Recession spreads fear and fear fuels recession. Stephen Walker looks at leaders' need to communicate with confidence in times of turmoil.

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I make no apology for bring the 'R' word into the TrainingZone again. We are all affected by the recession. It is uppermost in our minds.

No doubt there is a general decline in economic activity, but the people I talk to say there is activity. It is extremely competitive and customers are more demanding, but there is business to be had.

The major issues around credit and insurance are driving some unfortunates to the wall. But this is a technical issue to do with bank assets and risk. The stimuli applied around the world to the banking system will work eventually, and as asset prices start to rise so will the banks’ ability to lend. Will lending rise as fast as it declined? Demand is still there, we still need a house to live in. Albeit we will be cautious for a few years to try to avoid over-stretching financially.

Economic activity is down but more importantly, it is erratic. Organisations are unable to look at recent history and forecast the next 12 months. The data yields no pattern.

Fiat’s Mr. Marchionne, interviewed by Automotive News Europe declined to make a sales projection saying: “I honestly do not know. It’s not that I refuse to make a projection. I just don’t have a reliable context in which to make the projection. I abstain.”

Organisations are headed into uncharted territory with only their good sense to guide them, with their leaders showing the way. Naturally the employees, the people in the organisation, are fearful. They fear short term working or even redundancy. How do they cope with these fears?

Do the people carry on blindly ensuring the best performance and customer service that is possible? That is what the organisation needs for the best chance of survival after all. Or do they teeter on the edge of panic? Do they spend time checking with their peers for warning signs? Spreading fear and disillusion in the process. They de-motivate everyone in their path.

What these people seek is an answer to a question. “What is my future?” They seek a reality check. Any information is highly valued, worthy or not.

The herd instinct ensures we watch our peers and run if they run, panic if they panic. The leader is hugely influential in calming or inflaming the herd. The leader’s demeanour, deviation from routine and pronouncements are closely observed and discussed. Informal information is highly rated as it is direct and uninfluenced.

People are desperate for information. They want to know what is happening. Formal communication is vital. You will not drown out the informal communication but at best put across the formal view, the “facts”. What is the leader saying?

People weigh up the inconsistencies between the formal and informal communication. They ask “do I still believe what they are saying?”. We want to absorb what might affect my job, my team, my organisation.

The less formal communication there is the more amplification is applied. Slight inconsistencies become the subject of conspiracy theories. Rumours circulate much faster than any official information. The rumour mill feeds on its own spoil.

Substitute “a leader” for “powerful” in Margaret Thatcher’s famous quote “Being powerful is like being a lady. If you have to tell people you are, you aren't,” demonstrates the ephemeral nature of leadership. The right to be the leader has to be constantly re-earned.

Apart from “showing the way” what else do we need from our leader in these difficult times?

We need to be told:

Positive and realistic news

That management is still interested and working hard

That we are still valued

That our skills are still needed

That there is a plan

That there is hope for the future

A good leader will encapsulate these in short snappy sound bites. This may appear deplorable but we seek reassurance and want to feel part of something worthwhile. What more topical quote is there than the US Democrats’ Presidential campaign slogan “Fired up and ready to go!”

Is your organisation fired up and ready to go? Or hiding under its desks? Do your people have the mantra “I trust, I believe, I will follow”? For without followers there is no leader.

I do not think it is too soon to be looking beyond the recession to the better times. Most organisations will survive: some by slashing costs, losing capacity and reputation along the way. Some will find that they survive the recession only to fail in the upswing.

Others will have painful adjustments and show they care for their people. The difference lies in sensible plans well communicated, well conducted and well led.

Show us the way!

After over 30 years of hands on business and academic experience, Stephen Walker co-founded Motivation Matters in 2004. The company is a management consultancy focused on improving people’s desire to perform well at their work. Motivation Matters works with organisations to improve the performance of their people through better management practice