Strategy

Branson: Hard times can be good for business

A crisis can help your team forge stronger ties, but only if you include them in problem-solving.

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When I was growing up in the south of England, we didn’t see a lot of snow, but after a big storm my father would always say, “There’s nothing like a good snowfall to get the neighbours talking to each other.” He was right. Our neighbours, who usually kept to themselves, would be galvanized into helping each other to dig out their cars.

A more recent example of the power of teamwork is seen in the story of how James Mwangi, the 2012 winner of Ernst & Young‘s World Entrepreneur of the Year award, pulled Kenya’s Equity Bank back from collapse by smartly handling a crisis.

When Mwangi first took the reins as finance director in 1993, Equity was a small, insolvent building society (or a bank owned by its members) that was about to close down. Determined to save the business, Mwangi asked the staff to join forces with him and use their personal networks to encourage people to join the society. He also persuaded them to use 25% of their salaries to buy shares in the company. “Now they were involved. It was as much their company as anybody else’s,” he said.

Mwangi’s strategy worked: the bank began to expand. In 2006, it was listed on the Nairobi stock exchange, and shareholder value increased rapidly. These days, Ernst & Young says, Equity Bank is the biggest bank in the region by customer base, with more than seven million customers in Kenya alone.

If your company is faced with a financial crisis, make your team part of the solution. Do not shut yourself into your office—get out there and tell your staff what’s going on. As you consider strategy, remember that indiscriminate layoffs, pay cuts and benefit reductions will probably make an already bad situation worse. Instead, enlist your employees’ support and get creative about rewarding them for their commitment to the company.

If you are leading a company where unions are established, it’s important to set up great communications with union leaders, especially in tough times. Unlike so many of its competitors, which seem to be constantly at odds with their unions, Southwest Airlines has avoided bouncing from one crisis to another partly because of the strength of their labour-management relationships. Southwest has enjoyed decades of relentless profitability—and it is one of the most heavily unionized airlines in the industry.

Of course, crises come in all sizes, and your employees have to be ready to work with each other on defusing small emergencies as well. A few years ago, when I was waiting at London Heathrow for a Virgin Atlantic flight to Los Angeles to take off, a small crisis emerged in the form of a long weather delay. There is absolutely nothing an airline can do about such events, but not every passenger sees it that way. I watched as one of our agents tried valiantly to placate an agitated male customer.

When she was done, I commented to the totally unflustered agent, “Tough day, eh?” Her response was, “No, not really. I actually enjoy days like this because we all really pull together as a team. You go home feeling you’ve put in a good day’s work. Days when everything works like clockwork aren’t nearly as rewarding—for us, at least!” (I was glad she added that last bit.)

Such connections between your people are built over time. This agent learned to rely on her team through her everyday work with friendly colleagues. It also helped that her manager listened to her suggestions and followed up on them, and that management encouraged her supervisors to hold events that allow the agent and her colleagues to get to know each other outside the office. These small touches can add up to a team.

I never mentioned it to my father, but I noticed that as soon as the snow melted, the neighbours would quickly disappear behind their hedgerows again. Don’t make the same mistake at the office: once the crisis is averted, don’t slip back into your old ways. Make sure you keep that wartime spirit of working together alive and well—it will help you through good times as well as bad.

Richard Branson is a philanthropist, adventurer, entrepreneur and founder of the Virgin Group of companies