Leadership in a Downturn: A Question of Style?

A tough economic climate can take the wind out of the sails of both your employees and your leaders. What should the leader do to keep the ship striving in the sea?

During economic downturns, people tend to focus on things they can't control and stop taking positive actions. Managers often feel insecure about dealing with their teams as they do not know what should be communicated and how. What do we know about "best-in-class leaders"? How do they manage the downturn? Effective crisis leaders create an engaging work climate despite the economic bad news and the fear it can generate. The power of a positive work climate and the extra effort it encourages is enormous. Research, conducted in more than 50 countries all over the world including Russia, shows that employees working in engaging climates outperform their peers in a less robust environment by as much as 30 percent.

In this article we share some findings on what best leaders do to create such a climate that keeps people energized thus helping to win in crisis.

The best leaders create energizing, engaging work climates by using the full range of leadership styles provide clear direction in the face of uncertainty, reassuring their people when necessary, all the while continuing to push for results. They create clarity and buy-in, while keeping people focused on the work at hand. Good leaders do this by being authoritative -- creating the vision, providing the context and gaining commitment, explaining what is important and why.

Occasionally during times of real crisis leaders become coercive, directing people to specific actions and warning of the consequences if they are not followed in a timely fashion. Such direct leadership can become overbearing or downright boring if overused, but it has saved a few floundering businesses. When required, effective leaders reach out to others for help and expertise, taking a more democratic approach. But they do so only after they have established the parameters. Once the playing field and the rules of the game have been laid out, a team can develop an innovative approach through active participation. Good leaders are supportive. In times like these, affiliative leadership can also be important. People are scared. They're worried about their jobs and their ability to pay bills and their self-esteem is often under attack. They need reassurance. Even when good leaders are too busy dealing with the crisis at hand, they take a few minutes to coach listen, to help, to provide a bit of feedback and to impart a bit of wisdom. Such coaching moments can be brief but profound. Effective downturn leaders become more visible, using elements of the pacesetting style. By putting your shoulder to the wheel and leading by example, they demonstrate that they are there with employees – and for – them. However beware, that leader's role is to lead, not micromanage or disempower employees -- pacesetting style should be used sparingly.

Don't rely on one style

Combining these styles fosters a better work climate. It gives employees goals to focus on and room to innovate, while also encouraging them to work collaboratively. This is important because employees that are engaged by the right kind of leadership will go the extra mile. What leaders have to watch for is overusing any particular style. Be particularly sensitive to the style you use most often.

Avoid bad habits

During a downturn it's easy to fall into bad habits. Perhaps the biggest risk is adopting a command and control approach and become coercive. At its worst, this involves micromanaging employees. Also, if you're always jumping in and doing the work yourself – pacesetting – you miss the strategic piece. Used in isolation both of these styles can adversely affect the overall work climate within an organization and frustrate people's natural motives.

Communicate, communicate, communicate

Successful leaders get people looking at what they can do, so that they feel empowered and energized to help the company through the downturn. These leaders make decisions quickly and then communicate them effectively to staff so people have an area to focus on moving forward. Rather than simply cutting down on meetings to save travel costs, these leaders look for other, cost effective ways to keep people connected so they are encouraged to collaborate and innovate.

Untapped energy

When leaders use a mixture of styles they are able to maintain a focus on high standards and improvement and provide crucial feedback. They also create team commitment that is often in short supply during tough times. It is this set of elements that together create an engaging, empowering work climate. In many cases it may be enough to offset the cuts companies have had to make elsewhere, so it's plain to see that improving leadership styles really can offer extraordinary value to an organization.