For most financial services companies, the last three years have been a grinding struggle – and the outlook isn’t improving. The economy continues to poke along at a low level of activity and the regulatory burden keeps increasing. Over 60,000 layoffs have already been announced so far this year and more are expected in the future.
This kind of change and uncertainty puts enormous pressure on bank employees. Many are no longer doing the jobs for which they were hired; others are overloaded, and many more fear losing their jobs and joining the swelling ranks of the unemployed. In some companies I visit, the anxiety is palpable as soon as I walk in the door.
Most executives know how dangerous this sense of dread can be. Recent estimates put the cost of severe workplace stress at around $300 billion a year, from a lack of focus, poor decision-making, safety lapses, higher medical bills, and more days absent. We all have a limited store of psychological reserves we can use to combat high anxiety situations. Stress saps these reserves in the same way a workout saps our muscles.
The market for financial services continues to change, and banks must change with it. But managing a business through turbulent times also means managing the anxiety those times produce. Without facing workplace stress head-on, every dollar gained on the balance sheet will be lost on the retail frontlines.
Empowerment through Confidence
In my experience, honesty and confidence make for the best strategy. Star leaders don’t put a good spin on a bad situation or convey a false sense of calm and they don’t obscure the facts or feign ignorance about what’s to come. Instead, they fortify employees with a feeling of power – a sense that their fate and the fate of the company aren’t set in stone and a confidence that they have an important role to play in shaping the future.
Stress feeds on helplessness. It mounts up when people feel their future is out of their hands – when a project won’t meet a deadline because of lack of resources, a supervisor won’t forgive a mistake or the company won’t stay on its feet, no matter how hard you work. But stress shrinks when people feel they can do something to influence their fate. Athletes and performers learn to relish challenging situations because they know they can rise to the occasion, such as hitting the go-ahead run or giving the performance of a lifetime for an audience of thousands. Their confidence gives them strength; they prevail because they believe they can prevail.
Fakery destroys that confidence. It tells people that they’re too naïve, unwise or immature to even be told the truth about their situation. Great leaders embrace the truth – no matter how negative – and turn it into an asset. They don’t change reality; they change how their employees think of themselves and what they are capable of.
The best way to address anxiety is to prevent it. To do so, managers must keep up with the personnel reshuffling in their companies. They can make these changes more manageable by defining expectations and goals, laying out business processes and reporting lines, and giving employees a good sense of why they find themselves in new jobs. Bureaucracy should take a backseat; employees should have clear responsibilities and the authority to meet them.
When bad news arrives, good leaders talk about it. Topics like layoffs can’t be avoided, and if handled poorly, they can haunt executives for the rest of their lives. Offering a dignified exit makes both employees and managers feel a bit better about a bad situation, but more importantly, it reassures remaining workers that their company will treat them fairly, no matter what hardship lies ahead.
Human Resource departments know the list of options available to them, but the best exit programs directly attend to individuals’ basic needs; such as an adequate financial cushion, retraining options, active job search assistance, beneficial rehiring policies and psychological support for many who will be disconnected from the one thing that gave them a sense of purpose and worth – their job. These programs are forward-looking and meaningful. While providing no assurances, they are put in place to offer genuine help and hope and not to alleviate managerial feelings of guilt through superficial measures.
But the best way a manager can ease anxiety is to be present. None of us wants only to see our leaders during good times; if anything, we embrace them more strongly when times are tough. Even when we know they can’t give us what we want, we want our leaders to be there. Their presence is a constant when everything else seems to be changing.
So be present and be visible. Speak to your employees about the difficult path your company is on, about the calmer seas that lie ahead and about what everyone can do to get there. Those issues – as much as any regulatory or market changes – will define what America’s banks look like after the economic turmoil ends.
Mr. O’Malley is CEO of Promontory Human Capital Solutions LLC, a risk-based compensation consulting and human resource management firm that is affiliated with Washington, D.C.-based Promontory Financial Group. He can be reached at firstname.lastname@example.org.
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