On Friday, Fortune released its annual ranking of the World’s Most Admired Companies, which this year poses an intriguing challenge for leaders: What do you do if your company is greatly admired yet has lost billions in value in this year’s stock market plunge? More broadly, what if your lauded organization is getting suddenly and inexplicably hammered by market forces beyond your control?
That’s the situation facing the leaders of virtually all the companies in our 50 All-Stars ranking. The top three companies, which give new meaning to the honorific term “triple-A,” have all taken huge hits: Apple (AAPL) is down $67 billion (11.5%) in value this year, Alphabet (GOOGL) down $50 billion (9.5%), Amazon (AMZN) down $80 billion (25.1%). (All figures are for the year through Feb. 11.) The biggest percentage loser is Charles Schwab (SCHW), down $14 billion (32.5%) in just those first six weeks of the year. In all, 44 of the 49 publicly traded firms (Publix Super Markets is private) have lost value.
When the world’s opinion of an organization’s future changes so sharply, how should a leader respond? The basic advice is simple: Show, don’t tell. You can insist that your company is just as strong as it was in December, but it’s all a big shrug. What else would you say? Effective leaders let their actions speak. The prime example of the past six weeks is JPMorgan Chase (JPM) CEO Jamie Dimon spending $25 million of his own money to buy company stock, which is down 20%. The stock bumped up slightly on the news, but more important is that employees, customers, suppliers, and other constituents got the message that Dimon is genuinely confident.
Sign up for Power Sheet, Fortune’s daily morning newsletter on leaders and leadership.
Another way to show confidence is to issue a boatload of stock options to employees who get that form of compensation. To them, it says, “We believe that today’s ridiculously low price is a bargain and that you’ll make a lot of money if you stick around for a few years until these options vest.” General Electric (GE) followed that strategy when it issued options at $9.57 a share near the market low of March 2009; recent price: $29.
Times like these can also bring an opportunity to make attractive acquisitions. It shows that you’re smarter than typical corporate acquirers, who tend to buy when stock prices are booming, not when they’re low, and it shows confidence in the future; you’re willing to make investments when many others are retrenching, fearful that the market’s expectations of bad times may be right. In the same vein, this can be an opportune moment to steal excellent employees from companies that are demonstrating fear rather than courage, since those employees may be losing confidence in their employer.
There can be a couple of exceptions to the “show, don’t tell” rule. One is when the leader describes concrete growth plans. A key leadership task is to give hope for the future, and specific plans do that far more effectively than vague assurances do. The other exception is when you can report outsiders’ opinions of your organization. That happens to be just what the World’s Most Admired Companies ranking is—the result of a poll of 4,000 executives, directors, and security analysts. So even for those 44 of the All-Star companies whose stocks have been pounded down, it’s a credible vote of confidence.