If you look at the United States, the total number of mass layoff events was more than 23,000 in 2008, involving nearly 2.4 million individuals. In the United Kingdom, unemployment levels rose by 530,000 people over the three quarters beginning in July 2008. Some of the world's leading companies are trimming their workforces due to the economic pressures of what we are now told by our elected leaders is a "deep" recession.
Indeed, a great number of companies are facing this challenge, but those with effective leadership are faring much better. So how can leaders stabilize the workforce to ensure that the inherent uncertainty in today's environment and associated redundancies at their own companies aren't divisive and disrupt business as usual? Businesses need to understand what it is that employees look for from their leaders, whether that be the senior team or the line manager.
Leaders must clearly articulate the strategy for the company -- not for the analysts, but for the employees.
Between 2005 and 2008, as part of a comprehensive study about why people follow leaders, Gallup collected information from more than 10,000 national adults (aged 18 and over) to obtain their opinions about leadership and why they follow. This research formed part of our larger study on leadership, including more than 20,000 in-depth interviews with leaders, behavioral research data from more than 1 million work teams, and polling results from 50 years of research.
In our follower study, respondents were asked to name the leader who has the most positive influence in their daily life. The word positive was included to ensure that we were not studying leaders who have a predominantly negative influence. Then they were asked to list three words that best describe what that leader contributes to their life.
We thought we might come up with quite a long list of descriptors that would require further investigation. The Oxford English Dictionary (Second Edition) lists around 615,000 word forms, and most experts agree that most of us use fewer than 75,000 of them on average, depending on the methodology of the estimate. In any case, I suppose you could say there is quite a bit of choice. It was therefore quite revealing to learn that with no prompting, the answers distinctly fell into four areas: stability, trust, hope, and compassion.
Every leader, including those elected or appointed, should take note of what effective leadership entails. If we take these attributes as our blueprint, there are several key things that need to be done to manage the uncertainty resulting from the current environment and to ensure that employers are set up for success.
The first is to overcommunicate. Leadership has to be absolutely clear and completely honest in its communication with the workforce. While this holds true even generally, it is clearly even more important in times of huge uncertainty. Clear and honest communication will have an impact on trust in the leadership, and trust directly affects a wider measure of sentiment, engagement. Gallup workplace research has found that when employees trust the company's leaders, there is a greater than one in two chance that they'll be engaged. When they don't, that figure drops to 1 in 12.
The second step is to clearly articulate the strategy for the company -- not for the analysts, but for the employees. Especially when announcing redundancies, many companies make the mistake of focusing only on making the job cuts and ensuring that the legal and regulatory boxes have been checked when, instead, leaders need to ensure that everyone understands why the company has to make job cuts.
Within that communication, it is also critical to communicate the future state of the company and the role of each employee within that construct. This is critical for employees to retain or regain a sense of stability and hope. Also, leaders need to show compassion; they need to be believable. Leaders should be aware that almost 7 out of 10 employees who strongly agree that their company's leadership makes them "feel enthusiastic about the future" will be engaged, compared to just 1 in 100 who disagree with this statement.
Finally, the entire management team has to be aligned. They have to get buy-in from the people managers in the business to ensure that the employees understand the vision for the future and the necessary tactical steps to achieve that vision, even if it includes the need for job cuts. Everyone from the CEO to the line manager has to align around the messaging. Uncertainty among employees is the greatest enemy. Employees need to feel confident, secure, and reassured. As a result, if managers aren't able to directly address their team's concerns and are uncertain about the future as well, this will negate any action from the leadership team. Employees who have high confidence in their company's financial future are nine times as likely to be engaged in their jobs compared to those who have lower confidence about their organization's financial future.
Many of the steps above sound like the sort of things you should be doing anyway. They are. But the difference is that during a recession, the challenge is that much more acute, and the stakes are that much higher.
This article is adapted from one originally published May 9, 2009 in theHRDirector. Reprinted with permission.