November 30, 2019
by Chris Swan
Leaders need to prepare for the potential downturn. Neutralising risks means running a tight ship and making sure all the elements in managing the business are organised efficiently.
In September, I sponsored the AEC Advisor’s Chief Executive Summit in Manhattan. It was the inaugural event for this AEC Advisors, a split-off from the EFCG. The attendees include 260 CEO’s and other top industry executives from architecture, engineering, environmental, and a few construction executives. The sessions were focused on business valuation, excellence in performance, and corporate development. It was a mix of industry leading-public firms and ambitious boutiques.
An undercurrent throughout this year’s conference was the looming concerns around the political upheaval and a softening economy. The mood was a marked change from the previous year’s events, when everyone was upbeat, celebrating a booming economy, and a slowdown was nowhere in sight. This year the enthusiasm had vanished, and a feeling of resignation that inevitable recession was on the way. The questions of how might leaders prepare for an uncertain future, and how might a business downturn manifest itself were pervasive topics of conversation.
Leaders need to prepare for the potential downturn. Neutralising risks means running a tight ship and making sure all the elements in managing the business are organised efficiently. There are no benefits to the “wait and see” approach when fortifying your business for the future, particularly when dark skies are on the horizon.
Identifying leaders for an unsure future
Many of the CEOs with whom I spoke mentioned that they don’t have the leadership talent they need. The robust job market over the past three years has led to challenges for companies when it comes to retaining top talent. Competition has been fierce, and the best people have been snapped up by the most profitable companies. Many firms have gaps in their leadership teams with ineffective or distracted leaders.
Weathering challenging times demands good leaders, and “hoping for the best” is not a strategy. The Marine Corps Field Manual advises aiming for the 70% solution: it’s better to be decisive when it counts, even if you are relying on incomplete information, than to make a fully informed decision after it’s too late. Smart selection starts with a thorough understanding of the responsibilities and accountabilities required. To find the best candidate, it is also important to consider the industry, the markets, and the geography. However, to find the right candidate, there should be a thorough discussion of culture, team, and leadership competencies.
Even with rates slowing, finding excellent leaders will continue to be challenging. The unemployment rate remains at 3.7 percent and the professional unemployment rate closer to 2.0 percent. Perfection should not be your goal in hiring executives because no one has managed their career to be your perfect candidate. However, hiring the right candidate should be an obtainable goal. Finding that person who gets your business, who understands your culture, and has enough intuition to find an appropriate place on your team is very realistic. Such selection doesn’t come from hiring the first person who meets your criteria, but it doesn’t have to take a year either.
Internal vs. external leadership hires
Excellence in hiring comes from proper upfront evaluation and assessment. Perhaps you do have a talented person who is underutilised in your business. Perhaps it’s time to consider that junior staff person who may be prepared to take the leadership reigns. Is that subordinate leader skilled and shrewd enough to take action and keep the division on track?
Enthusiasm, change of perspective, and institutional knowledge are all valuable attributes in a management hire. Plus, promoting from within breathes life into an organisation. It’s good for morale, and it seeds confidence during times when a low-level concern about the economy likely pervades your workforce.
Consider doing it now, while the signs are there, but a recession is not yet imminent. This way, individuals can be prepared before the hard times hit the hardest. Perhaps extra training, guidance, and support may be necessary to help onboard your new leadership hire. But there’s value to deploying those resources for one of your own. If you are 70% certain, right now is a good time to act.
However, not all our clients are comfortable with the risks inherent with such a strategy. Furthermore, not all have the pipeline to do so. Bringing in new leadership almost always provides a break from the past, a fresh perspective on how to address challenges, and certainty that the business will be all it can be. Whether you hire from within or make an outside hire, if you have a leadership gap, now is the time to make filling that gap your priority.
Hunkering down in chaotic times
Trying to interpret how tariffs or tweets will impact markets can feel like a fool’s errand. Is this a good time to make major new technology purchases, expand into new services, or take your business to a new location? Are you better served to fortify your operations and wait until the news settles down in a few years?
Now is the time to be careful, but strategic. Look to deliver enhanced services to existing clientele, stay focused on being up-to-date, and ready to adjust to changing technologies. Perhaps it’s a time to revive lapsed client relationships-with an eye towards learning what they have discovered from your competitors.
The manufacturing industry may be in a recession, but the infrastructure deficit in the USA has swelled to $4 Trillion. Municipalities and states are raising taxes, and there will be new and expanding opportunities. It’s uncertain how the greater economy may fair in the downturn, but continued growth in environmental services, cyber-infrastructure, and telecommunications business is here to stay.
Decisiveness and clarity anchor good leadership
Business thrives on the routine, the certain, the reliable. None of this describes our current political and economic climate. There’s no virtue in waiting for a tsunami. Heed the red flags and prepare for the recession. Hope for the best, but plan accordingly.
This article is © TRANSEARCH USA and was originally published on the TRANSEARCH USA website.
Chris Swan is a Managing Director with TRANSEARCH International, co-founder of the Chicago office, and Global Practice Leader for Design, Construction, Technology and Environmental. He is a top executive search professional in the area of general contracting, environmental consulting, systems integration, cyber-security, digitisation, and new technologies. Firms value Chris' advice because of his understanding of the markets and what it takes to succeed in business. He attracts candidates when others cannot. Get in touch with Chris Swan »