Recession- A real Time reprieve leveraging on EI

 

Recession- A real time reprieve leveraging on EI

 “It's a recession when your neighbor loses his job; it's a depression when you lose yours.”
Harry S. Truman

It is quite mandatory to begin any meaningful and productive discussion with quotes!

Recession is the current “Buzz” word that has quite effectively (unlike the Bond Martini) ‘shaken and stirred’ and continues to shape the current road map of Global economy in 2008! The exact dictionary definition of Recession is:”a period of reduced or declining economic activity.”

The other terms and aspects synonymous with it are economic meltdown; stock market crash, downsizing and cost cutting.

The topical question is: How to weather this storm; which has acquired delusional dimensions?

Specifically; to ensure, that this phase is a period of sustainable growth and consistently productive activity for sowing the seeds of future prosperity.

 

At this juncture, it is relevant to articulate the premise, that every developing economy as also the developed ones; all require to fortify and create a bulwark to forge ahead undeterred in the wake of Recession. Brit Hume observes pithily the inherently paradoxical nature of this conundrum:

“Nobody's profitable at this moment, because recession is on; advertising dollars are down, and expenses are way up. So that kind of belies the situation that you would expect, because the ratings are way up everywhere”.

The other meaning of recession is a ceding a return of former possession. So is this a classic case of History repeating itself? Or is this heralding a new phase; of rewriting the chapter and verse of the Economic Bible? Be that as it may; some of the cold facts:

The news flash from the home ground; that the Tsunami of recession had well and truly engulfed the Corporate Giants, was splashed across headlines in mid October’08:

Turmoil in Indian Aviation - Jet Airways sacks 1,000 employees

The onset of the ‘winter of our discontent’ was equally dismal: what had begun to wither in the autumn; reached its dénouement in early December 2008:

Reliance to downsize staff in jet fuel division

To sum it up; ostensibly, it is logical and prudent to proceed with ‘rightsizing’ or downsizing’.

The reasons for downsizing are usually good ones–the company is losing money, the stock value is way down, market share is dropping.  Of course, it’s brutal for the people who get let go, but it’s supposed to make the company leaner and better able to survive.

 

 ‘Downsizing’ owes it origin to the Automobile Industry:  To design and manufacture a smaller version of a popular product-(esp. a car).

Continuing with the saga of Economic meltdown; here is another fact file.

 

According to the Bureau of Labor Statistics in the US, over the past year, the number of unemployed people has increased by 1.6 million, and the unemployment rate has risen by a full percentage point. When employees hear horror stories from their families and friends, or see accounts of despair on the news they wonder if our company might be the next!

 

The level of stress is high; whether one’s business is just surviving day by day, or thriving in the current economy, one may not escape the fear that dampens employee morale and saps productivity.

Huge EI requirement in such times is to manage employee exits and to maintain staff morale for those that are left behind. Transparency and sensitivity is the key!

The worst hit at this point of time; have been those who are the common, regular, white collar Job holders. The impact of the down side and fall out of this recession has not been the economic crunch, as it has been the panic and the momentum of ‘Fear Psychosis’; the trauma that become pronounced ! The recent studies illustrate this aptly:

  I.          A recent Gallup Poll surveying over a thousand adults found that 40% feel afraid, and 53% are angry. More than half said their financial situation was harmed; two-thirds said it will suffer long-term. And this was before the global economic meltdown.

II.          The American Psychological Association found that more than half of Americans report irritability or anger, fatigue and sleeplessness, almost half say they self-medicate by overeating or indulging in unhealthy foods, and two-thirds of smokers report they smoke even more. Over 80% of those surveyed reported that money and the economy were their most important stressors, and 46% report being worried about providing for their family's basic needs.

 Fear and stress can become self-perpetuating and self-fulfilling. In 1929, for example, many people became afraid that banks didn't have enough money, which caused so many people to withdraw their savings that banks ran out of money.

There is much to be said about economic bail outs; as have been taking place in the US. The     Emergency Economic Stabilization Act of 2008, commonly referred to as a bailout of the U.S. financial system, is a law authorizing the United States Secretary of the Treasury to spend up to US$700 billion to purchase distressed assets, especially mortgage-backed securities, and make capital injections into banks.

This might be akin to the manna from the maker, however, the present reality belies the grandiose gesture;” I fear the Greeks when they bear Gifts…”is more apt!

In this phase of turmoil and turbulence, the strategy to emulate is what the Chinese General Sun Tzu outlined 5000 years ago in his treatise “The Art of War”:

“If you know the enemy and know yourself, you need not fear the result of hundred battles.  If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.”

The touchstone of a sustainable economic Growth is not confined to mere number crunching and innumerable bail outs. It lies in strengthening the bedrock of people centric vision and correspondingly leveraging on the collective emotional fortitude and mettle for achieving success. ‘The finest of steel comes from the hottest of Fire’.

The trillion dollar question: What can organizational leaders do in such times of turmoil?

During difficult times, organizational leaders are pushed to their limits. They must be in tune with their employees, their hopes, their concerns and their fears. Interpersonal skills help employees better empathize with their fellow employees, and help them overcome their fears.

Leaders have to react to changing market conditions, which requires employees to be adaptable without panicking. All of this amounts to a great deal of stress for leaders, employees and customers. Individuals must be tolerant of stress and able to control their impulses during high stress situations. The turnaround fortunately is feasible and viable. It can be fostered by examining; reviewing, analyzing and strategizing; of our available resources and options.

 The way to create a breakthrough in this critical phase is to leverage on ‘the Core Competency’. That, which yields the highest return for all, is “Emotional Intelligence.” It is the ability to recognize and manage one’s emotions, while recognizing and effectively responding to the emotions of others.

 Kenny Moore expresses it beautifully; “Working with people is not a mechanical relationship.  It’s a sacred one.” 

The Organizational Leaders need to review their strategic planning and skillfully weave the following measures in their daily and direct dealing to ensure the employees overcome and circumvent anxiety, stress, panic and emotional breakdowns during the recession. 

A leader in any organization is sought for people look up to her for visual clues. The presence and confidence of a leader is the key to restore and reinforce the employee’s faith.

Regular, open and consistent communication through the channel of newsletters, bulletin boards, e-mails and face-to-face meetings ensures employee feedback about their concerns.

Demonstration  to the employees that their leaders care about them and their best interests; followed by actions which reflect leaders are willing to invest in their future and the company’s future.

Provision of a robust employee assistance program across the organization and follow up by the encouragement of its use.

Creating an Organizational culture that values all employees equally.

Times of high anxiety often bring out the worst in people. This is not only true for those characteristics we can see, such as race, gender and age, but also those characteristics we cannot see, such as personality and learning style. Ensure that an appreciation for diversity is not only a policy, but also a recognized practice in your organization.

While there is no exact formula to overcome the challenges of a recession, emotional intelligence offers a real opportunity for the leaders to keep employees happy and productive. The key is recognizing what the employees are feeling and then demonstrating the ability to help, not just because as leaders one might want them to do a good job, but because as leaders one cares about them.

As Tom Friedman recently wrote, "And therein lies the central truth of globalization today: We're all connected and nobody is in charge."

Considering the promise of emotional intelligence during difficult times, one can imagine how effective the employees will be if the top management and leaders help the employees to develop and use these skills during good times as well. 

 As hope springs eternal; it is a natural corollary,  that Recession will recede to give way to Economic stability and Sustainable Growth.

To sum it up in the words of Bo Bennett:

“As sure as the spring will follow the winter, prosperity and economic growth will follow recession.”