What if the Recession Endures?

There are small, perhaps illusory, signs that the economy is improving. Gallup's Consumer Mood Index had its most positive showing since mid-September 2008, continuing an upward trend that began the week of March 9, and Gallup's Monitor of Consumer Spending also inched higher. But there was no improvement in Gallup's Net New Hiring Index, which suggests that although consumers may be changing their spending behaviors, hiring managers are still being cautious about adding workers.

It could be a long time before the worldwide economy rebounds, and managers and their employees are likely to encounter significant difficulties until then. Some economists expect the U.S. gross domestic product to rebound by mid-2009, but the U.S. job market -- which has already shed more than 4 million jobs -- may not turn around until 2010 or 2011. That means managers must do more with less -- and with anxious employees -- for months or years to come.

Many people can cope with short-term trouble, but enduring over the long run takes a special kind of stamina. "Fear wears us out, and it undermines our health and wellbeing. When that happens, we're less able to hope," says Shane Lopez, a Gallup senior scientist in residence and a leading researcher of hope. "Managing this fear has to happen in a big way at the beginning of a crisis, and then it needs to be mini-managed every day. You can't be on high alert forever. You have to go back to kind of a normal way of protecting yourself and managing your life."

To quell short-term anxiety, managers should emphasize recognition, promote wellbeing, and keep their teams as stable and secure as possible. But for the long run, managers must reduce anxiety, focus attention, increase productivity, and keep workgroups functioning, and -- if at all possible -- safe from budget cuts. It's far easier to achieve those goals when employees are engaged.

Circumventing fear

Employee engagement is an emotional attachment between an employee and the workplace. More specifically, it's a psychological response to the fulfillment of certain needs. If handled deftly, engagement can circumvent workers' fear reactions. "When things go badly, people's 'fight-or flight' response is stimulated," says James K. Harter, Ph.D., Gallup's chief scientist of workplace management and wellbeing and coauthor of 12: The Elements of Great Managing. "In times of stress, it's natural for managers to push harder, to want more from employees. But to get more with less, managers need to bring clarity to the situation and engage them [employees]."

Unlike actively disengaged workers, who are profoundly disconnected from their workplace, engaged employees feel an intense emotional connection to their work or role. Engaged workers are confident that their opinions count, that their boss cares about them, that they have the equipment they need to do their jobs, and that they have a best friend at work.

The manager is the central figure in fulfilling these human needs -- and in times like these, that could feel like yet another heavy burden for a manager. On the other hand, engagement also provides an opportunity to make a positive difference in the workplace.

Managers can have a direct impact on the work environment, maybe more so in a bad economy, when stress is abundant.

"The good thing about engagement right now is that it's one of the few things employees and managers can influence," says Tom Rath, global practice leader and coauthor of Strengths Based Leadership. "We can't necessarily control pay or job cuts or workflow. Engagement is one of the only things that a manager can influence, and it's also one of the best ways to increase productivity and profitability."

Productivity and profitability can mean the difference between surviving and thriving -- or surviving at all -- in a bad economy, and that's a key value of engaged workers: They significantly outperform disengaged workers. Gallup research has found that organizations with more than four engaged employees for every one actively disengaged employee saw 2.6 times more growth in earnings per share than did organizations with a ratio of slightly less than one engaged worker for every one actively disengaged worker.

The research also revealed that top-quartile (in engagement) business units have 12% higher customer advocacy, 18% higher productivity, and 12% higher profitability than bottom-quartile business units. Bottom-quartile business units, in contrast, have 51% more inventory shrinkage, 31% to 51% more turnover, and 62% more accidents than business units in the top quartile. (See "Investors, Take Note: Engagement Boosts Earnings" in the "See Also" area on this page.)

All those performance differences depend on the manager's ability to engage his or her workers. "Managers can have a direct impact on the work environment, maybe more so in a bad economy, when stress is abundant," says Harter. "Great managers clarify expectations and get people what they need to do good work. They reinforce and leverage individual strengths for greater efficiency. The ones who can't do that may not make it through." To make it through, managers must focus unwaveringly on the 12 key elements that lead to employee engagement -- the items that Gallup measures with its Q¹² employee engagement survey. (See graphic "The 12 Elements of Great Managing.")

But as noted above, endurance takes stamina. To carry on through the next several months, managers will need to increase employee engagement by monitoring the 12 elements of engagement in their workgroups. They'll also need to help their staff members by communicating clearly, supporting them in dealing with change, and instilling hope. And instilling hope may matter most of all.

Communication

Workers can feel understood, cared for, and valued -- or not -- depending on how their managers communicate. And under current economic conditions, communication carries more significance and requires greater transparency. "The way that you communicate -- the value that you show for people -- goes a long, long way toward assuring them about the sincerity of your care and your compassion for people as human beings," says Barry Conchie, Gallup leadership expert and coauthor of Strengths Based Leadership.

