Four Behaviors to Watch For

VitalSmarts (www.vitalsmarts.com), a firm that specializes in corporate training and organizational performance, has identified four behaviors that typically arise during financial downturns:

1. Denial. This is one of the most common behaviors exhibited, says David Maxfield, vice president of research for VitalSmarts and co-researcher of its study, “Financial Agility: The Four Crucial Conversations for Uncertain Times.” He says denial is often accompanied by “dithering and debating.” Employees tend to question how severe a crisis is and to resist change, according to VitalSmarts.
2. Silence. “I’ll call this silent collusion because that’s what it feels like,” he says, noting that during financial crises, teammates may not hold one another accountable for their actions.
3. Protection of pet projects. Fearing repercussions, people tend to steer clear of suggesting cuts to the boss’s pet projects, even if those cuts make the most sense.
4. Irrational slashing. This “is sort of the response that leaders have to the first three” behaviors, says Maxfield. When there is debate, dithering, and denial, and when “sacred cows” are not confronted, and employees don’t hold one another accountable, leaders often give up on their team’s ability to make cuts, he explains. Leaders respond by making across-the-board cuts themselves—without input from the team.

Effective Conversations

The study also revealed some staggering results about leaders’ responses to those behaviors. Leaders who address the behaviors through candid, effective conversations are five times more likely to respond within days and are 10 times more likely to respond in a way that positions their company for success in the future, according to VitalSmarts. “Those are pretty big numbers,” says Maxfield.

In addition, teams that engage in crucial conversations related to the four behaviors are 250 percent more likely to survive than those that don’t, and teams who take months or longer to respond to a financial crisis are at least 360 percent more likely to miss millions in lost opportunities, he adds.

What to Do

HR plays a “crucial” role in ensuring that leaders are properly addressing the four behaviors, says Maxfield. “Often, HR is managing or observing the process of conversation—more so than trying to steer the product of conversations.”

He suggests that Human Resources be on the lookout for the four behaviors and when identified, push top management to confront them.

Maxfield also recommends that senior management teams be trained on—and practice—having “crucial conversations” in the event of a financial crisis. “Conduct several fire drills before the actual fire,” he says.

In addition, he says that leaders should model and teach dialogue skills, schedule “financial workouts” at least quarterly (because annual budgets are “fossils” as soon as they are completed), sacrifice one of their own pet projects or other so-called sacred cow, support managers’ decisions that favor timeliness over perfection, and create safe “sub-dialogues” (i.e., create cross-functional groups to work on discrete problems associated with fiscal crises).