The Ultimate Guide to Being a Great Boss in Bad Times

This was first published on 8 Jun 2016 on the EngageRocket Blog.

I published an Op-Ed in the Business Times on this recently (27 Apr 2016, for those that keep these things lying around at home), and more have written on this since then.

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There isn’t much each individual leader or manager can do about the overall economic conditions. But there are things they can do to protect their companies, their employees, and themselves. In the best of times, studies have found that successfully engaged teams were up to 22% more productive, had 25% less voluntary turnover, and were 21% more profitable than disengaged teams.

When the economic environment is uncertain, even without the possibility of retrenchment there are significant psychological stressors on staff. In a study done on 10,000 ‘followers’, staff who reported to leaders, there were four basic needs identified: Trust, Hope, Compassion and Stability.

Each individual manager has a disproportionate impact on their staff’s needs along these four dimensions. When taken together as a company, fulfilling these needs and creating engagement has significant bearing on financial performance. Studying companies in economic turmoil, Harter et al found that highly engaged organisations saw 2.6 times more growth in earnings per share (EPS) than average organisations. Also, the EPS of the most engaged companies outpaced that of the least engaged companies by 18%.

So - your team is looking at you, superboss, to help them navigate the treacherous economic waters ahead. What should you do?

1. Build Trust

“Build trust” is one of those generic suggestions thrown out by ‘management gurus’ on leadership. It’s almost as if there are leaders walking around out there who deliberately choose to generate mistrust as their management strategy.

(There aren’t. With possibly a few exceptions...)

Still, here I am trotting this out as the number 1 step to managing in bad times. At the risk of stating the obvious, the research is compelling in showing that open communication and trust builds engagement, particularly through stressful changes.

Gallup shows that nearly eight in 10 employees (77%) are engaged when workers strongly agree there is open communication, opportunities to provide input, a clear connection between current changes and the company's future, and management support for changes that affect their workgroup. When employees strongly disagree, a mere 1% are engaged.

Great, you’re thinking. So how do I do it?

Do this to create a culture of open communication

Institute a transparent workplace

Not literally glass doors and open offices. But consciously deciding to err on the side of openness when it comes to communication.

Peter Capelli, Director of the Centre for Human Resources at the Wharton School, makes the case that the first thing that needs to be done in a recession is to address perceptions about the downturn.

Michael Wolfe of Point Nine Capital adds to this, saying that company leaders should share as much information with their teams as they can: meeting notes, customer feedback scores, key financial data, targets, and new hires.

When in doubt, over-communicate. The people you want to hire and retain through a crisis are smart and ambitious enough to want this information, will appreciate you sharing it, and will use it to make the company stronger.

Banish “Us” vs “Them”

A 2012 Salesforce study found that 86% of leaders blamed workplace failures on a lack of collaboration and poor communication. A secretive “us vs. them” mentality will lead to friction between departments and erode trust.

Especially in difficult times, teams can start finger-pointing and playing the ‘blame game’. Marketing isn’t getting enough leads, sales can’t convert, engineering is creating stuff customers don’t want, customer support is driving up our churn rate...the list expands ad infinitum.

A deliberate attempt needs to be made to foster genuine human connections between divisions. Regularly scheduled meetings, ‘makan’ sessions, or ‘all-hands’ gatherings to celebrate successes and communicate upcoming challenges can help. While it’s tempting to slash budgets for such activities in downturns, this would only sabotage your team’s performance even in the short run.

Make your goals and objectives public

For those who haven’t yet crystallised your goals and key metrics to track (a trendy term is OKRs - Objectives and Key Results), step aside for a bit and write them down. Come back when you’re done.

Ready? Good.

The next step is to make sure that everyone’s eye is on the same key metrics for the business, and on the strategy to weather the storm. Team OKRs should nest neatly into company OKRs, and the best way to do this is to establish company-wide goals first, before cascading them into department and team goals.

These all need to be SMART: Specific, Measurable, Actionable, Realistic and Time-bound. If nothing else, it allows for clear accountability and heightens the level of trust in management, as well as across departments. The more public these can be, the deeper within a company you can build trust.

Ask specific questions

Piyush Gupta, the CEO of DBS Bank, once remarked that the moment he became CEO was the moment when he became the guy who knew the least about the company. Maybe it’s an Asian thing, but leaders are often only fed good news, and bad news is cleverly couched to sound good.

Don’t be fooled though. Your staff hold tremendous insight into the inner workings of your company - the way to tap into this insight is to ask the right questions.

On top of regular team meetings, an automated feedback tool that asks them relevant questions on a regular basis can be very valuable for recognising achievements and serve as an early warning to people challenges.

When meeting in person, instead of asking “how are things going?”, try “I noticed that X is happening, do you need any additional support?”. Layer this into regular, direct communication and frequent automated feedback and you’ll gain valuable insight into the operations of each department and be able to resolve issues quickly.