Sincerity is always critical, but it's particularly important during challenging times because a lack of it will make employees feel less secure. Right now, employees may be hearing about their jobs or their company from many sources, including their managers, the company's leaders, the rumor mill, or the media. Of those sources, communication from managers is most important because they are closest to employees. If a manager seems to be sugarcoating, misleading, or -- in the worst case -- lying, employees can become unsure or frightened. That's a shortcut to disengagement.

There's nothing you can say that is as bad as what employees may be conjuring up in their own minds.

To engage workers, communication must be open, honest, and proactive. "There's nothing you can say that is as bad as what employees may be conjuring up in their own minds," says Lopez. "Lots of people are thinking, 'I'm losing my job,' so you're not going to surprise them by saying, 'Hey, some folks will lose their jobs.'" Telling people what you think they want to hear or refusing to discuss the obvious is condescending and confusing. It leads employees to distrust their manager just when they most need security.

If a manager who communicates poorly is bad, the rumor mill is even worse. If the manager isn't providing information, gossip will -- and that can be destructive. "The rumor mill is usually either wrong or exaggerated," says Denise McLain, Gallup principal, "and it's very hard to stop once it's started. Managers need to get there first with good information delivered clearly and consistently."

Change management

Fear of change when change is inevitable undermines engagement. It creates insecurity and mistrust, and workers must feel like their trust in their company is well placed if they are to be engaged. How a manager handles change will have a substantial effect on workplace engagement.

Most supervisors tend to manage change from the point of view of systems and processes, rather than from an emotional perspective. But change hits people hardest emotionally, and their emotional responses must be managed first and well. There are three emotional phases of change:

• resistance: employees say they won't change -- they like the security of the old way
• incorporating: workers start emotionally integrating change while processing their anxiety and fear
• adapting: employees commit to change, find advantages in it, and will teach others how to change

To move a team through the phases of change, managers must provide clear, constant communication about the changes workers face, why the changes are coming, and how the team will deal with them. Change is difficult, and few people are at their self-controlled best when the ground is shifting beneath their feet. Managers will almost certainly see increased stress among their team members. They should be sensitive to stress reactions and recognize that fear-induced outbursts don't define the person making them. Instead, they are a sign that the individual is moving toward incorporating change.

It's also helpful to make sure that the changes aren't unrelentingly bad. Managers can find bright spots amid the gloom by getting rid of the outdated policies and processes that build up during easier times. This can be a positive change for everyone. If a team is losing workers, for example, managers should try to lighten the load. But McLain suggests that managers should "make that kind of change only if you can do it swiftly. If you can get rid of unnecessary processes fast, do it. If deciding what to cut turns into a process itself, skip it. You're working for the greater good."

It's a good idea to ask employees what they think can be cut. This shows employees that their opinions count, which is important to engagement and speeds up the adapting phase. Furthermore, because employees are usually closer to the action, they may have better cost-saving ideas than management does. For example, Parrish Medical Center in Titusville, Florida, instituted a series of town hall meetings and used them to ask the entire staff for budget-cutting suggestions. The first one resulted in ideas that led to $3.6 million in cost reductions -- and the hospital's overall engagement level went up.

If managers ask for employee feedback, it's crucial that they use employees' suggestions or explain clearly why they can't. Managers shouldn't ask if they can't implement -- that will only make workers feel dismissed.

Hope

Hope is a key element for getting employees through tough economic times. Workers need hope that times will get better and that everything they've worked for will outlast the downturn. And in work teams, managers are the people who are best situated to instill hope.

You have to position changes in your company's circumstances in a way that clearly demonstrates optimism for the future.

Hope for better times isn't just a pleasant emotional experience. It's a critical element to performance. "Hope -- the ideas and energy we have for the future -- has been the subject of rigorous research for 20 years. We know what it is, how it works, and why it matters," says Lopez. "In good times and bad, hope makes us better. Hope gets us where we want to go."

Hope should be the basis of a manager's long-term strategy. Many workers are under a tremendous amount of pressure, and that's unlikely to change any time soon. But hope will help workers face what they must endure and give them confidence that these circumstances won't last forever and that today's problems will set their organizations up to meet a brighter future.

"You have to position changes in your company's circumstances in a way that clearly demonstrates optimism for the future," says Conchie. "Leaders have to balance communications that describe the hard medicine required for survival and success against a positive, compelling, and uplifting view of what the long-term future looks like."

A belief that their company cares about them, that their jobs are valuable, and that bad times aren't permanent provides a foundation for the stamina and engagement that employees and employers will need for the long haul. After all -- why bother if there's no hope?

"If you just succumb to fear or you don't align yourself with a future orientation, you'll be stuck, stuck, stuck," says Lopez. "Then when the markets open up and money starts to move again, you won't be ready for the new economy."