Power of Recognition to Overcome Recession Fears

As the news about the state of the economy continues in a negative tone, employees around the world are becoming more concerned about job security as employers look to cut expenses while maintaining performance. But these fears and cuts begin a cycle of fear and discontent that will be challenging to overcome once the economy begins to improve. In the recent article “Psychological Recession,” author Judith M. Bardwick defines the term as “an emotional state in which people feel extremely vulnerable and afraid for their futures.” She goes on to explain the effect, “Chronically fearful people are too exhausted to be creative and innovative. They expect the worst to happen, so they see no reason to give their all.”

An ailing economy exacerbates these feelings, resulting in a greater percentage of disengaged employees than during times of plenty. Towers Perrin reported in their 2007-2008 global workforce study that almost four out of five workers are not performing at their optimal level, with two out of five “checked out.” The impact on company performance is substantial. Companies with high employee engagement show a 19.2% increase in operating income while low-engagement companies show of drop of 32.7%. With a potential 50% differential on operating income on the line, engaging employees becomes critical for company success – especially when a company is struggling for margins during an economic downturn.

Today’s savvy employee knows no job is guaranteed, especially when the economy turns sour. However, many companies are reporting that simply making reductions in force is not a viable option. After cutting resources deeply during the last downturn, human resources leaders are now positioning themselves more strategically to ensure the company has the right people in the right jobs when the market turns.

This strategy will help the company rebound more quickly than those that did a less considered layoff. Employees have long memories. Those who make it through layoffs are often the most talented high performers companies want to keep. However, once the market recovers, those employees will remember how the company treated them and their less fortunate colleagues and may be the first to consider leaving for a more appreciative work culture.