William J. Conaty is widely considered to be a master of talent management. During his four decades at General Electric (GE), including 14 years as its human resources chief, he nurtured leaders through downturns and bubbles. Now an adviser to private equity firm Clayton, Dubilier & Rice, Conaty shares his thoughts on conducting a midyear review in a recession.
BE BRUTALLY CANDID
People really want to know where they stand. It's even more critical today because of all the mass restructurings. When there's not a lot of additional compensation or equity or perks or parties, individuals really need to know how they fit in. If you avoid that discussion until D-Day, and then have to reduce the workforce again by another 10%, people are going to say: "Why the hell didn't we have this discussion earlier? I just bought a new condo, and my mother's sick."
DON'T ASSUME YOUR STARS KNOW WHO THEY ARE
This is a time when silence is deadly. Even your best people are worried. They don't know how deep it can get and where it goes from here. They see their neighbors getting laid off. They see foreclosures. What people tend to do in this kind of environment is play it safe, play defense. But as a manager, you really want them to be playing offense. Unless your top players have been comforted by a face-to-face discussion with their boss saying, "Hey, I really appreciate some of the risks you're taking, and I'm there to back you up," they're going to be bunting.
GIVE GOOD PERFORMERS HOPE
In these kinds of times people tend to avoid tough discussions because they don't have all the answers. You don't want to guarantee them a job; you don't know whether you're going to have one, much less them. I think it's fine to just say: "Look, my feeling is within the next year, we're going to have another stock option grant or we're going to be unfreezing the compensation of our best people, and in my estimation, you fit that category." It gives people hope and optimism that when things start to turn they're going to be at the front of the line for some financial rewards.
BE WARY OF OVERLY AMBITIOUS GOALS
I think stretch goals are good. But they have to be laid out in the context of what's happening in your industry. This is more of a time for realistic goal-setting than stretch goals. In this environment, somebody might say: "If I don't make my numbers, I'm going to get fired, so I'm going to cut a few corners." And that's where we all get into trouble.