Despite signs that the worst of the recession may be over, fear, pessimism and self-preservation are still widespread. This creates a breeding ground for insidious conflict, which without doubt holds back corporate performance. Patrick Esson, Managing Director, Aransa reports.

Recession has caused dramatic change and business in general is unlikely ever to be the same again. Hard times can unleash conflict and produce an unnerving new environment– a ‘new normal’, where loyalty and unity are constantly tested. How HR Directors address these issues in a downturn can have a lasting effect on how their companies will perform later, because people have long memories.

Despite signs that the worst of the recession may be over, fear, pessimism and self-preservation are still widespread. This creates a breeding ground for insidious conflict, which without doubt holds back corporate performance. Conflict also seeds poor communication, which stifles feedback and reinforces feelings that fresh ideas are not welcome and people don’t matter. Divergent interests harm unity and polarise individuals and teams, with “me first” behaviour inevitably leaving the company second. Loyalty must operate upwards, downwards and sideways. Its absence is seen in the withdrawal of benefits and pension rights, lack of management support for subordinates, and selfish behaviour such as pilfering, absenteeism and back-stabbing.

Some companies react to financial pressure with insufficient thought and use very blunt tools. Reduced working hours, temporary lay-offs, and asking workers to accept pay cuts to preserve jobs are harmful enough. Asking low paid staff to work unpaid for a month, without any alternative compensation such as shares in lieu of pay, suggests utter contempt. As a consequence trust and morale tend to disintegrate. The ‘new normal’, therefore, not only tends to suffocate productive feedback but also encourages a heads down attitude where employees and managers fail to speak openly about genuine issues and concerns. According to a recent McKinsey survey (source: Leaders In The Crisis), senior executives may be feeling relatively stable and content about how they are weathering the storm, but middle managers report dramatically lower levels of satisfaction and less desire to remain with their current employers. Of this group 27 percent believe it has now become riskier to speak up on difficult issues, when their point of view differs from those of more senior managers. Retaining and motivating a fragmented, uninspired workforce in uncertain times is clearly a formidable challenge.

Unity in the form of a common purpose and core values is more important than ever in difficult times. People want to feel they belong, but how can they without a clear understanding of their team’s purpose and values? Without appropriate values people may achieve their objectives, but in the wrong way. Shared values nourish self-respect and enable leaders to delegate and trust people; they also reduce the need for micro management. If managers believe employees have a set of values and can trust in their integrity, then they can allow more discretion. Compare this with the recent issue of MPs expenses when observers felt most let down by the lack of integrity and the apparent abuse of trust. The Prime Minister’s instinctive reaction was to impose tighter control.

However, no matter how important they are to company success, ‘preaching’ values does little for motivation. The same McKinsey report suggests that whilst many executives try to motivate teams by talking about company values, direction and financial performance, few try to build stronger personal connections with employees. The report confirms what the military has known about leadership for generations – concern for those being led and communication are vital. As Field Marshall Slim once wrote, “I found that if one kept the bulk of one’s talk to the material things that men were interested in, food, pay, leave, beer, mail, and the progress of operations, it was safer to end on a higher note, the cause, and I always did.” Instead of just focusing on the big picture, the report declares there is a manifest need for “dramatically improved people skills, good relationships with employees, peers, and external stakeholders, as well as the ability to inspire and align a team”.

So the challenge for HR directors is to empower good leadership at all levels. Keeping the best people is not simply a matter of deciding you still want them, nor is it just about financial incentives; it’s about loyalty and respect. Managers must talk to people, show them they care, let them know what’s going on, that the company has a way of dealing with challenges and, above all, show individuals their contribution is important. This same behaviour paves the way for innovation as a platform for success in the future.

HR directors can choose to make this their ‘new normal’ instead of the insidious alternative of ongoing conflict. To do so they must nurture the development of effective leadership and teamwork, based on a real understanding of the roles that loyalty, unity and communication play in long-term corporate success. www.aransa.co.uk