COMMUNITY UPDATE

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According to leaders across the Criticaleye Community, there are now signs of economic recovery. At a recent meeting we held for CEOs, the general consensus was that no further redundancies would be made and there were even plans for recruitment in the near future. Indeed, a show of hands revealed that 50 per cent were increasing headcount and all believed that their organisations were now right-sized. However, when asked whether they felt confident about the future only 30 per cent were optimistic.

What's clear is that despite early indications of improving market conditions, there is still a great deal of caution from leaders about the future at this time. As Alan Parker, CEO, Whitbread said this week when asked to comment on economic recovery by The Times newspaper: "I'd say we're bumping along the bottom. There's good news and bad news but overall we're not seeing any green shoots."  

In the current climate, it's right that CEOs should cave at their views on economic recovery with an element of caution. These are unpredictable times so it would be unwise for leaders to appear too optimistic. As Jon Slatkin, CEO, Titan Outdoor says: "Although the market is showing signs of recovery, it's still tough. The recession has gone on long enough to spark cynicism among leaders and no one wants to get it wrong twice so it is natural that CEOs and Chairmen would be cautious when talking about recovery and not get overly optimistic at the first sign that things may be looking more positive. That said, industry leaders need to ensure that when the time is right they demonstrate optimism and drive the energy and motivation of their teams to maximise growth."

The same caution should be demonstrated when it comes to recruitment. Although leaders are now looking to increase headcount, they will need to think strategically about where top talent is most needed in the workforce. Stephen Mohan, Managing Director, Operational Services, Cofunds comments: "I think we are at the point where we need to be strategically positive, but tactically cautious. In terms of hiring, this means we should take the opportunity now to find key hires to build the future but staff your volume-related teams with temporary staff. There is great talent out there willing to take a chance on temporary/interim work and I would be wary of implying long term commitment at lower levels through permanent hires."

In reality, becoming overly enthusiastic at the first sign of upturn is neither desirable or realistic. Market conditions are still tough and whether we are entering a recovery period or not, leaders are going to have to pull out all the stops to ensure long-term success. As Rob Atkinson, UK Managing Director, Clear Channel Outdoor explains: "My reading of a potential upswing in the economy is to treat it with extreme caution. We have debt running at 78 per cent of GDP which will surely mean greater taxation from the government to both individuals and to companies. This, along with potential significant cuts in public spending, could slow the economy down once more in 2010. Saying that, I do think we'll see a positive end of year and the signs for the following two years leading to the historic Olympics are good."

So what approach should leaders be taking to positive signs in the economy? Don Elgie, Group Chief Executive, Creston plc offers this advice: "The fact is it's too early to call the end of this recession, certainly in the UK. I don't think that there is any point in speculating on what we have no control over. What we do have control over is managing the overheads to known revenue." 

We have a number of upcoming events designed to help you face the leadership challenges that the recession, and economic recovery, present. These include our CEO breakfasts (held monthly with the next on 7 October 2009) and Effective Incentives: Rethinking the Bonus Culture to help you find ways to realign remuneration packages with strategy in the recession and post-recession environments.

We also have a number of useful Insights to help you take the right approach to leadership in the current climate including 'Leading in an Economic Downturn' by Hewitt Associates offering back-to-basics advice on the core leadership traits needed to succeed in the downturn. Also see some of the excellent, recently published articles that we now have online including 'Cowering is not Leading' by former CEO of West Bromwich Building Society Stephen Karle and 'Leadership is Easier to Recognise than Define' by Robin Paxton, both looking at key leadership traits and what makes a great leader.

Please get in touch if you would like to discuss any of the issues in today's update in more detail.

Best wishes,

Matthew