Leadership in a Downturn Guide

Liberating Potential in a Downturn – A Brief Guide

© David Willcock, Liberating Potential Ltd., 2011 www.liberatingpotential.co.uk 2

Contents Page

Purpose 3 Introduction 3 The leadership challenge 4 The required leadership edge 5 Conclusion 9 References 10 Appendix 1 - The transition curve 11 Appendix 2 – Key behaviours and actions 12

This guide is the copyright of Liberating Potential Ltd., is for private use and not to be used for commercial purposes. Please respect the copyright and the author. All views expressed are those of the author. Any recommendations need to be placed in the reader’s context and a judgement made about relevance and appropriateness. Your use of this material is entirely at your own risk for which we shall not be liable.

www.liberatingpotential.co.uk



Purpose

This guide is primarily aimed at leaders and managers who are leading in a context of downsizing, redundancy and/or closures. The purpose of the guide is to help busy leaders and managers think through some of the relationship and emotional climate issues and how best to respond to them. Based largely on the experience of the author working with leaders and managers in these circumstances, the guide outlines key leadership challenges as well as the required leadership edge.

This guide is an updated and expanded version of an article published by the author in 2001 at the time of the last major recession. It now includes personal and team exercises. This material would be relevant to any change impacting on people in organisations.

Introduction

Over the last 20 years the focus of leadership development theory and practice has been to create more adaptive organisations in the face of rapidly changing conditions -technological, social, and economic1. Leadership development has focused on the need for leaders to align followers behind a vision for the future of the business, and to motivate and inspire them to achieve it. Leadership is normally associated with a positive future for the organisation: growth, customer satisfaction, increasing profits, share-holder value and resultant employee rewards. I t is an attractive and exciting area to be involved in.

There is however a shadow side to leading organisation change - employees get displaced and lose their jobs. A significant role for many executives is leading a team that is either shutting down (as in an office closure) or has several members who are being made redundant. They often have to do this where they themselves are facing redundancy. The redundancy or closure period can be protracted, lasting several months. Getting the leadership task right under these circumstances is a business necessity for a number of reasons:

The operation may still be critical to the organisation during the transition period. Often work needs to be transferred to other parts of the operation and employees continue with their customer and supplier contacts

Employees are often also shareholders and customers and know hundreds of other customers and potential customers

Employees who are part of the new or continuing organisation are losing friends and colleagues. How they feel their colleagues are treated will impact on their perception of the company, their morale and motivation. Change fatigue results not so much from the organisation changes that take place but from how they are handled and the legacy that they leave. A cultural imprint is left on the organisation and influences attitudes to all future changes

The potential business impact of disaffected employees and leavers under these circumstances is easy to work out. On a broader societal basis, a risk of mishandling

1 See for example Joiner and Josephs, 2007, p.5




redundancy and closure situations could be growing disillusionment with the system of work. Despite this, the downside of organisation change does not seem to feature in much of the writing and training available on leadership2.

The Leadership Challenge

In a redundancy and closure situation the task of leadership remains the same only much more difficult. There are three key differences that increase the challenge. Firstly, people in this situation are going through a sharp transition and to a greater or lesser extent will be "grieving" their loss. Arguably the greatest contribution to the understanding of sudden and forced change in organisations was made by Elizabeth Kubler-Ross. In her book "On Death and Dying”3 she identified five stages of grieving experienced by terminally ill patients. These stages are: denial; anger; bargaining; depression; acceptance. This grieving process has universal applicability for people where any kind of loss is involved, although to different degrees of severity depending on the individual and the nature of the change. It is particularly useful for describing the experience of people going through an organisation change, especially when it is a forced changed with significant personal implications. Kubler-Ross's five stages of grieving have been adapted by many people over the years to describe this personal change process in an organisation context. One version of the "Transition Curve", as it is commonly referred to, is described at appendix 1. Secondly, the emotional pot is a lot fuller than under normal circumstances (see Figure 1). During normal operating conditions the general emotional content in the workplace is manageable. Problems that might occur with individuals and in relationships, like a splash in the water, can be contained more easily. During times of redundancy and closure emotions are running a lot higher. The ripple effect touches a lot more people and problems can spill over. This can impact more on the business as well as the individuals involved.

