Greece: One Down, Still Many More to Go

A major debt burden is lifted this week, but Greece still has massive problems. How leaders there—and anywhere else—can manage major turnarounds.



Things haven’t been great for Greece. Its people have been subject to crushing cutbacks in civil services and a troubled economy for nearly a decade. And while this week brought good news—the country successfully completed an emergency bailout loan program—leaders there face the daunting task of reinvigorating the nation’s people and economy. “You have to win hearts and minds,” says Kirsta Anderson, the London-based global solutions leader for Korn Ferry’s Culture Transformation practice.

It may be hard to remember, but Greece’s financial woes, a toxic combination of government borrowing, and the 2008 financial crisis nearly sunk the euro currency. The rest of Europe agreed to bail the country out but only after making the country adopt a stringent austerity program. That meant huge cutbacks in pensions, government jobs, and other services.

The country now has the flexibility to borrow in the global capital markets, which is something it failed to do at the beginning of the crisis. However, unemployment remains elevated, the economy is 25% smaller than when the crisis started, and it is still massively indebted.

But what needs doing now isn’t more of the same. There are parallels with Greece’s situation when companies come out of turnaround situation and need to get back into growth mode, Anderson says. “A lot of banks went into cost control and cut back and then needed to get back to growth, but they had lost the muscles,” she says. In other words, the bosses need to do an about-face from implementing one strategy to doing something completely different. That presents a problem.

In the simplest terms, slashing costs can be enforced from the top down. When jobs are eliminated then the cost savings are often immediate. However, that isn’t the same thing as pushing for growth, which is what Greece will likely be focused on now. Worse still, making a company or an economy grow is difficult because it requires your team to be motivated. “You can’t make people be more customer-centric or innovative,” Anderson says.

It is often a challenge for managers to shift their mindsets from one type of modus operandi to another, experts say. Doing so requires a shift from concrete objectives into ambiguity. Managers go from knowing immediately whether something will work, in the case of cost-cutting, to trying things that may simply fail when developing new business.

In Greece’s case there is another impediment to growing the economy. One of the usual policy tools in the government toolkit isn’t available. “The whole question is how do you get growth when you can’t afford to borrow for fiscal stimulus.” says Philippe de Backer, Dubai-based senior client partner for Korn Ferry. In other words, the government is still heavily indebted and so it likely can’t spend its way to prosperity.


What the government does try, there must be a willingness to accept temporary failures, and that’s what gets you into the fail-fast learn-fast mentality, Anderson says. In turn, that mentality requires managers to be comfortable with not being the go-to expert with all the answers, but instead being able to coach staff to help them find the right answers

Changing that outlook requires a willingness to listen to feedback and to change behavior. Anderson describes a manager who tried to merge two companies together and inadvertently ended up alienating the workforce of both the acquiring company and the acquired. “Both sides felt aggrieved,” she says. But the man listened and changed how he interacted with employees. His problem was repairable because of his willingness to listen and adjust. “It’s another mindset shift,” she says.