Effective Business Leadership: What It Takes to Keep Your Business Going in an Economic Crisis

As the CEO of Advanced Electron Beams (AEB), a green industrial energy efficiency company, Mitch Tyson knows what it takes to be a leader of a company, whether the economy is humming along or has stalled. According to Tyson, an economic crisis requires company leadership to stay calm, increase its communications with everyone involved in the company and, above all, not make impulsive decisions. Tyson, who was previously the CEO of PRI Automation and whose career spans almost three decades, actually sees an economic downturn as an opportunity for a company to re-think its strategy as well as ensure that it is running as lean as it can. Venator Partners spoke with Tyson about how a business leader can most effectively steer its organization through the current slump and emerge as a stronger and more successful business.

Question: What advice would you give to other executives to most effectively weather this dramatic downturn?

Tyson: The first thing is, don’t panic. Businesspeople should step back and perform an objective assessment, not take knee jerk actions. It is a useful moment to look at your business strategically. If you haven’t been running lean, take a close look at adjustments you can make, particularly if your strategy depends upon a robust economic environment. It’s obviously not a good time to increase capacity. But it might be a good time to fix some of the processes and product shortcomings that you never seem to have the time to address when business is strong.

Smart companies use downturns to re-tool and focus on different aspects of their business. They have to balance actions that will help weather the downturn with actions needed to prepare for the upturn.

Above all, executives need to stay calm and they need to calm their workforce. Right now everyone is scared about losing their job. Everyone sees their investment portfolios shrinking. Executives need to assure employees that ‘we’re going to get through this.’ For most businesses, if everyone stays calm and they balance long and short term requirements wisely, they will get through this and perhaps emerge a stronger organization.

Question: Should companies put off hiring staff?

Tyson: If you have a strategic hole in your executive team, this is the best time to hire someone. You’ll have great candidates to choose from. If you wait for the upturn to hire, you will have lost the opportunity to have a wise and trusted partner to help you get through this period and get up to speed in time to help with the recovery. If you are adding staff to grow, of course postpone these hires if the business outlook is uncertain. If you have a weakness you want to fix, don’t necessarily wait. You need to look at these two issues separately.

Question: What are the typical mistakes businesses make when they panic?

Tyson: Letting go of vital people who are the core of the organization. You can’t hire them back when it’s time to grow and it hurts morale and customer confidence.

Question: What should company leaders specifically be doing to steer their companies through this economic crisis?

Tyson: They should be sharing lots of information. What causes panic and low morale is a lack of knowledge. Even if you don’t have all the answers, in times of stress extra communication is required. You may need to have employees work harder or forgo salary increases but staying in close contact and talking with them about the challenges and the big picture is the right way to lead.

Communicating with your customers and partners/suppliers is also critical. They are anxious to hear what’s going on and what your plans are for weathering the storm.

Question: How should venture-backed companies deal with the pressure from investors?

Tyson: It’s the job of the investor to apply pressure but businesses must be able to explain to their investors why they are doing what they are doing. Business leaders need to proactively communicate with their investors just like they need to communicate with their other key stakeholders.