Managing Through Tough Times
By Tom Ryan
At the last presentation
at the NRF convention, Mindy Grossman, CEO of HSN, and Jon Luther, executive
chairman of Dunkin’ Brands, discussed the importance of building morale and
maintaining a company’s culture when managing the current downturn.
In the session entitled “How
Leadership Triumphs Hardship,” the executives pointed to a few other keys
to managing difficult times, referencing learnings from the recent downturn.
These included preserving cash, continuing to invest in the customer experience
and innovation, and not straying from what had made a business successful.
“Headwinds only slow you
down,” said Mr. Luther. “They never prevent you from getting to your destination.”
But much of the discussion
focused on managing employees’ concerns and keeping them focused on long-term
“[Employees] were fearful
about what was going to happen so we had to be very clear to articulate what
we were doing and why we felt we were going to come out of this,” said
HSN stepped up its communications
to include town hall meetings every six weeks, constant web updates, and “very
visible” management. Ms. Grossman said the company’s recent success reflects
its ability to be honest and engage employees early in the downturn.
‘We had to make difficult
decisions,” said Grossman. “We had to freeze merit pay and redeploy people
but we explained why. If we were still going to invest, we explained why
we were going to do that and why we were making the choices we were making.
And I think that it’s critical. They may not like the decision that you’re
going to have to make but they understand that it’s in the best interest
of the company.”
Similarly, at Dunkin’ Brands, the challenge
was to reassure its franchisees at Baskin Robbins and
Dunkin’ Donuts, many of which “have almost their entire net worth invested
in your brand,” according to Mr. Luther.
While the parent looked into
ways to improve margins for franchisees, it also pushed to deepen communications.
“I told everybody in corporate,
‘Yeah, I want to save a little money but I want you out in the field. We
don’t ring a cash register in Canton, Mass. [Dunkin’s headquarters]. They’re
all done out there so show up in front of the franchisees.’ ”
On the one hand, those communications
involved showcasing “wins,” such as any new store opening or community award
for a local franchise. But it also included open-honest communications.
“It’s one of the easiest
things to walk away from because it’s hard to do and you have to force yourself
to do it,” said Mr. Luther. “But that’s what gets you through the tough times.
You’re telling people we can’t contribute as much to your 401K or your merit
pay isn’t going to go up. But the message is ‘We’re going to keep your job’
and that inspires people to say, ‘They’ve got me in their mind. They’re going
to take care of me.'”
Mr. Luther also said that
companies should seek to redeploy jobs to more critical areas first before
exploring layoffs to preserve a company’s culture.
“You have to take a holistic
view,” said Mr. Luther. “Make sure you stay true to your strategy, protect
your culture, and communicate whatever you can.”
Questions: What lessons were learned over the last year about managing
in difficult times? What are the best ways to support morale and a company’s
culture in such times?