3 Ways Leaders Prevent An Economic Recession From Becoming A Trust Recession

All it takes is hearing the word ‘recession’ to create feelings of worry or anxiety inside many organizations. The reasons for this seem obvious on the surface. Those who were part of your company during the last recession will remember what happened before, whether that included layoffs, deep cuts, or other tough measures. Others may be wondering how they can meet current objectives when customers aren’t spending, or how to innovate or drive future growth without investment from leadership. As challenging as these scenarios are to consider, what’s really causing concern isn’t just an economic recession – it’s a trust recession.

What is a trust recession? According to experts, we feel it before we see it, but the impact is real. It refers to sentiments of growing mistrust in government, media, and other institutions, and inside organizations. The pandemic only exacerbated matters, explaining why we see even higher churn rates, lower engagement, drops in performance, and lowered expectations in leadership than pre-COVID worldwide. What this means now is that you’ll have a higher bar to clear when it comes to accelerating execution, driving growth, or sustaining engagement when it comes to your teams, your customers, your markets.

Good companies have long understood the connection between high trust and strong performance, but what’s different today is the idea of potentially facing two recessions at once. It’s all tall order, even for the most experienced leaders, reflected by comments made by one CEO: “I honestly never want to be a CEO again. Dealing with a recession is one thing. Doing that with an organization that is still limping along from the pandemic is incredibly draining.”

While this sentiment certainly isn’t everyone’s reality, and some organizations aren’t missing a beat when it comes to trust and performance, it’s the right time to assess what’s really happening inside your organization, with customers, across your teams, and with your people when it comes to trust and leadership performance. Start here:

• Where are we experiencing a trust recession right now inside our company?
• What are examples of that?
• Left unaddressed, how will this impact our ability to navigate a recession?
• What have we learned from the pandemic about how we can address this?
• What is one specific action we can take as an organization right now?

Capture and codify responses, integrate them in an updated version of a recession playbook and don’t stop there. Translate insights into concrete behaviors that employees can adopt and share how you’ve integrated new thinking into your approach, so employees recognize how you’re not just copying and pasting from the past. When you do, you’ll help employees trust that you’re taking the very best actions possible to minimize the impact on the company and on them and empowering them to be part of the solution.

Don’t assume everyone knows what is important.

How else do you address a trust recession? Focus on what matters most. If you’re like most companies, life has only gotten more complex since 2008, from organizational structures to operating models. With so much happening, it’s too easy to become spread thin and lose sight of what is essential to keep your business moving forward. Ask yourself: Out of everything we could do, what is the one thing we must do to future proof our business?

You may need to communicate about this much, much more than you think. Even when your priorities and choices seem obvious, don’t assume others have the clarity you do. Link company activity to these priorities and take every opportunity to communicate simply and clearly what really does matter most. Whether it’s customer retention, improved sales performance, or on time deliveries, good leaders know that while everything may be important, some things just matter more than others, and they can articulate why that is the case. This not only helps your teams focus but makes it easier for them to say no when they need to. They trust you have their back when you make priorities clear.

Appreciate the role inspiration can play to reduce recession impact.

Recently a COO shared a detailed plan that outlined measures to restructure and consolidate business units in preparation for an economic downturn. At the same company, the CFO created a short, 3-minute video sharing ideas for simple measures every employee could take to strengthen performance. His message of empowerment resonated beyond his expectations. His simple message was: “There is so much that we can do to control whatever impact a recession may have on this company, just by doing our jobs well.” Not only did the CFO’s video receive some of the highest viewing levels in the company’s history, but also garnered exceptional feedback from employees, like “You gave me hope again,” and “I’m so glad you’re the CFO leading us through this.” They were inspired, they felt like they are in good hands, and they were also given a clear path forward for an action they can personally take now.

It is easy to forget how thirsty people are for inspiration because a recession isn’t just a period of economic decline, but also a time of uniquely high uncertainty, pressure, and stress. It’s why the last thing employees need is another presentation about challenges, problems, and difficulties ahead. When times get tough, it’s easy to only focus on communicating “how hard things are,” and while it may feel true, it’s not helpful, it motivates no one, and does little to inspire action. Without a balance in messaging between what’s real today and a vision for what is possible for tomorrow, employees may check out, because they don’t see how they can make a difference, why their actions matter, or what they can do to help create a better future. The balanced conversation is the right one to have, starting at the top of the organization, and cascading throughout.

Warren Buffett famously said, “Only when the tide goes out do you discover who’s been swimming naked.” Challenges have a unique way of shining a light on the cracks in the system, making it even easier for leaders to default to old behaviors and undermine trust in leadership. Heading into an economic downtown on anything less than a full tank of gas in the trust department isn’t a risk worth taking, and leaders can take action now to improve the odds of coming out of the recession even stronger than when they started. Now that’s inspiring.