What to do when employees feel less loyal, less trusting, and less engaged

We all know why executives and employees are feeling highly anxious these days: layoffs and the threat of layoffs, failed strategies, unpredictable business shifts, the all pervasive uncertainty. Here, Karen Sumberg, a vice-president at the Center for Work-Life Policy, talks about the very measurable effects of stress in the workplace.

She and her colleagues conducted a three-month long research project, "Sustaining High Performance in Difficult Times", in the spring of 2008, as the recession was just starting to take hold. They interviewed some 200 employees who had been identified by their bosses as having "high potential." What the Center found was troubling; what's going on now, Sumberg says, is even worse. Excerpts from her conversation with Associate Editor Susan Berfield:

What was the main conclusion of your study?

Well, we found that the financial turmoil and all the layoffs were stressful for everybody and bad for the companies. Loyalty, engagement, and trust had all gone down compared to a year earlier. Before 95% of the people we interviewed said they were very loyal to their employer; in 2008, that number had fallen to 53%. Trust in their company had gone from 79% to 37%. That's trusting your manager, the company, what you think is going to happen. There's a lot of stress around that. The person you never thought would get laid off does, and you think there are no rules. Engagement—the willingness to go the extra mile—was down from 91% to 71%.

How did the companies take these results?

The loyalty number is a huge blow. And when trust is gone, that's it. As for engagement, people were engaged as a means of survival.

What did the participants say about how their managers were handling the stress?

Everything seems very tribal, very Lord of the Flies, in times like this. There is a feeling that people are withholding information. But the people at the top really don't always know more. Sharing that they didn't have anything to share would be more helpful. They can say, "As soon as I know something, I will tell you." That can go against the grain, but it can endear you to people.

We found that manager interventions are important. Building bonds and camaraderie with the team is important. Managers making themselves visible and available, just walking around the office is important. It seems like "no duh," but people don't always do it. Managers are shutting their doors and calling their contacts. They are becoming more isolated.

Were any managers doing the right things?

We heard about some teams that had paid for a physical trainer once a week during lunch time. Others would just go outside, even if it was with brown bag lunches. Getting out of the office is good. Giving recognition for work, even a thank you note, motivates people when there's no money to give out.

Letting people volunteer during work hours is a great boon to companies. It's a great way to retain people. It takes people out of their crisis and stress and refocuses them. Giving back is a really important thing, a very powerful tool and it's tremendously gratifying. In some companies, people had the time. And if a company says you should go help someone else, that's a great thing. That's a powerful reward.

What advice did you give to the companies involved?

That the communication has to be authentic, not one-size-fits-all. After a town hall meeting, teams should debrief and talk about what people heard—which is sometimes different than what was said.

We suggested that they think about finding ways to keep relationships with some of the people they had to lay off. They could create job banks, alumni groups. They could offer unpaid sabbaticals instead of layoffs in some cases. It's not so simple, we know. A layoff is awful, it's a breakup, but there are ways to handle it more effectively.

We also reminded them to put in the face time with the clients and customers. Make sure they know what is going on, that they are getting an honest account so they don't see the need to take their business elsewhere.

And we told them not to forget about yourself. Don't shut out friends and families. Get what you need. If you put up your shell, the Mack truck will still hit you. But if you have a support system, there will be someone to pick you up from the road. It's easy to get lost in the panic and speculating.

Were executives surprised by any of your findings?

They were surprised that some of the interventions are so simple, that some of the quick wins could really pay off. These are easy things to do.

Did the executives take any of your advice?

The companies did start doing some of this. Our president, Sylvia Ann Hewlett, conducted some meetings for managers. We sometimes call it the "perma frost" of middle management. They have to feel special and know what they need to do because the message from the top can get lost there amid the panic.

Susan Berfield is an associate editor at BusinessWeek