Keeping people productive and hopeful in tough times isn't as complex -- or as costly -- as you might think
How a country copes with a brutal economy depends in no small part on how well its people maintain their confidence in their own personal financial future. Will consumers be confident enough to spend? Will investors be confident enough to buy? Will employers be confident enough to hire?
Managers might also need to consider ways to bolster employee optimism, particularly if their company is forced to lay off workers and cut pay. That's because, as Fred Luthans and other management scholars have found, confidence and hope tend to make workers more productive.
As economic conditions worsened during 2008, U.S. workers' confidence in their economic futures also declined, according to Gallup. In January 2008, 60% of employees felt that their standard of living was improving. By October, when the extent of the financial meltdown was becoming clear, that figure had dropped to 39%; in October and November 2008, employed Americans were more likely to say their standard of living was getting worse than to say it was getting better.
However, American workers' optimism partially recovered between November 2008 and May 2009 before stabilizing. Since last May, about half of employed Americans have consistently said that their standard of living is improving, while about one-third have said it is getting worse.
These trends have been remarkably consistent across different job categories, reflecting the breadth of the economic downturn. It's been called an "equal opportunity" recession in the sense that it affected the perceptions of all types of workers -- including service workers, manufacturing workers, managers, and professional workers.
However, Gallup data point to greater differences in optimism about financial progress among employees who have different perceptions of their work environment. Between January and April 2009, when Americans' optimism was recovering from its late-2008 lows, about 10,000 randomly sampled U.S. workers were asked to respond to the Q12 -- 12 specific workplace items that Gallup uses to gauge employee engagement. The results offer clues about the aspects of employees' experiences on the job that are most strongly related to confidence in their future living standards.
Personal development items matter most
Respondents were asked to rate their level of agreement with each item on a 5-point scale. Two of the 12 items stood out as most strongly related to confidence that their standard of living is improving: "There is someone at work who encourages my development" and "This last year, I have had opportunities at work to learn and grow." The relationships are seen among workers across job types and among those at all education and income levels.
There is someone at work who encourages my development. Among the group of employees who strongly agreed that someone at work encourages their development (by selecting a "5" on the 5-point scale), the proportion who said their standard of living was improving jumped from 46% in January 2009 to 60% in April 2009. Among the remaining employees, there was no increase -- in fact, they were slightly less likely to feel that their standard of living was improving in April than they were in January. In other words, the gains in economic confidence among U.S. employees between January and April of 2009 were predominantly accounted for by those who said someone at work encourages their development.
"When employees know someone is interested in their future, it seems to give them a sense of security that there is something beyond the immediate crisis," says Jim Harter, Gallup's chief scientist for workplace management and coauthor of 12: The Elements of Great Managing.
In any job category, managers can promote employees' sense that they are continually progressing.
Harter also notes that employees who are newer to a company and younger employees tend to more commonly say that someone at work encourages their development. However, the need to have a mentor is no less important to other employees -- in fact, the data gathered in early 2009 indicated that the "encourages my development" item was most strongly related to personal economic optimism among employees aged 35 to 49.
This last year, I have had opportunities at work to learn and grow. Employees' optimism about their standard of living also rises steadily with their level of agreement that they have opportunities at work to learn and grow. In fact, employees who strongly agreed in early 2009 that they have such opportunities were significantly more likely to feel their standard of living was getting better (50%) than to feel it was getting worse (33%).
Harter notes that the drive to progress, to work toward one's full potential, is a basic element of human nature that has been studied by experts in psychology, neuroscience, and management, among other disciplines. "The early evidence suggests this portion of the brain is crucial for employees continuing to pursue a long-term goal despite the inevitable setbacks," Harter and his coauthor, Rodd Wagner, write in 12. "Such a mastery over one's self and circumstances appears to be an important component of living a full life."
The "learn and grow" question was significantly related to employees' optimism about their standard of living in all job categories, but some more so than others. The connections were strongest for jobs that are most likely to be routine and to offer less room for creativity, including those in the construction and manufacturing sectors.
However, in any job category, managers can promote employees' sense that they are continually progressing. Harter recommends helping employees set specific "stretch goals" and establishing regularly scheduled meetings to chart their progress in reaching those goals. Such strategies address both items -- "encourages development" and "learn and grow" -- most strongly related to employees' perception that they are moving toward a better life for themselves.
Governments around the world spent massively in response to the current economic downturn. Countless resources were devoted to stimulus packages, industry bailouts, and other strategies, all with a simple goal: to shore up the confidence so crucial for economic momentum.
In the workplace, however, effective strategies for bolstering employees' confidence can be relatively simple and inexpensive. In an uncertain economy, when signs of financial progress are scarce, managers should pay particular attention to helping employees focus on other markers of personal development. When they do, they will establish processes that help employees think creatively about ways to continually expand their knowledge base and increase their productivity levels -- another crucial advantage for companies in tough economic times.