Besides giving yourself greater visibility, the added benefit to this would ironically be to create trust. Leaders who know clearly the challenges their team is facing, and takes active steps to help them resolve those challenges, will earn far more trust than leaders who adopt a hands-off approach to let their team sink or swim.

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2. Show Compassion

Once you’ve built a foundation of trust in your leadership, the next thing to do in times of crisis would be to show compassion. Your staff are smart enough to know that there will be some casualties if business is bad. What they will be watching very closely will be how those casualties will be handled. Especially with employees who have been loyal to the company through decades of ups and downs, this can be particularly emotional for the whole team.

Seek first to understand

The rush to plug leaks and keep the boat afloat during tough economic times can lead to emotional outbursts and short tempers when mistakes are made. These can sometimes translate to rash separation decisions, AKA panic firings.

One of Stephen Covey’s classic Seven Habits is to seek first to understand. That means taking the time to gather information before making a snap judgement, which could have irreversible and far-reaching implications for an individual employee, as well as those she was close to at work.

The best way to do this in the heat of the moment is to take a step back and practice ‘active listening’.

First, say less than you think. Regulate what you say and choose to stay silent if unsure.

Second, monitor your question to statement ratio. Just being aware of this helps to keep your outbursts in check. A good rule of thumb is to have 2 questions to each statement.

Third, listen with the intent to understand, not to reply. Very often we find ourselves in conversations where the other party is speaking, and instead of listening to what they’re actually saying, we are just waiting for our turn to present our case. Don’t do that.

A helpful chart I’ve come across on this is here:

Be fair

As the boss, no one expects you to be a nice guy all the time. “Business is business”, and sometimes tough calls need to be made.

But they DO expect you to be fair.

This is actually not difficult to do, and has been something that has been preached for ages (my knowledge of theology isn’t great, please let me know if I’m misrepresenting any of these faiths. They are also appearing in alphabetical order):

Buddhism: Hurt not others in ways that you yourself would find hurtful.

Christianity: In everything, do to others what you would have them do to you.

Confucianism: Do not do to others what you would not like yourself. Then there will be no resentment against you, either in the family or in the state.

Hinduism: This is the sum of duty; do naught unto others what you would not have them do unto you.

Islam: No one of you is a believer until he desires for his brother that which he desires for himself.

Judaism: What is hateful to you, do not do to your fellow man. This is the entire Law; all the rest is commentary.

Taoism: Regard your neighbor’s gain as your gain, and your neighbor’s loss as your own loss.

Just ask yourself “How would I like to be treated in this situation, all things considered?”. Then, do that.

Take time to give appreciation

Warren Buffett, the savvy investor and chairman of Berkshire Hathaway, said that an important key to his success is showing appreciation. Researchers even say that frequent appreciation (up to once a week) is a critical driver of engagement, and that for every piece of criticism dished out it should be accompanied by 5 statements of praise.

I’ve been quite curious about the response to this suggestion when I’ve given it in my consulting work. There was a leader who sarcastically asked if he should line up his team every Monday morning and deliver a hearty “good job last week” to each of them. Others shared concerns that appreciation would lead to their staff slacking off, thinking they’re in the good books of the boss. Another said that too much appreciation will cause her staff to forever be bugging her for a raise.

All interesting concerns, but unfounded. The crux of creating a culture of appreciation lies in paying attention not only to “closing performance gaps” of your team, but also in what your team does exceptionally well. Knowing that your boss is sensitive enough to notice when you’ve done a good job, gone above and beyond in a particular area, is a huge motivator. Moreover, it makes it that much easier for you to model that behaviour and start recognising your peers and staff too.

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3. Introduce Stability

Mike Myatt writes that “stability is something we don’t often think about as a leadership quality - that is until it is absent.” In handling a crisis, stable leaders are worth their weight in gold. They rally people around them, inspire confidence in the future, and give their team a sense of security.

This is how you can introduce stability into your leadership style:

Have a True North

Bill George and Peter Sims wrote about leaders with a clear True North and the deep impact it had on their teams. Stable leaders are open-minded, but stay strong in their convictions and principles. There are some handy exercises on building this capability in yourself here.

One of the core elements of a stable leader with a clear ‘true north’ is a high degree of self-awareness. The ancient Greeks and Chinese philosophers (and others I’m undoubtedly missing out) all spoke about the wisdom of this.

To get there, it starts with a clear assessment of your own individual strengths and weaknesses, purpose and values, which the Bill George worksheets and other tools help with. From there, ensuring that your decisions and actions are highly consistent with these builds a sense of stability in your team. An aligned vision resting on clearly stated values, and the conviction to hold people accountable to values over outcomes builds on this.

Freedom to fail

Sooner or later, everyone’s going to make a mistake. Sometimes even a big one.

The pursuit of excellence is an important endeavour, but if everyone on your team feels like they will be punished for the slightest mistake, positive risk-taking behaviour will very quickly be ‘crowded out’. Even worse, negative ‘backside-covering’ behaviour will start getting ‘crowded in’.

