flowing motion

Confidence in bad times

Posted on: October 29, 2008

in a blaze of glory

Image by Darwin Bell via Flickr

For the last two weekends, I ran a little poll here on your plans for beating the recession.  The full poll and results are at the end of the post.

Of the two score or so people who answered, this was the modal response.

I have only scenario planned the future INFORMALLY.  I am planning to 2010.  My business is YET to be affected by the recession.  I expect to grow 25% over a 2007 baseline.  I will find a RECESSION-BEATING strategy.

So are we confident or fool-hardy?

Let me add these three observations.

  • People who answer online polls are “geeks” or “geek-like”.  Maybe all of poll results are true.  We haven’t been badly affected and we understand what is going on sufficiently to improve our businesses.
  • A prudent economist friend of mine offers the following:  the stock market has dropped 50% since its peak of October 2007 (possibly more by today).  The average growth rate per year is 6%.  Assuming a good recovery, stock prices will recover their value in 50/6=8 years time (2016).  This simple arithmetic may be useful for people managing their portfolios or planning their retirement.  Notice that people in my survey (typically) assume 4x the average growth rate.  During coaching, some nudging towards practical plans might be necessary.
  • Before I left Zimbabwwe, and while it was already obvius that things were going wrong, my students ran a series of studies measuring and explaining “hopelessness” [not hope sadly but interesting nonetheless].  They measured “hopelessness” in various groups and NEVER EVER found clinical levels of hoplessness.

Explaining hope and resilience

Moreover, any one person’s sense of hopelessness could be explained by the level of social support they perceived from relevant others.  Here are some interesting results.

  • Wives of unemployed men looked to their churches for support.
  • Teenagers about to leave school after writing their O levels [school certificate/high school] felt more hopeful if they were supported by their families.

And feeling supported by their family was strongly linked to the number of family members having work or income

  • Working men in factories depended heavily on the social support of their supervisors. The mood of employees who were well educated and qualified was very much less affected by their managers

What did we take from these studies (and my little poll)?

  • People are naturally resilient.  They believe the best.
  • Social support is critical.

In hard times, it is very important for the management system to provide support.  This is likely to have a chain effect.  The CEO needs to show belief in his or her direct reports and they need to show belief in their direct reports.

  • Social support outside the firm is also critical and managers can help themselves by supporting external support systems.

Enourage people to remain within churches and sports clubs, help them stay in touch with their families and make it easy for them to do so.  Have we arranged for Hindu employers to have time off for Diwali?  Do we celebrate Eid?  Do we help people take time off for important events?

Collective efficacy, solidarity and business results

It is pretty likely that

  • collective efficacy (expressed belief in the importance and competence of our colleagues) and
  • solidarity (our willingness to support each other through thick-and-thin)

add a critical 5-10% onto our collective performance.

I wonder if there are any practitioners out there who are focussing on these ‘soft’ concepts and linking them to the ‘hard’ results of revenue in hard times?

Here is my original poll.  Thanks so much for contributing.  Despite my experience during other crises, I was still pleasantly surprised that we are so confident.

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1 Response to "Confidence in bad times"

[…] my little survey of our reactions to the credit crunch show suprising optimism.  Briefly we haven’t been hit yet, we are doing little planning and we expect to use the […]

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