Creating a WORLD of Difference


How the Financial Crisis will Cripple Productivity Unless Leaders Take Action

Share Article:

In an increasingly uncertain world, business leaders have to learn to navigate simultaneous crises. Following the Covid 19 pandemic, the invasion of Ukraine and with the current financial crisis, leaders are facing unprecedented challenges. In this article, Chartered Psychologist Aidan Kearney looks at how the current crisis could cripple productivity unless leaders step up and take action.

We all know what a tsunami is, don’t we?

We’ve seen the horror of it visited upon communities like Indonesia and Japan. We’ve witnessed the devastation that it can wreak, where an unstoppable force inundates areas sweeping everything in its path.

Imagine, if you can, the feelings of powerlessness that such events can cause. Then imagine if the tsunami was not a body of water, but … something else entirely.

Imagine that tsunami was economic in nature. A constant deluge of price rises, spiralling bills, energy price hikes, inflation and flat lining of real time wages.

What impact might this type of situation have?

Well, to start with, let’s remind ourselves that human beings have a wonderful system that each of us has access to. This system creates all of the innovation and problem solving we are so fantastic at. It also enables us to navigate complexity and change in flexible and adaptable ways.

This system, the human brain and mind also scans for danger 24/7 in order to detect and respond to threats in order to try to keep us safe.

Great so we’re armed with a flexible, problem solving, threat response system that’s great at change. No problem then.

Ah just hold that thought for second.

Human beings are great at change; however, the context is key. Aspects of control and influence are critical to consider.

When we’re faced with aversive stimuli like a financial tsunami, like a seemingly unending rise in costs and bills, where our levers of control, our ability to influence the impact of this is limited or negligible, then something else can happen. This is where understanding the concept of ‘learned helplessness’ is vital.

Seligman (1967) developed the concept of learned helplessness from laboratory experiments where the impact of inability to escape from stress and aversive stimuli was measured. In essence the inability to control or escape from the negative and stress inducing situation resulted in a passive response, so that even when an opportunity to escape from the stress inducing situation presented itself, the subject remained passive.

The Chartered Management Institute (CMI) survey of more than 1,000 managers and team leaders, 71% said they had seen evidence of the crisis increasing stress and anxiety for their teams.

Learned helplessness in humans can increase the risk of depression, anxiety and disorders including PTSD.

If you’re leading a business, I would hope that first and foremost you’d would want to mitigate the chance of learned helplessness arising from a duty of care point of view. However, if you need a business case, then ask yourself, what might be the impact on productivity of staff who are overwhelmed by stress and feel passive in the face of the economic challenges around them, if they are so stressed by the threat posed by financial challenges that this then impacts how they show up and function in their role.

If you’re looking for data in regard to the impact of the financial crisis, the Chartered Management Institute (CMI) survey of more than 1,000 managers and team leaders, 71% said they had seen evidence of the crisis increasing stress and anxiety for their teams. Of these, 93% said it was affecting employees’ productivity. That amounts to 66% of all the managers surveyed.

Forty-one per cent of the respondents highlighted ‘more distraction, less focus and attention to detail’, 33% increased sick leave or absence and 31% a ‘reluctance to take on extra work.’ (source – The Guardian, 11th December 2022).

So significant data is demonstrating that the impacts of the stress are appearing in sizeable numbers. And guess what the financial crisis shows little sign of abating.

We’re already seeing increases in sick leave and absence and if this continues the potential for learned helplessness to embed is all too real. So, while this shouldn’t need stating so clearly … learned helplessness and burnout (feelings of exhaustion, mental distance from job and a host of psychological and physical symptoms) pose significant risks to individuals and teams. And as with any risk in a business I would suggest these should be understood, mapped, and managed or mitigated.

And in a time where economic headwinds are battering organisations too, it makes not just ethical but also business sense to put some thought and action into how we support each other.

What can be done?

Well to borrow from another older theoretical model, Maslow’s hierarchy of needs (1943), by understanding people’s need for stability and a degree of certainty around specific needs, we can approach support in a measured way.

And unlike being faced with the tsunamis caused by the unstoppable power of the ocean, there are steps that we as leaders can take to mitigate some of the impacts of this financial tsunami.

I would suggest:

  • the provision of support services for those who are finding things tough
  • guidance around available help
  • opening discussions and creating the space to have conversations about pressure points and being prepared and trained to step into uncomfortable and challenging areas, creating trust that concerns and fears can be expressed and explored
  • the institution of financial wellbeing initiatives
  • proper compensation and remuneration and using profit to benefit the organisation as a whole
  • evidence based and properly trained and resourced psychological support

All of this support can help staff to find solutions, to perceive a degree of control and by developing and introducing whole person support initiatives, we can not only enable staff to manage stressors and avoid learned helplessness, we can also support business continuity and productivity in the process.

World Wellbeing Week 2024

June 24 – June 30

Follow Wellbeing World

Sign up to our newsletter

Fill out the form below to get all the latest straight to your inbox!

Search Wellbeing Providers, Articles & More...