Like all other humans, employees have different needs at different moments. Leadership during good times and bad are uniquely different and require different skills. What leaders do for employees when the economy and industry are good is not what they do when times aren’t so great.
It boils down to the fact that employees respond to fears and opportunities, and those change with personal, industry and economic cycles. You must have enough heart to know and feel for the psychological condition of employees, so they remain content, feel safe, and stay with your company. This is good business because not only is employee turn-over expensive, but a loyal and stable set of employees provides you with competitive advantages.
What to do and when
What do leaders need to understand about employee psychology during the distinctly different phases of economic and industry cycles? What should leaders do, and not do, to manage employee stress? Here are my top tips after 37 years as the longest serving CEO in Silicon Valley and the one with the lowest employee turnover rate in his industry.
During good times, the up-cycles, your challenge is employee retention. When the economy is growing, so are competitor payrolls. Other companies start soliciting your team.
- Be sure your compensation package is competitive: Most people leave a company because they don’t get along with their boss. Other employees, if just moderately happy with their supervisor, can be swayed by a fatter paycheck or better benefits. Remain up to date with current compensation rates.
- Visit the various groups often: Invisible bosses are not leaders and are not trusted. Be visible and praise employees often and authentically. A little lift keeps people motivated.
- Reinsure about the future: Make sure all employees know that the company is doing well and benefiting in the good times. This lets them know the boat is not leaking. Interestingly, employees can tell if the company is doing well by the amount of equipment and system upgrades. If times are good and you need to eventually make those investments, anyway, don’t hesitate.
As you can see, during economic upswings, optimism is the general tone in employees’ minds. When the economy goes south, fear and pessimism are the psychology issues with which they contend. They are afraid of cutbacks in terms of layoffs, salary and benefit reductions.
- Be fair and communicate clearly: The unknown is the most fearful thing there is. So even if you don’t make cutbacks, communicate often and clearly about the situation. And if cutbacks are necessary, make sure they are extremely fair and well communicated.
- Visit the various groups often: Yes, this was repeated from above, but the underlying reason is different. You are now reassuring your teams that you are involved and that the ship is afloat. A “leader” who vanishes during tough times sends a message of sinking ships. In darker days employees need to feel and know that you care and are working hard for them.
- Roll them with the punches: Bad times never last forever. This must be well communicated. Let employees know that, as a team, everyone will weather the storm.
- Maintain morale: One reason the military pays so much attention to troop morale is that soldiers have really hard and scary jobs. Morale is critical. When the bombshells of economic hard times come, employee morale is depressed. During bad times, employees get discouraged and tend to be much less productive. For the company, this is the worst problem to address.
- Cheer ‘em up and on: Being a good cheerleader is your main role at all times, but especially in the down cycles. Even if a leader is having difficulty keeping their spirits up, they must not let it show. Positive leadership begins with your own positive, optimistic attitude.
- Be the example: Work a little harder and longer to show employees you are in it all the way.
Remember that when times change, so do employee needs. As a leader, you need to always be attentive to their needs. Your ability to adapt to their changes helps them to help your company adapt as well.