02/13/2009 05:12 am ET Updated May 25, 2011

Recession Leadership: Don't Kick the Cat

Think of recessions as tests. Companies that fail them die. Companies that survive live to fight another day. But a few companies emerge stronger than ever. How do they do that? This is the second in a series of blogs about how great businesses have used hard times to strengthen their companies.

Although we all seem a little amnesiac these days, the last recession wasn't so long ago. 2000 saw the tech bust, followed by a market slump that found analysts, on September 10, 2001, asking if the market had bottomed out. Then came September 11 and by the end of 2002, the Dow stood at 7,197.

This concatenation of events left tech firms highly exposed, none more so than Mona Eliassen's consulting firm, The Eliassen Group. That business depended on the high tech community concentrated around Boston. In the tech boom, bd been booming, but now no one was hiring and the company was in trouble. What did the CEO, Mona Eliassen, do?

She paid attention to the company's culture. Holding regular staff meetings, she explained what targets the company had to hit to avoid layoffs. As it became clear that those targets wouldn't be met, employees weren't helpless or kept in the dark, but informed enough to make their own decisions. Many opted to take some time out, others for a career change. They were treated like grown ups.

Nor were tough times an excuse for petty savings. As one employee recalls, "We still had fresh fruit in the kitchen. The dry cleaning company came in, and a massage person brought her table in. We had visiting nurses come and give flu shots. Cutting those things wouldn't have saved jobs but keeping them kept us together." Many of Eliassen's competitors closed down but when the recession ended, the Group emerged stronger than ever, with highly motivated and committed employees who remember tough times in nostalgic detail. "For me," says Mona, "Culture is not the only thing. But the more I run a business, besides having a market to sell to, I think it is the most important thing."

Mona understood that, at times like these, culture is more important than ever. People are the shock absorbers of volatility. If you say they are your most treasured asset, treating them well in good times is easy. Tough times prove you mean it.

Last month, I watched the President of a Fortune 100 company publicly chew out a junior executive for a technical glitch in a presentation. It was a classic 'kick the cat' moment: a powerful person taking their anxiety out on someone vulnerable. I'm told that President is being considered for the CEO spot. Anyone witnessing this scene would have put him out of the running. This company had invested deeply in a nurturing culture - the comment of a moment proved it was just lipservice.

In recessions, every employee is scared and stressed. Most of them live with partners, who are scared and stressed too; many have kids graduating college, unable to find work. Cat kickers think their stress gives them an excuse for bad behavior. True leaders appreciate that tough times are opportunities to strengthen the culture and prove their integrity. If you mean what you say about valuing your workforce, now is the time to prove it.

This is the second in a series of posts about how great companies triumph over tough times.
1:Lessons from a Vineyard