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The Sinking Ship and How To Stop It

There’s no denying that every company goes through ups and downs. There are times of prosperity and abundance and times of scarcity and desperation. For employees who are lucky enough to be present for the abundance, the stress of the difficult times often becomes magnified. The higher the high, the lower the low.

Normally, the roller coaster of ups and downs/highs and lows is just a typical cycle of business. And then there are the rare occasions where an event strikes that no one saw coming or was entirely prepared for. When you’re stuck in the thick of it, it can feel excruciatingly painful, devastating, and the waters can be difficult to navigate in order to come out on top.

Leadership is particularly tested in difficult times. During rough patches, even those that are the result of external influences, fingers will be pointed in the direction of those who are steering the ship. Bearing the burden comes with the territory of being in a leadership position; however, many leaders are unequipped to handle the effects that this stress puts on the rest of the organization.

Today, we’ll look at how this plays out in a company example.

It was the best of times

AppleRed, a natural foods chain, started 20 years ago. The first AppleRed was a small startup, built on the idea that typical supermarkets weren’t providing enticing enough healthy, local options for people to buy in Z town. When AppleRed opened, many people flocked to the store. The branding was spot-on for the wealthier consumer – beautiful packaging, enticing product descriptions, and the prices to match it. Only those with disposable income could afford to shop there. But middle-class customers wanted to try it too, so they’d peruse the aisles and pick out a few things on the lower end of the price scale, hoping that someday they’d be able to afford to regularly shop there.

Though they were marketed to a specific niche, the concept of AppleRed caught on beyond the town of Z. People from neighboring towns and extended areas of the country started talking about how great AppleRed was and how they longed to have one in their own neighborhood. A new CEO, John, was hired, who was positioned to help grow the company. John set a high standard and created a new vision and mission (based on growth) for the company that everyone could get behind. The store was franchised, and a period of insane growth followed. Before long, the employment force tripled. John hired a new leadership team to support the increasing needs of the expansion.

The first supermarket of its type, AppleRed had become a household name, synonymous with elite foods and products. Not surprisingly, as the success of the company spread, people started talking. Entrepreneurs in the supermarket sphere wanted a piece of the market share, and before long, a variety of new businesses were created based on similar concepts. The differentiator for the new supermarkets, however, was that they mimicked some of the ideas from AppleRed but sold food and products at much lower prices.

The boom of AppleRed slowed as competition increased. New supermarkets emerged with prices that AppleRed couldn’t match, and John and the leadership team at AppleRed knew that with the decrease in sales, they couldn’t continue to meet their inflated budget.

Reality sets in

Even though the competition should have been foreseeable, John and the leadership team at AppleRed hadn’t followed the market data closely enough. They weren’t prepared for the sudden pinch on their massive budget. For many years, their growth had been exponential. They had built numerous stores all over the country, tripled their supply chain, and had been communicating their success to all of their employees without any fear of slowing down.

By the time the company realized that they were in serious trouble, big changes needed to be made immediately in order to avoid bankruptcy.

Ben, the local AppleRed manager

Ben started working for a local AppleRed as a cashier about 10 years ago. He loved working for the company because he believed in the mission and vision and wanted to contribute his skills and talents to a company where he was a part of something bigger than himself. As a strong employee, he always received substantial annual raises and when a management position opened up, he was offered the job, which he gladly accepted.

During quarterly AppleRed town hall meetings, Ben always paid close attention to the financials and what was happening in the greater business. He believed it was his duty to stay informed, and he wanted to be able to relay company-wide information to his team about the state of the industry and the future strategy at AppleRed.

The inevitable workforce restructuring

In the wake of financial troubles due to increased competition (and the lack of realistic preparation for the change in the market), AppleRed’s Leadership team was forced to make some tough decisions, including the implementation of a workforce reduction and restructuring. It was as if the downturn happened overnight, nobody saw it coming (and if they did, they didn’t express their concerns loudly enough).

Unprepared for such a sensitive undertaking, the leadership team went into panic mode. They hurried through their organizational restructuring plan and abruptly laid off numerous workers throughout the country.

The employees of AppleRed were devastated when they learned of the layoffs, especially Ben. He didn’t lose his job, but he instantly started to worry that he might be next. Since the company had been prosperous for so many years, many of them didn’t see the layoffs coming. People were confused, there had been no discussions of potential layoffs during the town hall meetings. Trust was lost, and morale started on a downhill spiral. Everyone started looking over their shoulders wondering what other negative events were to come.

Ben tried to lift morale on his team, but his faith and confidence in the leadership team were diminished. Since he wasn’t sure if he’d keep his job, he didn’t know what to do or how to explain the situation to his team. Ben decided to contact the HR department. The CHRO started a workshop for remaining AppleRed managers in communications intelligence to realign the culture, rebuild trust, and give the employees the tools to productively deal with the state of the organization.

During the training, the mission and vision of AppleRed were revisited. The team members who attended the training were asked about WHY they worked for the company, what made it a great place to work, and how they could contribute to the positive transformation of the culture. There was a turnaround in attitudes and hope for the future.

When the layoffs happened, John knew that restructuring the team was the only option. The budget couldn’t support the widespread (and expensive) workforce, and eliminating positions was the quickest, surest way to bring dollars back to the bottom line.

At first, John didn’t realize that he went about the workforce reduction all wrong. The layoffs happened abruptly and mechanically when they should have come from a place of empathy, understanding, and transparency. The reduction impacted the remaining workforce incredibly negatively. As a defense mechanism, John had tried to protect his employees from the stress of the business, and he hadn’t properly prepared anyone at AppleRed for the inevitable downsizing. In hindsight, John wished he had been more honest with his projections and in his communications to the rest of the company so that they were better prepared when the tough decisions were made.

A lesson in workforce alignment and the philosophy of dealing with transition

Every company inevitably goes through peaks and valleys of prosperity and hardship. Though it’s not possible to control how the workforce will react to hard news during times of stress, leaders have the power to set the tone and define the norms during business transitions. When they ingrain the appropriate philosophy and manage their own stress levels, finding a balance of transparency and positivity, it spreads throughout the workforce. People are more aligned and prepared to handle even the lowest lows when their leaders are focused on retaining a high-performance culture. After all, the last thing you want is for people to feel hopeless. Leaders do have the power to transform the engagement of their workforce, maximizing their effectiveness.


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