2 For some comment on this during the last recession see The Economist (August 25 –31, 2001), Things to do in a Recession, article ‘Employee Loyalty: An Alternative to Cocker Spaniels’; The Economist (October 13, 2001), article ‘Managing in a Downturn - snip, snip, oops!’ 3 Elizabeth Kubler-Ross, 1969




Thirdly, a large part of the leadership role is to create purpose and meaning to motivate people to achieve great things for themselves and the business4. Often the new organisation is developing a purpose and vision for the future, or reinforcing the existing one with new programmes. This is of little use to the people leaving the organisation. At a time like this many employees can lose their sense of purpose and become aimless.

The Required Leadership Edge

On the face of it the list of leadership competencies required in a downturn would read exactly the same as under normal operating conditions. However, leaders in the former situation require an edge over others in terms of their personal qualities as well as the depth and range of knowledge, skills and behaviours they can draw on to meet the challenges. The following are some key examples. Emotional Intelligence The emphasis of leading in this context needs to be on relationships and climate, the task being achieved by getting these elements right. Leaders require well-developed levels of emotional intelligence - self-awareness, self-management and relationship skills - to ensure that transitions are handled sensitively and appropriately5. Without awareness and ownership of their own thoughts and feelings leaders will have difficulty understanding and helping others, particularly in providing the necessary emotional support. In order to help people through the transition curve, they need to understand where they are in the process6. They also need to be sufficiently aware of their own personal emotional process so as not to get hooked into dysfunctional interpersonal dynamics that could lead to inappropriate responses and actions. Their own sense of ownership and responsibility in the situation needs to be a spur to others to take responsibility, rather than getting stuck in the doldrums and blaming others. Exercises 1 and 2 on the following page are designed to help you increase your awareness in a change situation. It is inevitable that people will go through a transition in some way when they face any kind of change, particularly when the choice has not been theirs, such as a redundancy and closure. Some people will go through the transition fairly quickly. Others will "hold on" to what they have and will take longer, possibly getting "stuck" on the left-hand side of the curve. So the significance for the individual in this situation and business performance is great. The importance of facilitating the transition in the quickest possible time and reducing the severity of the "dip" is obvious.

4 See for example Wheatley, 2001 5 Daniel Goleman, 1996 and 1998, argued that well developed awareness, empathy and social skills are potentially more important in leadership and management than intellect (or IQ). 6 Leaders and change agents who have planned a change over several months have already been experiencing the transition. They have often moved through to the right hand side of the curve and are advocating the change. From this position they don’t always recognise the need to support others through what is a natural process.




Leaders need a broad range of influencing skills and behaviours in this situation. They have to be umpire as well as supporter, advocate as well as listener, director as well as catalyst. They need to be strong in under-standing relationships and able to make observations about what is actually happening in the moment. Based on self-awareness they need to be able to disclose their own personal thoughts and feelings as they occur and in a genuine way, as well as get other people to open up and disclose their own. Above all they need to build and maintain trust through authentic and consistent dealings with people. With trust in the organisation already frayed i f not broken, the leader has to work a lot harder to achieve this. The normally task-focused manager will need to raise their aware-ness and change their approach quite dramatically in such a situation, otherwise they will not see half of what is going on before it is too late. Daniel Goleman published a very good article on leadership styles linked t o his ideas on emotional intelligence7. Based on empirical research, he describes six leadership styles - Coercive, Authoritative, Affiliative, Democratic, Pacesetting and Coaching - and the impact they have on group climate. I recommend you get hold of this article from the Harvard Business Review web site and do exercise 3:

7 Goleman, 2000

Exercise 2 – Transition curve 1. Reflect on how you currently feel about changes you are subject to at work or are having to manage and how you are currently behaving 2. Write your feelings and any associated behaviours down 3. Look at the transition curve at appendix 1 and plot where you believe you are on the curve. 4. Consider the implications for your leadership and management behaviour and make some notes 5. Reflect on the behaviours being displayed by the people you lead and manage 6. Plot where you think people that you lead and manage are on the transition curve 7. Consider the implications for how you lead and manage them and make some notes 8. Refer to ‘leading and managing through change’ at appendix 2. 9. Write down the ways you may need to change your leadership and management behaviour and actions to provide the greatest support and challenge.

