Management Matters Blog

Management Matters with Mike Myatt: Surviving the Economic Downturn

By: Mike Myatt, Chief Strategy Officer, N2growth

--As odd as it may sound, if you want to survive the economic downturn, increase your marketing expenditures. If you're the short-sighted CEO who cuts back on marketing, branding, and advertising budgets in an attempt to reduce costs, shame on you.

Top CEOs recognize that economic slow-downs are not all doom-and-gloom. In fact, the smartest executives understand that swimming upstream against the conventional wisdom of the risk adverse can actually create significant opportunities for growth. By making heavy operating investments into marketing, advertising, business development, and sales initiatives, the aggressive enterprise can create significant competitive separation during a time when many are pulling back on such expenditures. In today’s column I’ll make the business case for applying contrarian thinking by becoming very bullish in the face of a waning economy.

Let me start by asking a question with the intent of pointing out the obvious. What better time could there possibly be to ramp-up sales and marketing investments when your competition is slashing costs and going into hibernation? The answer is, there couldn’t be a better opportunity to increase market share, sales penetration, and brand equity than to exploit the flawed business logic of timid competitors. The fallacious thinking which underpins some of the slash-and-burn management tactics that tend to get traction during economic downturns can ultimately devastate a business that adopts a bunker mentality.

If you doubt my logic, all you have to do is look at the research and historical data supporting my conclusions. McGraw-Hill Research assessed 600 companies across 16 different industry categories analyzing their advertising expenditures during the recessionary periods of the early 80’s. The results of the research showed that companies who maintained or increased their advertising budgets during recessions demonstrated significantly higher growth in revenue and brand equity, both during the recession, and for the following three years, when contrasted with competitors that eliminated or decreased marketing, advertising, and branding expenditures. Another study by the Center for Research & Development revealed that companies who aggressively advertised during a recession garnered almost 5 times the market share of their cautious competitors.

The research mentioned above is also validated by examining the historical marketing data for companies that thrived during the Great Depression. The reason that brands like Kellogg, Coca-Cola, Kodak, Campbell’s, and others survived those devastating economic times was their total commitment to continued marketing, advertising, and branding initiatives. My final warning is not to become a CEO who sacrifices long-term shareholder equity considerations for short-term financial benefits. Because Wall St. often rewards cost cutting measures with a temporary bump in stock price, fiscally conservative CEOs tend to focus on short-term benefits for all the wrong reasons.

The smart CEOs realize that cost-cutting does not constitute a sustainable business model and will forego temporary incremental moves in lieu of long-term, disruptive moves. This more aggressive strategy will ultimately reap more significant rewards from the market when the analysts realize the company is positioning itself to exploit current market disequilibrium while favorably positioning itself for the coming growth cycle. This thinking most definitely applies to your marketing outlook.

The reality is that when Company “A” cuts back on marketing initiatives and Company “B” increases marketing initiatives, Company “B” will take marketshare from Company “A”. As noted above, history has shown us that recessions create new brand leaders as aggressive companies are creating their future while conservative companies attempt to protect their future. Smart CEOs, while certainly aware of risk, spend considerably more time managing opportunities than they do risk.

Management Matters with Mike Myatt: Are Recruiters Effective?

By Mike Myatt, Chief Strategy Officer, N2growth

--Sourcing tier one talent is an issue for all businesses. I was recently asked if recruiters are effective, or if they're worth the investment.

Since my firm has a talent management practice which includes a practice group that provides both contingent and retained search services, to be fair, I must disclose my bias before addressing today's topic. While I clearly have a strong bias favoring an outsourced recruiting model, the question merits a bit of exploration in order to provide a fair answer.

In the text that follows I'll do my best to manage my bias and provide a transparent and authentic answer to a question I'm sure most of our readers have asked themselves at some point in time.

Let me begin by providing some historical background on organizational behavior which might serve as a useful backdrop for today’s post. While I could go as far back as Plato’s writings on the essence of leadership, Aristotle’s lectures on the topic of persuasive communication or even refer to Machiavelli’s work on organizational power and politics, for the sake of brevity and relevancy I’ll fast forward the late 1800’s in America.

It was during this period of time that I believe we can find the roots of modern HR. It was during the late 1800’s that industry recognized that people problems were a very real and rapidly growing concern in the workplace. It was also during this time that the US Government stepped-in to provide the first real legislative protections for the workforce.

As time has continued to march forward, America has moved from the concept of “personnel administration” to “human resources administration” to “human resources management” and now we are moving on to “talent management.”  Nomenclature aside, the biggest challenge that HR departments face today is that of multiple and often competing agendas which in turn tends to cause staffing inefficiencies and often results in lackluster performance. As with the evolution of most functional departments in corporate America, with the passing of time has also come some empire building and title inflation. The HR department is no exception to this regrettable state of dysfunction.

Let me ask you to think about your HR department for a moment How large is it, how big of a budget does it command and most importantly how productive is it? Upon reflection you’ll find that much of your HR department is likely charged with defensive posturing associated with managing compliance and litigation risk.

