Leaders’ behavior in four crucial moments determines survival in the recession

Research shows leaders who hold crucial conversations respond five times faster and ten times better to financial threats

PROVO, UT – April 15, 2009 – New research from VitalSmarts reveals the way leaders and employees behave in four crucial moments is a predictor of an organization's ability to respond effectively and quickly to financial threats.

According to the study, the four behaviors every organization encounters during financial downturns are denial, silence, protection of pet projects and irrational slashing. Leaders who hold candid and effective conversations when these behaviors arise are:

  • More than five times more likely to respond within days or weeks of the crisis.
  • More than ten times more likely to respond in a way that positions their company for future success.

The study, titled Financial Agility: The Four Crucial Conversations for Uncertain Times, was conducted in December via an online poll of more than 2,000 managers, leaders and executives from more than 400 different companies. It was conducted by Joseph Grenny and the VitalSmarts research team. Grenny is the coauthor of the New York Times bestseller Crucial Conversations (McGraw-Hill), a consultant to the Fortune 500, and cofounder of VitalSmarts, an innovator in corporate training and organizational performance.

The research also found that less agile teams are more than 360 percent more likely to miss millions of dollars in lost opportunities due to irrational or hasty solutions.

“As the economy weakens, leaders are forced to bolt expenses to revenues,” says Grenny. “To accomplish this they instinctively impose top-down, across-the-board solutions. Our research shows these common strategies result in a fifty-fifty chance of damaging the company's long-term ability to thrive.”

Instead of taking a gamble during the recession, Grenny says leaders can guarantee fiscal survival by engaging in candid and effective dialogue. Companies that encourage and foster crucial conversations during high-stakes moments are not just a little more agile—they are many times more responsive and able to succeed in tough times.

The four behaviors of uncertain times:

  1. Denial: Often, employees question the severity of financial crises and resist change. Unable to overturn doubts, leaders make across-the-board cuts or get bogged down in endless discussions.
  2. Silence: During financial crises, people often fail to hold teammates accountable to commitments made by the whole group. Companies that encourage people to speak up and hold others accountable to agreed-upon plans experience steady, rapid and unified action.
  3. Protection of Pet Projects: In many companies, employees half-heartedly engage in cost-cutting decisions. The most obvious and necessary cuts are often the boss's pet projects, but suggesting cuts there could be politically unwise.
  4. Irrational Slashing: Leaders often hastily conclude they can't trust their team to offer up real reduction opportunities, and consequently, they impose deep, across-the-board cuts. These companies emerge from recessions cynical rather than nimble and vital.

Grenny says the greatest barrier to financial agility is not a lack of intelligence or a lack of time, but a lack of focused and unified dialogue. “Leaders who invest in the skills, time and support to help their people hold crucial conversations when four behaviors arise will generate both profoundly wise and surprisingly rapid solutions to their current financial challenges.”

About VitalSmarts

An innovator in corporate training and organizational performance, VitalSmarts is home to award-winning training products that deliver powerful tools for enriching relationships and improving end results. The company also has three New York Times bestselling books, Crucial Conversations, Crucial Confrontations, and Influencer. VitalSmarts has been listed twice on the Inc. 500 list of fastest-growing companies and has taught more than 2 million people worldwide. www.vitalsmarts.com

Note to editor: Joseph Grenny, coauthor of, Crucial Conversations, can give your readers/viewers tips on how to hold crucial conversations regarding the four behaviors of uncertain times. Tips available upon request.

About the research: The study collected responses via an online survey tool from 2,000 individuals. Margin of error is approximately 3%. Full survey results are available here.

CONTACT: Brittney Maxfield of VitalSmarts, L.L.C. +1-801-724-6272, or bmaxfield@vitalsmarts.com.

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