BY BRIAN FORMATO

Most struggling organizations try to figure out how to turn their fortunes around. They look at various metrics and investigate cutting costs, increasing production, expanding their offerings, and a whole host of other options. Team building, though, rarely tops their lists, with many HR managers thinking of it as an investment to consider only when their organizations’ financial results improve.

But what’s the thinking behind that position? If a business isn’t performing well and goes into cost-cutting mode, then what is it doing to improve performance? Budget cuts and poor performance cause employees to disengage, which usually only worsens the company’s predicament. Improving performance is key to improving an organization as a whole—and that starts with motivating employees to work together as an effective team.

A tough business climate is something all companies face at one time or another. An organization’s long-term survival depends on its leadership’s ability to handle both the good times and the tough times. In all situations, leaders must consider not only the intent of their actions but also their impact. In the case of cost-cutting initiatives, those policies may be implemented with the intention of improving the bottom line, but their impact on a company’s culture and morale can be disastrous.

With profits down and a need to please stakeholders and shareholders, what should leadership do to improve performance? Cutting costs, cutting programs, and cutting head count are all defensive tactics that have residual negative impacts on morale and can cause an even more rapid downward spiral. As the old saying goes, “If all you play is defense, the best result you can hope for is a tie at zero.” To improve performance, companies need to go on the offense by being proactive—and that means investing in their teams.

In fact, the best time to work on a team is when things are not going well. For example, the sports team practice of calling a timeout in order to figure out how to deal with a challenging situation may offer a good model for companies to follow. Calling a “team timeout” to evaluate the situation and come up with a plan for team building to strengthen the team and its actions is an opportunity for a company to recharge and get back on the winning track. A team timeout is a small investment in terms of time and money that can pay huge dividends when a turnaround is required and can serve as a catalyst for improved performance.

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Brian Formato is the CEO of Groove Management, a human-capital consulting firm focused on helping individuals and organizations maximize their strengths in order to achieve superior perfor mance. He is also the founder of LeaderSurf, an experiential leadership-development program that combines leadership development, humanitarian aid, and surfing lessons. He can be reached at bformato@ groovemanagement.com.