pdf_buttonThe economic climate is changing fast and few of us are prepared for a recession. Let’s face it, everyone under 40 hasn’t experienced a recession in the workplace. Similarly, most people over 40, who went through the 1991-92 recession, have potentially forgotten what it was like.

And yet, recessions require a different approach to leadership and to managing performance. Why? Because a recession has three different dimensions:

  • It is a crisis of confidence, leading to reduced spending and increased saving.
  • It is a crisis of employment, as businesses retrench based on expectations of future revenue.
  • It is a literal belt-tightening, as businesses reduce all ‘non-essential’ expenses.

The combined effect is that anxiety in the workplace inevitably rises, because eventually people catch on to the fact that there is no limit to how deep staff and expense cuts can go.

What is new this time around is that many private households are overextended in terms of their savings-to-debt ratio, so individuals have little capacity to survive even short periods of unemployment. This adds to the stress individuals will be experiencing. High levels of stress and anxiety have a drastic impact on performance at work – productivity declines as people worry excessively and spend more time reassuring each other and sharing their fears.

By this point it should be self-evident that such a climate requires a different style of leadership. It places a much higher demand on the emotional competencies of the leader, should you wish to counteract these forces and maintain the performance of your team. At the same time, as a leader, there will also be an added pressure on you to be more nimble, more flexible and more innovative. So you and your team are been asked do the same (or more) with less and come up with great ideas on how to keep the business profitable.

Well, here’s the rub. When under pressure or highly stressed our creativity goes into sharp decline and we revert back to doing what we do best. Innovation requires courage and sticking your head out; and is often the last thing on peoples’ mind who are trying to avoid being a target for the next round of lay-offs.

Enough doom and gloom, what should you do about it? Or is there nothing you can do? We believe there is and it requires two key competencies: flexibility and resilience. Fortunately, these can be learned.

Flexibility comes mainly into play with regards to your leadership style. Our experience, over the last 8 years, has been that the vast majority of leaders avoid difficult conversations. They either ignored the underlying issue or threw money at it to make it go away. The difference in coming months will be that the latter will no longer be an option and the former will lead to a sharp reduction in productivity as outlined above.

So as a leader, you will need to be prepared to have robust conversations, acknowledge that feelings of fear, anxiety and anger are legitimate; and use language that oscillates between reassurance and acknowledging the uncertainty whilst, at the same time, holding people accountable to stay productive. You will also have to create periods of relative calm to enable creativity and innovation. That’s no small ask and many leaders will probably require coaching to adapt quickly to these changing circumstances.

The second part of the equation is resilience. Resilience is a bit more complex and encompasses a number of competencies, including emotional awareness, perseverance, optimism, support, perspective and a sense of humour.

When faced with adversity, typically people will react by buttoning down the hatches and going into their shell to wait for the storm to pass. Once it becomes clear that the storm is not going to pass quickly, there are two main responses – develop resilience to deal with ongoing adversity or permanently withdraw. As we are very adaptable creatures, most of us will go down the resilience path.

For business leaders the challenge is to minimise the time it takes for staff to come back out of their shell and to guide the team along the resilience path. This means of course that the leader himself/herself must be resilient in the first place! The key to becoming emotionally resilient is to have a high level of emotional awareness, to know what you are feeling in the moment and to be able to regulate these emotions if need be. Learning emotional awareness takes a bit of time with some coaching, but the benefits in being able to regulate your emotions are enormous.

Beyond that, you need to be an optimist and have a sense of perspective and a sense of humour. Perspective is easy to attain, there is always someone worse off than you are. We have used this ‘learning by contrast’ approach for many years to help individuals develop empathy and perspective by having them mentor long-term unemployed people. Optimism comes back to your childhood programming and it takes some effort to overwrite long established neural pathways. Learning the art of reframing is a key element in changing your outlook on life and situations at work.

Finally, humour is the great healing force when people support each other in the face of adversity. As always, people look to their leader first for guidance. So if you can keep your humour free of cynicism and give people a light-hearted outlet for the stress and anxiety they are experiencing, you are going to make your job that much easier.

We are all in for an interesting journey over the next months or even years. The skill set that makes a great leader is not going to change; it remains firmly in the realm of emotional competencies. If you or your leaders have been able to get away with a narrow range of competencies over the last decade or so, then now is the time to lay the foundation for the coming change and develop the competencies we have outlined.