Exercise 1 - ‘Thought provokers’ - reflect on the following questions about change orientation. How true are they for you?

I understand the need for continuous change and personally act on it I can identify continuity in my world as well as changes I am aware of my response to current changes, particularly my feelings and

behaviours I can talk about my feelings and share my emotions I can let go of the past I can see subtlety and “shades of grey” rather than binary options I listen to and give feedback as a stimulus to change I take appropriate risks and experiment to develop myself and increase my

options I take personal responsibility for my situation I celebrate my successes




Leaders need well-honed facilitation skills to help individuals and groups take control of their situation and help them through it. In particular they need these skills in dealing with relationship and group climate issues. A good grasp of interpersonal and group dynamics is required. Knowledge of a psychology discipline such as Transactional Analysis8 would be beneficial. As a minimum they should have an appreciation of the transition curve shown at appendix 1, the stages of team development (particularly endings)9 and Wilfred Bion’s work on dysfunctional work groups10 (Bion 1991). Leaders need to be able to facilitate group meetings where the emotional content and levels of personal uncertainty can cause dysfunctional behaviour. They also need to beware of falling into leadership traps set by a group that is more concerned about itself than the work of the day. For example, taking on too much responsibility for dealing with problems, only to find out how difficult this is and eventually being rejected by the group for disappointing them. Leaders have to be able to intervene in ways that empower rather than de-power, that keep confidence levels up and encourage self-responsibility in difficult circumstances. Exercise 4 on the following page is designed to help a group or team of people who are facing significant personal change at work. Key to this is educating them in the transition curve to raise awareness of the natural process and implications. As a leader you can facilitate this exercise with your own team or ask a colleague for help. Creating Meaning The same principles of leadership apply with regard to meaning creation. However, they need to be refocused. In a closure situation for example, the leader needs to energise the team by focusing the purpose and vision on the period up to the closure itself. A team/group session run around creating an operating framework for the period up to a closure can release a lot of energy and pride. One management team I worked with in an office that was closing down created a vision of everyone else in the organisation applauding them for the positive and seamless way they managed the business transfer. Key questions include:

What is the central purpose of this team during the next period? What do we want to achieve during the closure period that would mean success

to us? What will success look like, sound like and how will it feel? How do we want to be remembered in the organisation? How do we need to be with each other during the closure period to ensure well

being and success?

8 See for example Berne, 1964 and Stewart and Joines, 1987 9 Tuckman 1965, Tuckman & Jenson 1977 10 Bion, 1991

Exercise 3 – Goleman’s Six Leadership Styles 1. First, without reference to the article, write down what you believe to be your key strengths as a leader in relation to style and influencing – how you achieve ‘followers’ 2. Next read the description of the styles in the summary box 3. Rank order the styles according to your frequency of use in the last month 4. Compare with your original thoughts 5. Consider the implications for how you lead and manage people in the current change situation 6. Revisit the development plan you started to create in exercise 2 and build on it.




This new sense of purpose and vision has to be established with the management team as a pre-curser to planning a people support programme for the rest of the affected business area. For individuals in any redundancy situation, purpose and vision has to become more personal, focusing on their future lives and careers. This also needs to be encouraged through coaching and outplacement support, rather than just focusing on CV’s and skills awareness, which is the usual task approach to getting a job. The organisation purpose and vision, no longer relevant, are therefore replaced by ones that are, rather than leaving a void which increases uncertainty, ambiguity and negative emotions. Being a Role Model A key aspect of leadership is being a role model. Writers on leadership today advocate leaders as role model learners and risk takers. In the closure and redundancy situation the leader needs to some extent role model self-interest, taking personal time out to focus on the next stage of their lives and careers. Busy operational managers and other employees can be used to putting the job and current tasks above themselves and their own development. Work ethic and organisation culture play their part. Typically in a redundancy or closure situation driven by cost cutting there is more work around than people can cope with, so pressures to perform

