Stay positive and beat the credit crunch

Jul 23 2008 Agenda

Professor Mike West, an organisational psychologist, and Executive Dean of Aston Business School, says people should think positively if they want to overcome economic woes.

* Are we talking ourselves into a deeper crisis with the credit crunch, fuel crisis and business declining. Are we heading towards recession and are we doing it because we’re talking ourselves into it?

It’s clear that recessions are often a consequence of loss of confidence and that what we’re seeing in the modern age is because there is so much communication through the media that in a sense, that loss of confidence becomes more pervasive and more contagious more easily.

So there is a lot of ‘doom saying’ going on at the minute about the economy, about finance and about business and so on and of course one of the things that does is undermines the confidence of ordinary people in the street.

Interestingly when I talk to business leaders they are not as pessimistic as are the newspapers, or people in the street, but people in the street are being made to feel afraid because they’re worried about their savings and their pensions, and they’re worried that their incomes won’t cover costs as time goes by, and they’re worried that inflation is going to go up and so on.

And a lot of that seems to be coming from yes, objective problems that have occurred, but also from the press and from certain commentators who are being very pessimistic.

And I think for us all as leaders what we need to be doing is to be confident and positive and enthusiastic about the future.

That doesn’t mean that we’re being dishonest or unrealistic, but recognising that yes, the economy is in a downturn but that what we have to do is learn from it and recognise that when you go through difficult times, that you can grow from adversity and we can become more efficient as a result of adversity.

What companies typically do in a recession is cut out unnecessary costs and they become more efficient.

So one of the things that’s going to happen is that we are going to become more efficient and more effective and that’s something to be pleased about, to be confident about. the concerns is that because of this financial downturn, that ordinary families are going to suffer and of course everybody suffers in a recession, but what we need to do is limit the scope of that recession by not talking ourselves into a worse and worse state.

So reasonable optimism, enthusiasm and confidence are what politicians and business leaders need to be practicing.

Because if our leaders are not optimistic, enthusiastic and confident then how can everyone else be?

* If you’re heading for a day at work, and you’ve started the day by listening to the Today programme and we’ve thought ‘it’s Monday, everything’s drab and it’s dreary news’, what can we do to bolster ourselves for a day of business and being confident?

One of the stories that always strikes me as being very powerful is Southwest Airlines. The day after 9/11 the leaders of Southwest Airlines knew they were about to face one of the biggest downturns in air travel that they’d ever seen and they went out that morning and said to all their employees ‘there will be no redundancies’.

That was a brave, bold move, and through that they won the support and the backing of the confidence of their employees because they acted as leaders in a situation that was dreadful and dire. So sometimes it’s about being really courageous and really bold.

On a more parochial level as leaders we can talk optimistically with employees, we talk enthusiastically and confidently. Yes there are problems, but we have the skills and we have the talent and we have the vision as an organisation to survive.

Actually we’re going to do more than survive, we’re going to grow and be really effective.

I’ve seen a leader walk into a room full of his managers and say “There’s this really difficult situation, it’s been forced upon us, there’s nothing we can do about it, there’s nothing I can do about it, times are going to be very hard ahead, we’ve just got to survive.”

And walk out of the room leaving 150 managers utterly deflated.

Good management is about saying ‘we are in a hard situation, we are in a tough situation, but we want to get everyone’s views on how we deal with it.

These are the things that we’re putting in place. We’re confident we’ve got the right people in our organisation. We’ve got great people. We’ve got great spirit.

We’ve done very well in the past. We’ve built a solid base. We can go forward. And we will grow and we will be a better organisation in the future. That’s what good leadership is all about.

And those are the sorts of things I think leaders should be doing going into work after listening to the Today programme.

* Are there any things that political leaders should be saying?

What we want from our political leaders is honesty, good judgement, and again optimism and enthusiasm.

They need to be of course honest about the realities of the situation, it’s a global crisis, it’s not limited to the UK, it’s a global problem.

There are particular problems in Britain we need to solve but it’s also then about saying that ok, that’s the reality of the situation, but Britain has had the highest productivity growth of any nation in the western economy for the past 10 years. Britain’s done very very well indeed, we have a high level of efficiency in our work force and we should be celebrating what we’re good at.

And we need to be saying that this is a time of difficulty and challenge and what are the challenges we need to face and what are we going to do about them?

We need to train more of our people to degree level and get them well qualified. We also need to put more into research and development.

The danger is that at a time of difficulty like this, the politicians take money away from training and research.

But these are the investments for the future and we need them to be investing in the future now, so that we come through this difficult period better equipped to cope with the economic conditions afterwards.

* As a psychologist, are there any key phrases or techniques that you could be able to use to garner enthusiasm of a group of managers?

You talk enthusiastically, optimistically and honestly. You celebrate the strengths that you’ve got. You set clear objectives for the future in the situation, you have a vision for the future and a mission and you really powerfully believe in as an individual, so you must talk from the heart about what it is that you want to achieve. It’s not about manipulating people, or presenting advertising messages, it’s you as a leader talking from the heart. This is where I believe we can go, this is what I believe we can accomplish. And if you’re not enthusiastic and confident, what are you doing standing there as a leader? That’s what leadership is about, especially in difficult times.

* If you were able to give a couple of tips to the Prime Minister, what would they be?

The most important thing the Prime Minister should be doing is presenting this country with a vision for the future.

At a time of crisis, it’s about believing in the capabilities and the skills and strengths of the people of this country, affirming those and then saying how those are going to help us achieve the vision of the kind of society and economy that he anticipates that we’ll be in the future.

That’s absolutely fundamental first base stuff about leadership which we’re not getting at the moment, and that’s what he needs to do.

* So are we looking gloomily at next week and next month instead of looking optimistically at next year and five years’ time?

I think that we should look optimistically at next week, next month and five years’ time and we should look at today and be grateful at where we are as a nation today. One of the greatest contributors to health amongst humanity is a sense of gratitude and this country has so much to be grateful for.

A simple technique is to write down at the end of each day three things that you had to be grateful for that day, at the end of a month your mental health and physical health will be dramatically improved and will continue to stay improved for six months after.

Write down three things a day in your diary that you have to be grateful for.

As a nation we have to be metaphorically writing down the three things that we’ve got to be grateful for every day. There’s so much that if you live in this country you’ve reason to be very grateful for compared with people all over the world. And we should celebrate the strength that we have and capability and the promise of the country as well.

We have one of the most diverse populations in the world, yet we’re probably the most tolerant society in the world.

We have the best university system in the world and we’re second only to the US in terms of research quality, we’ve got a fantastic workforce whose productivity is growing every year and we have huge experience to contribute.

So there’s an enormous amount to be grateful for and we have to keep celebrating that. That’s how you get out of the doldrums. You change the way you think and change the way you talk. You stop running negative songs in your head and start running positive ones and that’s what we need to be doing as a nation.