To transform a troubled company, Keith McFarland urges managers to quickly communicate a plan, help employees turn paralyzing anxiety into action, and maintain a sense of humor
I've just spent the past several years studying the dynamics of resilience as it relates to business—why some people and organizations emerge from adversity even stronger—while others simply crumble under the pressure. In my last column, I touched on the three ways companies often perform when times get tough. When they hit a downdraft like the 2008 recession, some react like glass Christmas ornaments—they shatter on impact. Others emerge from a recession badly bruised, like oranges. Resilient companies bounce back like rubber balls—and are often stronger than before.
What determines a company's bounce—its resilience in times of adversity? Last month I pointed out that a leader's attitude going into adversity is crucial. Effective leaders "embrace the bounce"—they understand that difficult times present an opportunity for a company to focus its vision and learn about itself and its customers.
A second factor is the leadership team's ability to effectively manage anxiety. When the market tanked last year many employees were faced with a trifecta of challenges that caused anxiety to red-line—401(k) balances shrunk, mortgages went under water, and the prospect of job loss became a real concern. Recent university-based research studies suggest that when people's anxiety goes up due to challenges they face, they often lose the very capability they need most: the ability to think clearly, prioritize what needs to be done, and most important, to think outside the box.
Leaders Must Absorb Anxiety
When a nationally recognized technology company where I served as chairman of the board suddenly lost its biggest client, I saw up close and personal this tendency of people to shut down during a crisis. When I stepped into the CEO role, the business was spinning, jumping from one half-measure to another in the face of what turned out to be a full-blown crisis. People were under such stress that they weren't thinking clearly—and I realized the first task of the new leadership team was to reduce the level of anxiety in the firm.
MIT's Ed Schein suggests that in times of great difficulty, one of the most important roles of the leadership team is to absorb anxiety. This is an important insight, since senior executives are humans, too, and if they are not careful they can unwittingly find themselves creating anxiety rather than absorbing it.
What can leaders do to reduce anxiety in an organization during tough times? First, they can communicate quickly, frequently, and honestly about the nature and scope of the challenges the organization faces. Nothing creates more anxiety in a firm than the belief that the management team doesn't understand the seriousness of a challenge. If the challenge is serious enough to require a significant reduction in costs, they should move swiftly to make the necessary cuts, and do so in a way that both signals a commitment to protect the most valuable capabilities of the firm and a commitment to any workers losing their jobs or losing hours. Finally, managers need to lead a confident assault on the company's most serious problems in a way that allows the people in the firm to be part of the solution.
Two Kinds of Anxiety
Schein also suggests that there are really two types of company anxiety: Anxiety I is "the fear of what might happen to us," and Anxiety II is "the fear of what might happen to us if we don't change." Anxiety I is the enemy of performance under pressure; it almost always results in decreased productivity. Anxiety II, on the other hand, can actually increase productivity by prompting people to recognize and acknowledge the need for change. As leaders, our job is to convert Anxiety I into Anxiety II by getting people in the organization involved in how the organization needs to adapt.
Perhaps the most important tool in a leader's anxiety-management tool box is an abiding sense of humor. A well-timed zinger can encourage people to keep challenges in perspective and can signal in an important way that "we're all in this together." During the 1989 Super Bowl game between the San Francisco 49ers and the Cincinnati Bengals, the 49ers were trailing 16-13 and pinned deep in their own territory on the 8-yard line. Returning to the huddle, 49er quarterback Joe Montana drew a deep breath and poked his head out of the huddle to look into the stands.
Turning to tackle Harris Barton, he shouted over the roar of the crowd, "Hey look, isn't that John Candy?" The team erupted in laughter. Many 49er players who were on the field say that this was the precise moment when they knew the team would win. Montana then led the 49ers on a 92-yard drive, throwing the winning touchdown with 34 seconds left. As much as any player in recent history, he was able, even at times of great pressure, to keep things in perspective—and to say the right thing at the right time to help his teammates do the same. (In case you doubt this, remember that Montana had a total of 31 comeback wins in his career.)