Exercise 4 – Coaching through change 1. Explain the exercise and agree some ground rules for the discussion, e.g. confidentiality, respect for individuals. 2. Ask individuals in the team to write on sticky notes how they feel about the changes they are currently subject to at work 3. Ask them to stick the notes on a flip chart and then get the team to cluster the notes into similar feeling groups 4. Consider the results and draw attention to common ground (people will find comfort knowing they are not the only ones who feel that way) 5. Introduce and explain the transition curve 6. Compare with the feelings on the sticky notes 7. Ask team members to plot where they believe they are on the curve (they can do this publicly or privately) 8. Split the team into pairs 9. Each person with the help of their partner to explore their current feelings around change: - What are your current feelings? - How does that impact on your behaviour, performance, ability to help yourself? - What other feelings does this exploration evoke? 10. Break and get some feedback on this exercise 11. Staying with the same pairs, each person with the help of their partner to explore how they could move positively through the transition curve - What outcome are you looking for? - What are you already doing that’s helping? - What other options/opportunities do you have? - What would it take? 12. Get feedback from the group on some of the key possibilities




are high. Sometimes stuck in denial, people carry on as if nothing has changed. A lack of personal purpose and vision can also contribute to an avoidance of focusing on self and the future. This might ensure that lots of work gets done, but it can drain people emotionally and leave them high and dry when the closure or redundancy takes effect. This avoidance can remain prevalent even when outplacement support is provided, reducing the effectiveness and value of this support. Outplacement organisations are not working in the operation, dealing with day-to-day team dynamics, so have little influence over this phenomenon. People in this situation must plan time into the working day to focus on their future lives and careers. Leaders must encourage this and support it through their own actions. Communications

Communications throughout the whole organisation need to be sensitive to the situation that redundant people are in. After a restructuring a lot of leadership effort is understandably focused on the new organisation and new job incumbents, and it is easy to over-look the problem in the corner. Insensitive messages or a lack of recognition in organisation communications such as newsletters and briefings will impact still further on the morale and motivation of redundant employees and create negative impressions in the minds of those leaving as well as those staying. Recognition and Celebrating Success Should the organisation’s leadership let people disappear into the night or should they celebrate and reward the achievement of people in difficult circumstances? At one manufacturing company a redundancy situation meant that several people would miss out on their long service award. Under the circumstances the leaders of the organisation were unsure about holding the usual awards dinner. After discussion with the trade union and some of the people involved, they decided to go ahead. The employees concerned really enjoyed it and appreciated the effort made by management to recognise them. The final impression of the organisation that people will take with them will be what happens at the end. There needs to be appropriate recognition, beyond the redundancy package and loyalty bonus, of what has been achieved and this from the most senior levels.

Conclusion A lot of leadership development today is arguably too unitary, painting a picture of leaders and followers creating the organisation of the future. How an organisation handles a redundancy or closure situation, however, is a direct reflection of its culture and values. No words will replace the meaning ascribed to these actions. I f organisations want to thrive in today’s world of scarce talent, instant communication, high education standards and human rights they need to ensure that leaders are equipped to deal with these situations. The type of support suggested in this brief guide is different from outplacement in that it focuses on the relationships and climate in the redundancy situation.




The implications for the business of not leading this type of change well, in terms of customer perceptions and employee morale and motivation, are potentially huge. The numbers may not be large and easy to overlook, but the accumulative effect over time can become an invisible millstone around the neck of the organisation. Appropriate support can increase the likelihood that the cultural impact is a positive one that retains people’s faith in their organisation. I t can also ensure that the organisation and the individuals involved do not suffer any more than the fact of redundancy makes inevitable. David Willcock MSc. FCIPD MAC Liberating Potential Ltd.