Google’s own studies on this finds that the most important element of successful teams is ‘Psychological Safety’. Making sure that your staff are held accountable for mistakes, while at the same time making it clear that they do get a second chance, helps to bolster the sense of psychological safety within a team.

Are there mistakes that are more ‘forgivable’ than others?

Yes. Mistakes made when experimenting with new strategies, tactics, business models, processes, are mostly the price of admission to transformational change. Errors of omission - carelessness, lack of attention to detail - are still worth giving second chances for.

Errors of commission - deliberate harmful actions - are a bit trickier. Depending on the company values you uphold, my personal take is that if there is too serious a breach (eg dishonesty, cheating, etc), there shouldn’t be a second chance. Definitely seek first to understand, conduct a thorough investigation, but if the findings are damning, don’t hesitate in taking action.

What should I do for repeated mistakes?

I hear you - we don’t want our teams to have to relearning costly lessons. In these cases, just proceed as you normally would in holding the party responsible. The idea is to ensure that there is some room to make mistakes, not to open the floodgates to unlimited mistakes.

Express genuine care

The most stable leaders know that their success is rooted in the care and well-being of those in their team. A senior naval officer shared this point with me in my early days as a leader: when you first manage a team, give first before you ask of them. Show care, concern, take personal interest in each and every team member’s well-being. Only when they feel that you are a leader they can trust, and have introduced an environment of stability, will the team start giving you their best work.

This is also seen as an important dimension of what great managers do differently. The results of a 2002 study conducted by four professors emphasises this. They wanted to know whether people staffing phones at a company would falsify their reports to boost their pay. Given the financial incentive to cheat, the business was faced with the issue of how closely to monitor employees in its 16 call centers.

Should they spend more money to audit the work, or could they trust their workers to do the right thing? One of the best predictors of an employee's trustworthiness was his perception of whether the company "cares about my personal well-being."

"'Conscience' alone is not guiding the actions of the workers we observe in the experiment," the researchers concluded. Compared with those who feel their company is looking out for them, "a disproportionate number of the workers who view the employer as unfair and uncaring" will cheat when they think they can get away with it.

Teams without a culture of care have a regrettable attrition rate of up to 37% higher than teams that report a high degree of care at work. In an unstable economic environment, having a caring boss adds significantly to a sense of stability.

4. Create Hope

With a foundation of trust, compassion and stability, you are then free to work on creating hope in your team. Andrew Razeghi, author of Hope: How Triumphant Leaders Create the Future, writes that “Hope sets objectives, ignites will, focuses the organisation in turbulent times, renews energy, displaces boredom as it succeeds, fosters creativity and innovation, and hope inspires people to want to do the right thing.”

In other words, Hope is what can help your team stay strong and positive about the future, and could be the seed of your recovery.

Deborah Mills-Scofield writes in the Harvard Business Review that “hope is a critical part of achieving a strategy when based on what is possible; perhaps not highly probable, but possible”. The important qualified here is a focus on the possible, even if it is not highly likely.

The way to make hope a part of your leadership strategy would need to include the following:

Base it on fact, not fiction

One of my favourite books on change management is Chip and Dan Heath’s Switch: How to Change Things When Change is Hard. In it, they articulate the concept of ‘bright spots’, areas in a company where things are working, and working well.

Hope needs to be based on fact: instead of spending precious energy trying to solve problems, the Heath brothers advocate looking at what has worked, why, and find ways to apply the lessons to other areas of the company.

Learn and apply from failures along the way

Closely related to giving your staff the freedom to fail, it is also important to learn and apply lessons from failures that you do inevitably encounter. Within the startup world, Facebook has popularised the concept of “fail fast, fail often” as a means of rapidly learning what doesn’t work in accelerating your journey towards what does.

An important way to learn from failure involves 3 steps:

1. Before a risky activity: Lay out what you’re testing ahead of time - hypotheses you are testing and a priori expectations of the results. Identify what success would look like, and how you would know when you achieve it.
2. During the activity: Pay attention to the metrics you set out to watch, but also keep an eye on what is happening that is outside the parameters of what you expected. The Law of Unintended Consequences has a way of popping results out that you least anticipate.
3. After the activity: Review the results honestly, and don’t add unnecessary qualifiers to the data (eg this was influenced by seasonality, our technician wasn’t feeling well during those few days). If there was a failure, embrace it as a learning experience and regard the entire exercise as an experiment - which it was. Document the process and the learning, and move on.

Be a great boss, in war and peace

Winston Churchill is famous for his rousing speeches and steady hand in leading Britain through the Second World War. History will remember him as a better war-time leader than a peace-time one.

To avoid that, keep working on serving these four needs of your followers:

1) Building Trust

2) Showing Compassion

3) Introducing Stability

4) Creating Hope

They will thank you for steering them through tough times, and be more likely to stick with you when times get better.

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