Being a Good Boss During a Down Economy

My last post, called Happiness is Making the Best of It, is about how uncertainty is really more of a mental factor than things like the poor economy. Why is this? Because once you come to terms with bad situations you make the best of it. When you don’t know what the bad situation fully is, you can’t begin to deal with it. This leaves the person in an ongoing state of anxiety.

I got my latest Harvard Business Review magazine in the mail the other day and it is mainly about trust. This is right up my ally. One article in it is called How to be a Good Boss in a Bad Economy by Robert I. Sutton. He highlights four areas for bosses to be aware of:

  1. Predictability
  2. Understanding
  3. Control
  4. Compassion

Predictability and Understanding really jumped out at me because it talks about uncertainty:

If predictability is about what will happen and when,
understanding is about why and how. The chief advice here is to
accompany any major change with an explanation of what makes it
necessary and what effect it will have—in as much detail as possible.
This advice, too, is rooted in psychological research: Human beings
consistently react negatively to unexplained events. The effect is so
strong that it is better to give an explanation they dislike than no
explanation at all, provided the
explanation is credible.

The days of hiring someone for life are long gone, so everyone understands that layoffs are going to happen. What people need is to understand why they happened and when they are over. This allows the employees to drop their level of anxiety and get back to work. Here is an example of a good strategy cited in the article:

Seligman observed that when a stressful event can be predicted, the
absence of a stressful event can also be predicted. Thus a person knows
when he or she need not maintain a state of vigilance or anxiety.
Seligman cites the function of air-raid sirens during the bombing of
London in World War II. They were so reliable a signal that people felt
free to go about their business when the sirens were silent. The
hypothesis was bolstered by studies in which some animals and not others
were given a warning in advance of a shock. Those that were never warned
lived in a constant state of anxiety.

The same holds true for organizational shocks like layoffs. If
you give people as much information as you can about what will happen
(to them as individuals, to their work groups, and to the organization
as a whole) and when it will happen, they will prepare to the extent
they can and suffer less. Just as important, they can learn to relax in
the absence of such a warning. This was the thinking behind one CEO’s
decision to issue a heads-up memo to the staff of his nonprofit
organization. In it he laid out in detail the worst-case scenario that
would result if the stock market and donations failed to rebound over a
certain time period. But while preparing people for a future that might
well involve job losses, he also made a firm commitment: No one would be
asked to leave for at least three months. At another company I know,
managers opted for a deeper staff cut than was immediately necessary,
because they were determined not to inflict a second one right away and
thus create a distracting fear of still more to come. They followed that
cut with the message that although more might be needed in the future,
none would be made for at least six months.

Here is a video of Robert Sutton talking about these situations:


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