s culture.

The results of the programme have been tremendous.  Key business measures have shown improvements and the culture of the organisation has changed to become more customer focused and proactive.

However, because of the economic climate the organisation has not been making the required profits and the leadership team decided to put an embargo on all unnecessary spend.  The directors decided to take control over the purchasing of all “consumable” items such as stationary, printing inks etc and all managers have to get approval from a director before they can purchase anything.

What will be the impact of such an approach?  Managers will suddenly feel that they cannot be trusted to make the right decisions and staff become frustrated because they can’t get the tools they need to do their jobs properly.

The consequence of this is that in an instant all the good work that the organisation did in investing in the leadership development of their managers becomes undone.  This is because the managers perceived a lack of congruence between what they had learned and were expected to do (i.e. develop trust, empower their staff etc) and the behaviour of the directors who are into command and control.

This issue is not about what the directors of the business were trying to achieve but how they went about it.  Clearly action needs to be taken to control costs during difficult times, however stripping managers of their decision making authority will simply alienate and demotivate them.  So how should this situation be handled?

Managers need to know what’s expected of them e.g. to reduce costs.  However to maintain their motivation and commitment challenging but realistic targets and budgets need to be set and managers should be empowered to deliver the new targets and budgets without draconian measures being taken.  In this way the engagement of managers is more likely to be retained, ready for when the economic pressures ease and the organisation returns to growth.