Charles Pfeffer

Executive Coaching & Leadership Consulting

Economic pressure’s effects on leading and following

Does leading become more difficult during tough economic times? What about following?

With all the scary news about recession, credit crunch, energy and food prices and home foreclosures, it would be easy to get pessimistic about the economy and business conditions. But, what about leadership?

Leading is about building relationships, creating collective meaning, and making decisions. Building relationships involves getting our interests aligned, having a common future we are committed to and establishing our roles and responsibilities in getting that future to happen. Creating collective meaning is storytelling. This means taking the facts that we observe and weaving together a narrative that explains what these facts say about our future, our relationship and the implications for action. Making decisions is how we enact our understanding of these implications.

In good times, relationship building is easy and the pressure on relationships is moderate to low. In tough times, relationships can come under pressure as people’s anxieties rise and resource constraints demand trade-offs that hurt various self-interests. Creating collective meaning in good times may be easy or hard, depending on how easy it is to get people’s attention. A clear threat to survival can make it easier to focus people on a common problem. When times are good and opportunities abound, it can be quite a challenge to focus attention on a particular direction or initiative. Making decisions in good times can be challenging for much the same reasons. When opportunities abound, saying no to someone takes a pretty clear explanation of the strategy and direction you are pursuing. When times are tough, the circumstances do a lot of the explaining for you.

It’s during the hard times that the social capital you built in the good times pays dividends. If you’ve done a good job of relationship building, you have a group of people around who can remain committed to the future you’ve described, even when the current circumstances put that future in question. Doubt is a normal response to risk, so hard times call for stone cold examination of the facts at hand, imaginative interpretation (telling really good stories) and courageous, purposeful and transparent decision-making. Followers get cynical when they think facts are being ignored and when they see decisions being made without a clear connection to the purpose they signed on for. If it’s clear to all that the purpose served by decisions is shared, then even when the decisions call for sacrifices, they can be supported.

Facing hard times without rich social capital, deep relationships and a clear shared understanding of purpose, strategy and decision frameworks is a recipe for disaster. If that’s where you find yourself, look around for the folks who aren’t scared and are getting on with helping the people around them make positive sense of what’s happening. These are the people you’ll want to be leading with you through this crisis and the one’s to make sure you keep around afterwards.

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