Are We in a “Psychological Recession?”

Judith Bardwick recently published a very interesting article on “The Psychological Recession” in the May/June 2008 issue of the Conference Board Review. Ms. Bardwick defines a psychological recession as “an emotional state in which people feel extremely vulnerable and afraid for their futures [such that they] are too exhausted to be creative and innovative. They expect the worst to happen, so they see no reason to give their all.”

With today’s fears in a slowing economy, mergers and acquisitions seemingly more and more common, and outsourcing only growing, it’s easy to understand why employees may be fearful for their jobs. It is up to management to clearly communicate the value those employees have for the organization and what the company is going to continue to do to maximize their value, input and performance. To do so is even more critical after, for example, a reduction in force. To keep the remaining employees from entering into a “psychological recession,” they need to understand without a doubt that they are an asset to the firm.

One way to do so is through strategic recognition. To increase employee engagement in their jobs and with the company during tough times, employees need to be frequently and appropriately appreciated for their efforts. As Rich Wellins, a VP with Development Dimensions International, pointed out in a side-bar in the article, it’s also important for leaders to reinforce and model the company’s vision and values so the employees have clear expectations.

A strategic recognition program that incorporates the company’s values and is built around the company’s vision can help to accomplish these communication goals with frequent and timely recognitions.

What is your experience with “psychological recession?” If you’ve found yourself in that state, what did it take to renew your commitment and restore your performance?