Navigating the Next Year

Herman Trend Alert: Navigating the Next Year

December 31, 2008

A recent study by the well-respected organization The Corporate Executive Board offers some sage advice for corporate leaders about how to successfully navigate the next year.Speaking on MSNBC, Tom Monahan, Chairman and CEO of this unique peer-to-peer network, shared the results of their recent research. When asked which issues would be most challenging in 2009, 30 percent of the corporate leaders who responded answered "protecting growth initiatives", 24 percent said "making critical talent plays", 21 percent answered "exploiting risk opportunities", and 17 percent replied "improving cost discipline".Overall, the suggested strategies highlight the need for leaders to change in five key areas.

First, the report directs executives to "focus on product and services [expenditures] in their cost-cutting process, not just overhead cost, because that is where long-term competitive advantage lies".

Second, leaders must be vigilant to "protect growth initiatives ". This strategy involves identifying and sheltering growth opportunities in the capital budget. In addition, the report suggests they integrate concrete innovation targets into performance expectations and reporting, even while belt-tightening".

Third, leverage financial strengths. Foster innovations that target the shifting financial strengths of customers and suppliers.Fourth, "exploit risk opportunities: embrace, don't eradicate, "the right" risk exposures".

Finally, and in our view most importantly, now is the time to "make critical talent plays", "to court and cultivate tomorrow's winners". Take the opportunity to close critical skill gaps with less-occupied talent. Reward outstanding performance. "Use the economic crisis to sharpen the acumen of future executives." "Embrace offshore centers as a source for critical skills and next-generation executive leadership, not just low-cost execution."

The study also found that one in four top, high-performing employees expects to leave in next 12 months, up from one in 10 last year. Wise employers will use this downtime to re-engage employees with "stay interviews", re-orientation, and special projects.

This re-engagement will also reduce the five percent productivity loss that translates into about $100 Million in lost operating cash flow for the average company. Monahan closed his interview with an astute observation: "Companies playing offense on talent have a remarkable opportunity right now."********