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Mistakes Managers Make During Tough Economic Times

Posted by Dr. Holly Latty-Mann on

Withholding Information

Often managers are skeptical in revealing bad news regarding budget cuts, layoffs or changes they are forced to make in hard times.  This is a fatal mistake and an easy one to avoid.  There are three specific groups that management needs to address during recessionary conditions: employees, customers and vendors.

The Wall Street Journal promotes sharing important business decisions with all employees. 

An Open Book: When companies share their financial data with employees, the results can be dramatic

Employees: It is important to communicate with employees about the changing business landscape and discuss both the short and long terms effects.  Including employees on decisions, cut backs and budget issues not only gives them ownership of the solutions but also opens the door for new ideas on how to manage costs.  If employees are uninformed theyw ill seek information from other sources, which could easily spread to panic and false rumors.  This employee anxiety will decrease morale and productivity.

Customers: Customers are also a crtical aspect of open communication during times of change.  Managers need to make sure that customers are able to meet their payment dealines and also thay they are saisfied with the exisint services/product.  This may be an appropriate time to renegotiate terms of payment/delivery or order quantities.  It is important to work with your customers sooner rather than later due to the diminishing recovery of delayed A/R.  Remember to focus on the value that the company provides and do not neglect communicating with clients.

Vendors: Vendors are also an important group to include in clear communication efforts.  Remember that vendors and customers alike hold valuable information about what is going on in the marketplace.  althought you may be tempted to leverage your business with vendors to get a better deal, instead this could be an oppotune time to focus on the long term benefits of maintianing the relationship.