Great article in the McKinsey Quarterly (free but registration required) called "Learning to Grow Again".
In recession, most companies know what they need to do: cut costs. But in recovery, corporate muscles that have gone unexercised must be flexed anew. In preparation, boards and top managers would do well to ask three basic questions.
What is success?
In earlier eras, the success of a company was judged by a mixture of measures, including its fundamental economic performance, its reputation with customers and employees, its stock price, and its responsibility to society at large. That changed in the 1980s and 1990s. Academic theory, the takeover boom, and shareholder activism led to a focus on share-holder value, all too often measured through the narrow prism of short-term movements in stock prices....
Factors outside management’s control, such as investor sentiment and overall market conditions, can have a major impact on share prices. Did all those CEOs really deserve to get rich from the rising tide of the 1990s? Likewise, some strong management teams have doubtless been punished unfairly during the downturn.
This raises troubling questions as companies look to manage the next era of growth while avoiding the pitfalls of the last... A more balanced view of success, and the time over which it is measured, would ultimately serve shareholders (and society) better by encouraging more innovation and growth.
How can we nurture talent?
...When the downturn came, there was an abrupt shift from "we value talent" to "you are a disposable cost." The options evaporated, the perks were withdrawn, and the layoffs came swiftly—in some cases, brutally. This tore the social fabric of many firms and left employees cynical. Trust will have to be earned again and a new compact forged between companies and employees.
...The best companies will create jobs and roles where employees feel they have some control over what they do, where professional relationships are valued, where more than lip service is paid to the work-life balance, and where there is a real belief in the social and ethical responsibility of the employer. The companies that translate these principles into concrete practices and build the social and knowledge capital of the organization will establish a source of competitive advantage not easily displaced.
What is the role of business in society?
...Market economies depend on integrity to function; companies should adhere to the values and norms of the communities in which they operate, as the great majority of businesses do. The drive for growth need not be at odds with environmental and other societal concerns...
Excellent summary of what businesses must do to survive and thrive. Far from being rocket science, it just comes down to the basics: balancing short- and long-term perspectives, valuing employees and acting with integrity.