Other staff members are likely charged with training and administration activities, some have fallen into IT roles developing applicant tracking systems, while others perform marketing and research activities surrounding candidate development. How much of your staff is actually charged with recruiting and how senior are these people? It is not that HR departments are incapable of making high volumes of consistently great hires, it’s just that most or not organized to do so. If your executive level recruiting is being handled by staff level HR shame on you. The following are just a few reasons why I believe in most cases a company is better off leveraging the services of an outside recruiting firm:

1. Outsourcing allows companies to focus on core business while leveraging a broader, deeper and more senior recruiting talent pool than they could normally afford to organically payroll.

2. When payroll costs, ad budgets, job posting fees, research costs, IT costs, lost opportunity costs, etc. are considered it is more affordable to use a recruitment firm. Why spend your budget when you can let the recruiter spend theirs?

3. There are many benefits associated with using an outside recruiting firm including realizing the benefits of a confidentiality buffer which keeps the employer in relative anonymity until they are ready to engage with a candidate.

4. Recruiting firms have existing long-term relationships with passive job seekers not readily known to most HR departments.

5. Recruiting firms have access to a wider range of candidates who may not have ever considered working in a particular industry or for a specific employer.

6. As mentioned earlier most recruiting firms are staffed with very successful senior talent as opposed to corporate recruiters who are usually less tenured.   

7. No charge replacement guarantees makes using an outside recruiter a very low risk proposition.

8. Recruiting firms have a broad array of industry trends and information which can often be useful to employers in terms of benchmarking and analytics.

Good luck and good hiring!

Management Matters with Mike Myatt: Partisan Politics Not Always Bad

The truth about partisan politics is that contrary to public opinion, it's not always a bad thing. Likewise, bipartisan efforts don't always reflect altruistic behavior and selfless acts. From my perspective, it isn't necessarily the stance you take, but rather the reasons underpinning your decision to adopt a position that matter most. In today's column I'll share the unpopular truth about partisan politics.

In this last week I have harshly criticized others for both their partisan and bipartisan behavior, and I have also been criticized for my staunch partisanship. I’m not going to spend much time debating specific positions in the text that follows, but I am going to ask that you take a hard look at the motivations underlying positional differences, and then to draw your own conclusions from there.

Let’s begin by understanding that the intent behind a multi-party system is to insure integrity, transparency, and accountability. Partisanship serves as a fundamental check and balance allowing different perspectives, voices, and agendas to be put forth for consideration. I would submit that the danger lies not in the practice of partisan politics as it was designed, but rather in the disingenuous and self-serving interests of those who choose to abuse their positions in an effort to be viewed as non-partisan.

In fact, I would further submit that when an individual believes his or her partisan beliefs are in contravention to popularist bipartisan agendas, that they have a moral and ethical obligation to stand firm in partisan opposition.

The truth of the matter is that it can take a lot of guts to cross party lines, or it can display a complete lack of intestinal fortitude. The question should not be whether a person acts in a partisan or bipartisan fashion, but rather why are they choosing to do so.

Is their choice based upon doing things right, or doing the right thing? Is the decision based upon holding firm to their values and beliefs, or does the decision compromise values, ethics, and beliefs to satisfy public opinion and to protect their personal popularity?

Let me digress for a moment and address the issue of popularity. It becomes a very slippery slope when a politician, celebrity, executive, parent, child, friend, etc., develops a need to be popular, and in turn places that need ahead doing the right thing. When the primary motivating factor underpinning a position or a decision is to be liked, compromises in personal integrity and character quickly follow. In today’s culture where our nation has become obsessed with celebrities, and being politically correct, the need to be perceived as popular has become a demanding master to whom many strive to serve.

Popularity, vanity, narcissism, or other forms of self-indulgent or self-serving behavior are very temporary states. These characteristics while initially appealing, have no moral quality, serve no higher purpose, and are fleeting at best. While anyone can spin their way into popularity on a temporary basis, long-term respect is earned by not catering to special interests, not by compromising your values and beliefs, but by fighting for the right thing regardless of public opinion.

In this last week we have seen numerous calls to set aside partisan agendas in support of putting our nation’s interests first. In principle, I concur with the sentiment of the aforementioned battle cry. However, this assumes that the Bailout plan is truly in our nation’s best interests. I am much more impressed with those politicians, journalists, pundits, and other individuals who have opposed the bailout on principle, than I am with those that have looked for cover by walking the middle of the road.

My personal belief is that the heroes of this last week are those individuals who have stood boldly to oppose a flawed piece of legislation. It is incumbent on all of our elected officials to adopt whatever partisan or bipartisan positions necessary when and where it serves the best interests of our country. I have supported the Republicans and Democrats who have opposed the Bailout plan, and I have likewise hammered the Republicans and Democrats who have indulged in fear mongering and played party politics in supporting a rush to pass a flawed piece of legislation.