...and hard decisions become inevitable, talk about it honestly to your employees.

When we work with clients from across the globe, we find that communicating difficult news in bad times is one of the challenges they dread the most. "I really don't know what to say", is what we hear most often. And, as a result, they focus on things like strategy and cost-cutting while retreating into their offices.

But we know that it is possible, even in the worst of times, to speak the truth and to be empathetic while showing resilience and hope, thereby carrying people with you. When the Towers fell on September 11, Rudy Guiliani's statements were heard around the world, "The number of casualties will be more than any of us can bear ultimately... Tomorrow New York is going to be here. And we're going to rebuild, and we're going to be stronger than we were before."

Threats to companies are coming from the outside in. It is particularly at this time that the leadership team in an organisation needs to communicate authentically, walk the talk and learn: in essence, lead from the inside out. In our experience, these principles are the key to employee engagement in a downturn.

We do as we say

Edgar Schein, as part of his breakthrough work on learning and culture, had  pointed out that people in organisations face survival anxiety and learning anxiety. Learning anxiety accounts for a good portion of resistance to change -- we choose not to learn because it means changing what we value, or risking failure or being judged. As he rather acidly pointed out, unfortunately, organisations choose to address this issue by increasing survival anxiety: either an employee learns to do things or he loses his job. According to Schein, learning thus happens under coercion, because survival anxiety overshadows the fear of learning (and of change).

In a downturn, survival anxiety does not have to be created. It is a given. That said, it is even more true that coercion is still not the best way to go, and that an exploitative approach of creating anxiety in people while stretching them on their work tasks can be counterproductive. In order to build employee engagement in these times, companies first need to communicate candidly and clearly about their current situations. If times are difficult and profits are plunging, say so. Convey specific actions that the company is taking to address these issues. Elicit employee suggestions and participation in finding solutions collaboratively. It is especially important to communicate that resilience is a choice: while we have not chosen the external circumstances, we can choose our response and step up to the plate.

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The way a company behaves in a crisis is remembered for a long time. Our work with our clients as well as documented evidence suggests that companies that communicate honestly and then try to make amends as best they could to employees whose lives and jobs were affected in downturns, are able to show greater employee engagement and loyalty over a longer period of time than companies that allow rumours to flourish, act without notice and leave employees adrift. The latter evoke employee ire, and, in some cases, have been banned from recruiting from some of the world's leading business schools for a few years.

In one case, one of our clients, a major multinational bank, communicated honestly with employees about painful layoffs, and empathised with them. They also acted consistently on what they had promised. Interestingly, as their CEO said a couple of years later, the company had conducted exit surveys with staff who had to leave as well as climate surveys with those who were retained, and both these surveys showed that regard and trust for the company was higher than ever before, despite the enormous pain people had faced. As he said, "My job is to tell it as it is but also to give hope. The entire leadership team tried to do that consistently, and I think we succeeded, despite misgivings."

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So do as we do

Apart from communicating regularly and acting consistently, the leadership team should also focus on creating an environment of psychological safety so that people can pick-up new skills without the fear of failing. Starker differentiation between high performers and the others becomes a necessity in challenging times, as companies focus on raising the "performance bar" to up the ante on productivity and results. However, we have also seen that such performance differentiation can create greater anxiety in people, which in turn can interfere with their ability to learn the skills that the company so badly needs. Times of hardship can also be times in which people can be motivated to give the best they have to offer. In order to counter performance anxiety, and to keep people engaged and enthusiastic, we recommend that not just individuals but entire teams are mentored and coached.

The basic premises of employee engagement do not change in difficult times: while employees want security, they also seek challenge and growth. One of our clients told us that in the best of times, they cannot wait for a manager to learn on the job. In these times, organisations need people to learn faster than ever. Boundaries between departments are collapsing and organisations continue to become flatter as roles get reevaluated and managers take on more work.

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Learning teams are a powerful way to address multiple needs, both for the organisation and the employees. For instance, we have seen that communities of practice are a very effective tool in uncertain times: people have willingly shared their anxieties when coping with new situations as well as actively learnt from each other. A term taken from the field of knowledge management, the concept essentially involves professionals meeting or interacting over work-related issues to share insights and to learn from as well as coach each other. Since communities of practice have people with varying backgrounds drawn together by a common interest in sharing knowledge, the hierarchies in the group are very loose. Since questions are asked authentically, and since everyone has something to learn as well as to teach, people do not worry overtly about perceptions and power plays. Some communities of practice in our client organisations span continents, where people interact via special sites designed to facilitate their interaction. These communities of practice also foster innovation which in turn helps companies tide over crises. 

The HR challenge

What is needed to make these learning teams work is people who are willing to act as connectors and facilitators. The HR function can have a huge impact here. In our client organisations, we have seen greatest successes when the HR function has willingly embraced this culture. We have examples of clients who have taken the lead to play this role: their contribution in terms of essential issues such as scheduling meetings, ensuring technological support, documenting reflection sessions so that everyone benefits from the teams' discussions and ensuring sustained group mentoring from top management have all served well to increase learning, reduce anxieties and to show exponential business results in the process.

In order to create positive, engaged employees, the leadership and the HR teams are the message, and they need to lead through doing: by enabling, learning and teaching.

Padmaja Alaganandan is leader, human capital, Mercer Consulting (India), and Anuradha Oza senior associate with Mercer's human capital division.

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