Managing Through Tough Times

At the last presentation at the NRF convention, Mindy Grossman, CEO of HSN, and Jon Luther, executive chairman of Dunkin' Brands, discussed the importance of building morale and maintaining a company's culture when managing the current downturn.
In the session entitled "How Leadership Triumphs Hardship," the executives pointed to a few other keys to managing difficulty times, referencing learnings from the recent downturn. These included preserving cash, continuing to invest in the customer experience and innovation, and not straying from what had made a business successful.

"Headwinds only slow you down," said Mr. Luther. "They never prevent you from getting to your destination."
But much of the discussion focused on managing employees' concerns and keeping them focused on long-term goals.
"[Employees] were fearful about what was going to happen so we had to be very clear to articulate what we were doing things and why we felt we were going to come out of this," said Ms. Grossman.
HSN stepped up its communications to include town hall meetings every six weeks, constant web updates, and "very visible" management. Ms. Grossman said the company's recent success reflects its ability to be honest and engage employees early in the downturn.
''We had to make difficult decisions," said Grossman. "We had to freeze merit pay and redeploy people but we explained why. If we were still going to invest, we explained why we were going to do that and why we were making the choices we are making. And I think that it's critical. They may not like the decision that you're going to have to make but they understand that it's in the best interest of the company."
Similarly, at Dunkin' Brands, the challenge was to reassure its franchisees at Baskin Robbins and Dunkin' Donuts, many of which "have almost their entire net worth invested in your brand," according to Mr. Luther.
While the parent looked into ways to improve margins for franchisees, it also pushed to deepen communications.
"I told everybody in corporate, 'Yeah, I want to save a little money but I want you out in the field. We don't ring a cash register in Canton, Mass. [Dunkin's headquarters]. They're all done out there so show up in front of the franchisees.' "
On the one hand, those communications involved showcasing "wins," such as any new store opening or community award for a local franchise. But it also included open-honest communications.
"It's one of the easiest things to walk away from because it's hard to do and you have to force yourself to do it," said Mr. Luther. "But that's what gets you through the tough times. You're telling people we can't contribute as much to your 401K or your merit pay isn't going to go up. But the message is 'We're going to keep your job' and that inspires people to say, 'They've got me in their mind. They're going to take care of me.'"
Mr. Luther also said that companies should seek to redeploy jobs to more critical areas first before exploring layoffs to preserve a company's culture.
"You have to take a holistic view," said Mr. Luther. "Make sure you stay true to your strategy, protect your culture, and communicate whatever you can."

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