Today, September 23, 2022, the leading USA stock market price index (DJIA) has dropped more than 2%. Internationally other indices in the EU, Japan, China, and India dropped as well (although India was mixed).
EkaLore’s release today looks at the question: How enterprises react when there is a sharp drop in stock prices ahead of the calendar budgeting season (USA, Germany, EU), mid-year adjustments in some countries (Japan, Canada), and just before the critical “holiday quarter” (retail companies) in many markets
As an executive, you can make a difference and get a reputation boost doing what we’re talking about here. Executive managers will make emotionally-driven decisions in a hurry with information they have on hand.
For the largest number of people in publicly-stock-traded enterprises the daily price of the stock is of only passing interest. The stocks goes up and down without affecting their daily work or monies very much. For managers and executive management in these enterprises the stock price matters a lot (especially if their money is tied up in the stock or stock price). Most executives are playing the “expectations game” – with everyone inside (board/committee) to outside (bankers, financial industry).
The news of a sharp drop (or the results of a series of days/weeks with the stock dropping) does affect the expectations of everyone from executive to worker.
News affects workers when initiatives are held up, raises are cancelled, or projects aren’t started or cancelled. These changes often seem to happen without warning – or just very suddenly. Worries and the performance of “the economy” are often in the background before a sudden change – what causes the sudden actions?
Today’s events didn’t cause emergency actions – the actions are the result of worries over time. Enterprise executive managers are concerned with short term (the current 90-days and the next 90 days) all the time. Even more concerning are the months and quarters further out (quarters 3-12 for example). The emotional reactions of executives are dominant in decisions often made in reaction to events like a sharp stock drop. The event pushes executives to “go past” the point or edge where action becomes something-to-consider to action-right-now!
If you’re caught in this sudden shift (in an area whacked or not):
A) Focus on the results and progress of your current work. Communicating good results and honest status will provide the emotional credibility with managers needed just now instead of the “fog of doubt”. Even changes and adjustments to projects are better stated plainly as uncertainty or “we’re 90% done and only a few more months” will be closely examined for terminations.
B) Prepare to pivot to actions providing short-term (90 day) benefits (more sales, less spend). If this isn’t possible discuss options to reduce spend and project changes (eliminating contractors, slowing buys, lowering development (like cloud) costs).
C) Offer to help. Be prepared to give up resources, priorities, or attention to help the people in most critical needs as sponsors. Figure out the impacts on the projects and provide managers with the resources to react and prioritize immediate needs (dictated or coming down from senior management).
These ideas aren’t just for big project teams or multi-department initiatives. The same logical approaches to priorities and options affect individual contributors to “rush projects”. The attention and priorities of the enterprise may have just changed – focusing on the immediate priorities and needs can help (understanding not every person can improve results by themselves).
EkaLore has written about this and its effect on web-advertising already.
These changes are the “conventional wisdom” as they are the “most obvious” changes to do – like hot pepper oil causing gulping water when chewed. Uncertainty will kill projects faster than known problems. Reducing uncertainty by taking on pro-active decisions with sponsors and managers is a good idea – telling them “You can help” will get you on the calendar
If you'd like to talk with a senior analyst who has been there and done that, send us a note at eliot.axelrod@ekalore.com
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