References Berne, Eric, Games People Play, Penguin Books, 1964 Bion, W. R., Experiences in Groups: And Other Papers, Routledge, re-print, July 1991 The Economist, (August 25th-31st), “2001 things to do in a recession,” article “Employee loyalty – An alternative to cocker spaniels” and The Economist, (13 October 2001) article ‘Managing in a Downturn - snip, snip, oops!’ Goleman, Daniel, “Emotional Intelligence,” Bloomsbury, 1996 Goleman, Daniel, “Working with Emotional Intelligence,” Bloomsbury, 1998 Goleman, Daniel, “Leadership that gets Results,” Harvard Business Review, March-April 2000, reprint number R00204 Joiner, Bill and Josephs, Stephen, Leadership Agility, Jossey-Bass, 2007 Kubler-Ross, E. (1969) On Death and Dying, Simon & Schuster, re-print (1997). To find out more visit (website) www.ekrfoundation.org Stewart, Ian and Joines, Vann, TA Today, Lifespace, 1996 Tuckman, B. W. (1965) “Development Sequence in small groups”, Psychological Bulletin, 63. Tuckman, B. W. & Jenson, M. A. (1977) “Stages of small group development revisited”, Group and Organisational Studies, 2 Wheatley, Margaret. J., Leadership and the New Science, revised edition, Berrett-Koehler, 2001


http://www.liberatingpotential.co.uk/

http://www.ekrfoundation.org/



The Transition Curve11

Holding On Letting Go Moving On

Disturbance - The initial response to the event or change. Feelings of disturbance can include being overwhelmed, numb and shaken. However, the feelings can vary depending on the individual and the nature of the change, so a person may experience surprise rather than shock. All feelings in the transition are on a continuum and will be unique to each individual. Individual self-esteem and confidence can dip at this point. Significant from an organisation point of view is that performance can suffer as a result. Denial - At this stage the individual either denies that the change is taking place or believes that they can carry on as before anyway. If a person is going through a job change, they may believe that they can carry on using the same skills, competencies and attitudes that they have always used. This can lead to a temporary relief or euphoria when self esteem and confidence can go up again. Frustration/Anger - Eventually the reality of the change cannot be denied or avoided any more. The old skills and ways of doing things no longer work. This can lead to frustration, anger and blame. Individual self-esteem and confidence can slide. For a business going through change, performance can be severely affected. Demotivation - This is where people can hit rock bottom. Still not accepting the change, everything seems pointless and people can feel like giving up. Most people in an organisation context will not get severely depressed, but feelings of powerlessness (rather than feeling empowered) and demotivation are common. Self-esteem and confidence, and consequently performance, are at their lowest point. Reframing - The previous stage is not a nice place to be so most people start to pull themselves out of it. For example, they start to try out new things and learn new skills, such as job hunting. At this stage they start to accept the change and the need to change themselves. This can lead to feelings of concern and anxiety about the “new way”, but also excitement, energy and optimism given the possibilities. Self-esteem and confidence start to increase again. Acceptance - At this stage people decide what works and what doesn't work. The change is accepted and they can work towards integrating and consolidating the learning. This builds self-esteem and confidence and results in increased performance. Renewal - At this stage the changes are integrated into a new way of being and doing - they become part of the norm. Feelings can be of satisfaction, competence and motivation. Self esteem, confidence and performance can be higher at this stage than where the person started because they have been through a learning process.

11 Based on the idea of Elizabeth Kubler-Ross, 1969

DISTURBANCE

DENIAL

FRUSTRATION

RENEWAL

REFRAMING

ACCEPTANCE

Self esteem,

Confidence

and

Performance

DEMOTIVATION

ANGER

APPENDIX 1




Leading and Managing in Change – Key Behaviours and Actions Throughout the Process

Create/share purpose and vision – relevant to the situation Communicate throughout Role model desired behaviour Involve people

Disturbance

Empathise: “I know what it is like”, “I understand how you must feel”, “When I was told this I…”

Support “Be” there with them Respond to questions Give them some space and time

Denial

Support Raise awareness of changes Make the differences clear Ask questions to develop thinking Be clear about the message

Frustration/Anger/Confusion

Listen Allow expression of feelings - make it OK Provide support Encourage personal responsibility Get people together Provide structure Focus on the future

Reframing/Acceptance

Encourage Support Challenge Allow mistakes and learn from them Provide feedback Recognise achievement Coach

Renewal

Celebrate successes

APPENDIX 2


Leadership in a Downturn Guide

Leadership & Management