Into the lion’s den

What impact will the recent change of government in the UK have on the economy? By Business psychologists Jill Flint-Taylor and Cary L. Cooper of Robertson Cooper Ltd


This is the question on everyone’s minds, and as business psychologists we’d like to add our own perspective.

We’re particularly interested in the challenges that will be thrown up for organisations and their leaders. In this article we’ll look at what some of these challenges might be, and how the leadership response is key to ensuring a positive climate in which opportunities are seized and resilience – and economic performance – is maintained in the face of setbacks.

The most obvious challenges are those that will be thrown up by the need to reduce the UK’s budget deficit. Now that we have a new government, the first steps are being taken with the £6bn cuts announced recently across the public sector. While this is obviously going to create a tough situation for many, at least it is a first step in reducing the uncertainty that has been a problem for organisations and their employees in recent months. Uncertainty, we know, has a negative impact on employee well-being because it makes people feel like they are not in control of events – and feeling that you can’t  influence what happens to you is a major cause of stress.

In the broader economy, many are pointing out that the first £6bn is just a drop in the ocean of the main deficit. So we’re just moving on to a new round of (higher than usual) uncertainty for all. This is compounded by the expectation that cracks will soon start to appear in the coalition government – and who knows in which direction these cracks will run. Chief Executives and their top teams need to remember that those organisations who help employees to feel informed and in control of their own lives will be ahead of the game in retaining top talent, morale and competitive performance.

Uncertainty has a direct impact on organisational performance because it drains the “reservoir” of employee well-being. Research has provided evidence for the connection between employee well-being and organisational performance – so much so that organisations like the NHS are raising well-being interventions to the strategic level regardless of the economic climate.

The leaders’ role in this aspect of performance is highlighted by a recent Robertson Cooper poll of 2,000 people, relating managerial support to organisational resilience – the ability of the organisation to bounce back after setbacks. Of the respondents who felt that their organisation was “very naturally resilient”, 65 percent also said that they received either “a lot of support” or “a fair amount of support” from their manager. That’s a statistically significant correlation between perceptions of support and perceptions of how resilient the organisation is.

Providing direct support is just one way to maintain and replenish organisation’s “well-being reservoir”, but leaders often underestimate the impact they can have on well-being and performance. This impact involves improving their own resilience, helping to develop the resilience of their employees and taking action to keep the “well-being reservoir” in the organisation topped up. This isn’t easy though. One of the difficulties for leaders is that everyone’s different. For example, some individuals are naturally more resilient to uncertainty but are drained by other challenges such as increased workload. It turns out, in fact, that personal resilience is complex and multi-dimensional, with individuals responding to different pressures in different ways depending on their personality and the coping strategies they’ve developed over the years, as well as on what is going on in their lives at the time.

So let’s take another possible effect of the recent change of government, and look at what action a leader might take to maintain high levels of well-being, engagement and performance. There is no doubt that organisations such as the NHS are likely to embark on a new period of change. In this and other public sector organisations we are already hearing some confident and energetic leaders expressing the view that current political developments and economic necessities provide a positive opportunity for truly radical change.

These people and others like them are likely to be motivated and resilient in the face of the challenge this presents, but could become stressed or disengaged if they feel they’re not being given sufficient responsibility and involvement in planning the changes. Others who are less confident or who need a high level of structure and familiarity in their lives may respond best if they are given clear direction and kept well informed. So senior management must make sure they assess the pattern of concerns across the organisation, while individual managers should carefully consider how different members of their team are likely to respond.

In addition, although heavy cuts are necessary to assuage the markets, it is important for government to realise that engaging in negative or punitive policies for too long will have cumulative negative effects on the electorate. This will have political consequences down the line for the coalition government. Individuals understand the need to cut back during difficult times, but they also need to see the proverbial “light at the end of the tunnel”; in order to see positive aspirations.

This could come in the form of investments in things people value, some of which may even provide a return on investment. As the UK government’s Foresight programme on Mental Capital and Wellbeing found in their two year investigation, investing in the health and well-being of people in the UK, whether it is in enhancing the quality of working life or encouraging the aging population to be more active, will have a positive bottom line impact.

David Cameron is right in his ideas of The Big Society – once we have taken our hit for the greedy last decade, we will need to invest in delivering this big, positive idea.