Whether it is due to poor economic conditions, aggressive competition or a product failure, companies will periodically face adversity which will test the executives who run these organizations. The key consideration is how these individuals should handle such realities. For example, how big of a factor should cutting costs be for organizations that are trying to weather a difficult market but still have aspirations for future growth? Questions such as this one actually relate to a bigger, underlying question that those who oversee departments, divisions and the entire enterprise should answer for themselves. More specifically, are they leading vs. managing through tough times?

According to leadership and change guru John Kotter, managing involves budgeting, organizing, problem-solving and controlling that helps deal with complexity in the business environment. Common examples of this in a tough market would include reducing costs, rectifying work-flow inefficiencies, re-structuring, shoring up the product supply chain and eliminating jobs/conducting layoffs.

On the other hand, Kotter suggests that leading involves setting a direction as well as aligning and motivating people regarding this direction to help deal with change in the business environment. Examples of this in any market would be developing a “picture” of what the end-state looks like down the road, putting in place the strategy to get there, helping people to understand the end-state so they can commit to it, keeping people moving in the right direction despite obstacles and ensuring people are continuing to develop the needed skills for the present and the end-state.

In its experience, OrgLeader has discovered that executives often focus more on “managing” than “leading” through difficult times in order to better position the organization to withstand such challenges. While reducing costs, efficient budgeting, etc. are important in tough times, a failure to lead through these time periods by thinking beyond immediate issues can place the company in a precarious position from a people standpoint, because such actions don’t inspire optimism.

In a study by the Institute of Leadership and Management, chief executive officers reported that pessimism can be contagious and destructive as well as paralyze decision-making in an organization that is facing adversity. This decreases the likelihood that the organization will make it through the adversity. Conversely, optimism is highly valued, because it is associated with solution-focused, hard workers who seem able to overcome any challenge that they encounter.

Therefore, OrgLeader believes that tough markets and other forms of adversity do not make managing and leading an either/or proposition for executives. Executives who are successful in these circumstances maintain a balance between leading and managing where leading involves continuing to keep employees engaged using a variety of means to help foster optimism. The specific means do not have to be costly. For instance, they could simply involve touching base with employees to see how they are handling increased demands due to cost-cutting and providing coaching/mentoring to help them develop important skills. In situations like these, the bang does not necessarily come from the buck.