CEOs Ditch the Warm Talk as Economy Shows Signs That ‘Winter’s Coming’

CEOs Ditch the Warm Talk as Economy Shows Signs That ‘Winter’s Coming’ #CEOs #Ditch #Warm #Talk #Economy #Shows #Signs #Winters #Coming Welcome to Lopoid

The era of the kinder, gentler CEO is fading.

Corporate chiefs who spent much of the pandemic patiently answering questions in town halls, sending reassuring notes to staff members and projecting a softer image are shifting their tone as signs emerge that the economy is worsening.

The CEO of Google’s parent company told staff last month to work with “greater urgency, sharper focus, and more hunger than we’ve shown on sunnier days.”

Meta Platforms Inc.

CEO

Mark Zuckerberg

said in late July that the Facebook owner must operate with greater intensity “and I expect us to get more done with fewer resources”; an engineering leader at the company also recently told managers to identify and push out low performers.

Beyond tech, CEOs are warning of tougher times, while others are telling employees to reconsider spending on trips, business meals or even corporate swag such as T-shirts and coffee mugs.

The shift in messaging reflects increasing anxiety in the C-suite about where the economy is headed. A survey released in June by the Conference Board, a business research firm, found the majority of CEOs think a recession is coming or already here. When leaders fear a downturn, their talk and actions change, say executives, board members and corporate advisers.

“In the good times, we want to focus people on the growth aspects,” said

Ellen Kullman,

chairwoman of 3-D printing company Carbon Inc. and former CEO of

DuPont.

DD -0.53%

“But when the economy appears to have the potential for that downturn, it’s fundamentals 101. It’s: How do I conserve cash? How do I focus the team to emerge from whatever this is stronger?”

CEOs might want to better align teams now or push them to be in the office to set priorities, she said—a contrast from earlier days in the pandemic when executives preached flexibility, rolled out new benefits to support staffers or repeatedly acknowledged the challenges employees faced.

Now, “I hear from different CEOs that it is a little bit of a tougher talk,” Ms. Kullman said.

Many CEOs disliked remote work from the beginning and are tired of hiding it, advisers and executives say. Privately, some CEOs have said the prospect of an economic downturn will give them greater license to order their employees back into offices. On earnings calls with investors in recent weeks, executives also have emphasized their abilities to hold down costs or dust off tactics used in prior economic downturns, if necessary.

Jeffrey Brown,

CEO of online bank and financial-services company

Ally Financial Inc.,

ALLY 2.05%

told investors in July that the company is “deeply engaged with our business leaders on ensuring only the most essential projects and hires are prioritized.”

General Motors Co.

GM 4.39%

CEO

Mary Barra

said on a call with analysts last week that the company had “modeled several downturn scenarios” and would cut some hiring and spending.

Meta’s head of remote presence and engineering,

Maher Saba,

told managers this summer to identify and report low performers within the company. “If a direct report is coasting or a low performer, they are not who we need; they are failing this company,” Mr. Saba wrote in a post published in an engineering-managers-only group within the company’s internal social network.  

Meta Platforms, with headquarters in Menlo Park, Calif., has said it needs to get more done with fewer resources.

Photo:

David Paul Morris/Bloomberg News

A Meta spokesman,

Tracy Clayton,

said that any company that wants to have a lasting impact “must practice disciplined prioritization and work with a high level of intensity to reach goals.”

Sundar Pichai,

CEO of Google parent

Alphabet Inc.,

asked employees during a companywide meeting last week for ideas on how to improve focus and raised concerns that productivity hasn’t matched employment levels at the company.

Other bosses are urging workers to ease up on the spending.

Axon Enterprise Inc.,

AXON 0.88%

which sells Taser guns and body cameras to police departments, in July launched an internal campaign to “spend it like it’s yours,” CEO

Rick Smith

said, complete with the hashtag #likeitsyours. Business travel expenses had risen, Mr. Smith said, as teams planned off-site events or multiple people traveled to visit clients. Teams had gotten accustomed to ordering so many logoed T-shirts, hats and other items that executives decided to name a “swag czar” who now must approve such purchases.

“Sometimes we get to where we need swag detox,” Mr. Smith said. “Not every event needs a T-shirt.”

Meanwhile, Mr. Smith is urging managers to go on the offensive, hiring engineers away from tech companies that are contracting, for example, or thinking about how Axon can best position itself coming out of a downturn.

“Right now I smell opportunity,” he said. “Yes, winter’s coming. Now let’s embrace it.”

Google employees in Chicago were welcomed back to the office with breakfast in April.

Photo:

Scott Olson/Getty Images

CEOs navigated uncertainty at the onset of the Covid-19 pandemic, and many are adjusting again to get ahead of any economic downturn, said

Bill George,

former chairman and CEO of

Medtronic

MDT -0.31%

PLC, and the author of a forthcoming book on leadership. Focusing on performance isn’t harsh, he said. “Yes, performance matters more than ever,” he said.

Bosses can also take a harder line only so far, executives and coaches say, in an environment in which unemployment remains low and the most talented employees still have plenty of options. At the educational travel and experiences company WorldStrides, roughly 80% of employees are complying with a policy to return to the office three days a week, CEO

Bob Gogel

said. Managers are at times hesitant to strictly enforce the policy for those not complying.

“Because people say, ‘You enforce it, I’m going,’” Mr. Gogel said.

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Still, as the economic environment changes, some expect the return-to-office dynamic to shift, with bosses more empowered to compel people to come together in-person again. Office attendance in 10 major U.S. cities has risen slightly in recent weeks and was hovering near 45% as of late July, according to security provider Kastle Systems, which tracks badge swipes.

“Some organizations are kind of trying to take advantage of the macro fear environment and kind of scare people back into the office,” said

Rich Barton,

CEO of

Zillow Group Inc.,

Z 0.44%

which has embraced flexible work for its employees. “I’m not a big fan of that.”

Mr. Barton, who has also led companies such as

Expedia

through changing economic cycles, said he tries not to shift his message to employees when an economy is in transition. At Zillow, which last year laid off a quarter of its workforce, managers have been told to look for chances to hire employees from rivals, he said.

“Great leadership is as steady as possible,” Mr. Barton said. “It’s not very efficient to hit the accelerator and slam on the brakes all the time.”

The U.S. could be headed toward a recession, according to economists and latest GDP figures. But this recession might be different from past ones because of one main indicator: unemployment. WSJ’s Jon Hilsenrath explains.

Write to Chip Cutter at chip.cutter@wsj.com

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