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First COVID-19. Then, health mandates. Add in choked-up supply chains, the Russia–Ukraine war, rising prices, interest rates, and inflation. Economists are starting to unite around the prediction — a recession is inevitable.
No one has a crystal ball, and the future seems more uncertain than ever, but if we break these problems down (e.g., pandemics, war, and rising food and fuel prices leading to a recession), we realize that many of us have lived through similar challenges before. Either we made it out on the other side alive and thriving, or we made mistakes and learned what not to do. These insights are valuable for getting through this next round of uncertainty.
Alone, a business owner can see issues from a limited amount of angles. Especially as first-time leaders, it can be hard to think outside the box with little experience to reference. But, with a board, its members’ expertise can help in more informed decision-making. Leaders can lean into the diverse range of expertise their board members have — their “been there, done that’s” — to tackle challenges and opportunities better and get their company through even the toughest of times, including the oncoming recession.
Related: Building a Better Board: 5 Things Every New Board Member Should Know
Lean into expertise
Since 1854, the U.S. has lived through 32 economic cycles with an average of 17 months of contraction, followed by 38 months of expansion. Since 1980, four of these periods of negative economic growth have been recessions. Times change and no two recessions are the same, but the steps to get through them will likely have similarities. Having members on your board that lived through the biggest of all of these in 2008 can identify similar situations that could use similar solutions and where unprecedented changes might call for unprecedented action.
The job of a board is to guide a company to its goals, so to get through the rough times ahead, CEOs should leverage everything their board members bring to the table. The more experienced a board member is, the better a company’s chances are of getting through the recession. Even first-time CEOs can put plans in place for potential pitfalls and avoid anticipated obstacles with the guidance of an experienced board. By combining the lessons learned from previous failures and successes, then evaluating them through the diverse perspectives on your board, leaders can make better, more educated decisions with reduced risk of loss.
Related: The Best Employees Display These 6 Characteristics
Transparency helps everyone work better
Transparency between the company, its board members and all stakeholders is one of the essential tools for success. According to Salesforce President and CFO Amy Weaver, the pandemic has made transparency more critical than ever. “Suddenly, you were forced to make decisions at lightning speed … decisions that can truly change the entire trajectory of your company.” More communication with the board, Weaver says, is the way to balance that.
False information helps no one, especially those who meant to use that information to guide a company. It also makes it hard for board members to trust or feel aligned with the company’s leadership if they think they’re hiding something. When we bring all our ideas to the board with transparency, their expertise can help turn those ideas into practical actions.
Related: The Time for Outside Board Members is Now
Have a clear vision and drive it
A vision for your company’s long-term growth keeps it moving forward in the right direction: it can be your compass during uncertain times. In a recent FMI analysis of 150 organizations, leaders who made rushed decisions out of line with their company visions saw adverse short and long-term consequences. Some learned the value of leaning into their board more heavily to challenge those decisions with their board members’ experiences and insights. Like a “lighthouse in a storm,” a clear vision keeps everyone in a company focused on getting to shore even when the waves threaten to take them under.
If you set clear goals and prioritize building a board based on the height of those goals, everyone involved is better equipped to get there. If your company has no vision, now is the time to make one. If you already have a vision, it may be a good idea to reevaluate it and ensure it aligns with your mission and its core values. With everyone rallied behind a clear vision that lays out the problems a company solves, how it solves them, where it wants to go and what that will look like, your board members can advise you on the best method to hold that course.
Related: Finding the Right Board Members for Your Company is Crucial to Success. Here’s How to Do it.
Spend more wisely
Growing a company requires investments, and a board can help analyze the vision to ensure company investments are driving toward that end. When Universal Investments CEO Mary Cantrell turned to the company board to decide whether to close or limit a diamond-mining investment fund, the board ended up expanding the fund’s charter and outperformed most benchmark indexes. The board members’ insight and analysis resulted in a better company decision than its management would have had the wisdom and experience to make on its own.
Let boards see your finances and where the company stands so they can better advise on saving, budgeting and planning to correctly make it out of adverse economic times while surviving and thriving. Instead of rushing to lay people off when financial pressure ramps up, lean into board members’ advice to make more thoughtful hiring and firing decisions. Use board expertise to reevaluate long-term relationships with suppliers. With everyone struggling, your board can help you consider new opportunities to continue working together in ways everyone still benefits.
A recession may be coming, but the good news is we’re going to get through it because we’ve gotten through it before. Just as hard times have a beginning, they also have an end. With a board — and its wealth of experience and knowledge — prepared to guide you through the challenges to come, your business can come out on top when the dust settles.
This article is from Entrepreneur.com
