Founder and CEO of Symphony Advantage and Certified Honest Capitalism Advisor.
Fortune CEO Alan Murray recently asked, "How do you survive a short-term downturn while still doing what you need to do to prepare your company for the future?" The question comes at a time when many CEOs are deep worried because they think the world is changing too fast. A similar sentiment was echoed in PwC's annual survey, in which nearly 40% of CEOs don't believe their companies will be around 10 years from now if things continue as they are. Threatened by economic uncertainty, companies are trying to figure out how to survive in a volatile market.
Instead, business leaders seem confused about what to do, especially when it comes to the role of influence in their organizations. The survey found that 59% of CEOs plan to suspend or revise their environmental, social and governance (ESG) plans in the coming months as they adjust their strategies to combat the economic downturn. On the other hand, in a recent report by Alan Murray, he said the companies he surveyed showed no signs of slowing down in their ESG initiatives.
I think the problem with these paradigms and different perspectives in the market stems from the ambiguous nature of ESG. Although these goals are steps in the right direction for solving social and environmental problems, they often remain secondary initiatives. They are therefore not integrated into the company's operating system and can only advance one topic so far.
For many business leaders, including myself, the answer to Alan's question is stakeholder capitalism, in which companies seek to optimize value for all stakeholders, not just shareholders. It is true that stakeholder capitalism creates a powerful value chain that far surpasses the effects of capital capitalism through finance. Take Eileen Fisher as an example: her eponymous label has grown into a sustainable fashion empire by excelling at engaging with stakeholders. The company is employee owned and regularly hosts community workshops etc. are just that. The more successful a company is, the more its stakeholders are valued and intrinsically linked to its purpose and bottom line.
Using the principles of stakeholder capitalism, here are some steps you can take to not only survive but thrive during a recession.
1. Strengthen your organization's purpose.
Purpose is at the heart of stakeholder capitalism, and you already have one, you need a truly effective mission statement to motivate your stakeholders. Your goals should be time-based and not just a commitment to solving a specific, ambitious problem. So ask yourself: what exactly are you trying to solve and how long will it take?
2. Communicate a clear and compelling purpose to your stakeholders.
Once you have a solid sense of purpose, the challenge is to communicate it effectively to your stakeholders. The numbers don't lie: A recent study found that less than half of employees know what their organization is and what makes it unique. Internal and external communications should be clear and thoughtful to foster a shared understanding of what your company truly stands for with its mission and values.
3. Focus on retraining existing talent instead of downsizing.
With an economic downturn looming, it can be tempting to lay off employees to cut costs. However, now is not the time to miss opportunities to invest in your people to propel your business in a different direction. Challenging times present opportunities to work differently while focusing on maintaining critical gaps in the team rather than filling them.
4. Pursue long-term opportunities.
While it's natural to focus on short-term survival during an economic downturn, it's also important to think about the post-crisis future. In fact, this type of survival mentality can get in the way of your organization's mission or core values. This is the most important time to stay committed to your higher purpose, because it will make a big difference in the future: as you overcome economic challenges, employees, customers and other stakeholders will see where your company can invest its money. it's his face
During an economic downturn, a strong sense of purpose can be a guide for those looking to ensure their business's profitability. Today, more than ever, I challenge leaders to say yes to their core vision and lead with a higher mission. Obviously, both employees and customers are motivated to support companies that show commitment to their cause. This is especially true when spending your hard-earned money involves more risk and hassle. Rather than putting the interests of your stakeholders ahead of your own, I believe it's time to adopt an approach that maximizes everyone's value in building your business for continued success.
The Forbes Business Council is the leading development and communications organization for entrepreneurs and executives. What do I qualify for?
