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We Will Survive

In tough times some companies prove more resilient than others. Can that trait be learned?
Scott Leibs, CFO Magazine
April 15, 2012

In 1958, the average length of time a company remained on the S&P 500 was 57 years. Twenty-five years later it had dropped to 30 years, and 25 years after that it had fallen to just 18 years.

Clearly, it is becoming more difficult to survive in American business. In February alone, more than 5,000 commercial enterprises in the United States filed for bankruptcy, according to data from Epiq Systems Inc. (on the plus side, that's a 16% drop from February 2011).

What separates the winners from the losers? A sound strategy, competent management, and quality products and services are all critical, of course. Access to capital and savvy cash management are indispensable. And let's not ignore the obligatory nod to the engaged workforce.

But is there something underneath these attributes that is also at play? A more ineffable quality that allows some companies to power through tough times while others buckle? Certainly some people are deemed to be more resilient than others; can that human characteristic manifest itself at the organizational level?

Increasingly, psychiatrists and social scientists say yes. George S. Everly, an associate professor of psychiatry at the Johns Hopkins School of Medicine and executive director of Resiliency Science Institutes at the University of Maryland Baltimore County Training Centers, for example, argues that companies can develop a "culture of resilience" that provides a collective "psychological immunity" to adversity. Erik Gregory, an expert in positive psychology, recently launched a new Organizational and Leadership Psychology program at the Massachusetts School of Professional Psychology, intended, in part, to instruct leaders on how to foster resiliency within their organizations.

"The positive-psychology movement emerged about 10 years ago," Gregory says. "It was originally focused on individuals, but now organizations are applying the same principles."

This may strike some as a pop-psychology movement looking for a new market, but for senior executives who take their roles as leaders seriously, yet are unsure how that responsibility translates into actual behavior, the resiliency movement may be worth a look.

Anxious and Bored
As applied to an organization, Gregory says, those aforementioned principles include the cultivation of optimistic narratives ("Yes, times are tough, but . . ."), the ability to distinguish who among your stakeholders is impeding progress versus facilitating it, and a willingness and ability to understand the full perspectives of those who appear resistant to change.

"The new normal is that people are anxious at work and bored at home," Gregory says. In both situations, they lack focused motivation. There may be little that their bosses can do to prod them off the couch, but in the office, Gregory says, "leaders can make a big difference by matching workers' skills to their jobs, and by understanding that as more and more is asked of workers, their capacity is so exceeded that their potential decreases." An executive intent on making his or her organization more resilient should also, Gregory says, appreciate that "while creating some level of disequilibrium can help foster change, too much will lead to destruction."

Everly, author of Resilient Leadership: When Failure Is Not an Option, distills the challenge of building resilient companies down to four core qualities: optimism, decisiveness, integrity, and open communication. It is also important for leaders to appreciate and embrace their roles as conduits and gatekeepers of information. Readers of Malcolm Gladwell's The Tipping Point will see a close similarity between this idea and "the Law of the Few," which holds that mass movements depend on a small but critical group of people who connect, inform, and persuade others.

The challenge, therefore, is not only to model the behaviors Everly cites, but to do so in a very visible manner. For that reason it may be less important for leaders at the very top of a company to demonstrate these characteristics than for front-line leaders to do so. "First-line supervision is where it really happens," he says. "In hospitals, it's the nurses. In the military, it's the platoon leaders and first sergeants. All the C-suite has to do is stress the importance of those four core attributes; they don't necessarily have to embody them."

Nonetheless, it's difficult to imagine any of this succeeding if top leaders don't model those core qualities to at least some degree. One very tangible form of modeling, Everly says, involves decisiveness. "Most leaders mistakenly believe that the worst thing they can do is make the wrong decision," he says. "That's rarely true. People are forgiving of poor decisions, especially if you own the failures but share the successes."

Sharing the successes relates very closely to the other core qualities identified by Everly: integrity (no
blame-shifting), optimism (we did it), and clear communication (which, in this context, is very similar to the propagation of "optimistic narratives" that Gregory says is so critical to fostering a resilient corporate culture).

To some extent this may seem like Leadership 101, and while there is evidence that these techniques do boost resiliency at the individual level, applying them companywide is a new and largely unproven concept. But by applying to the corporate world a body of research regarding what separates resilient individuals from their less-resilient peers, researchers are doing a valuable service to executives who may not fully appreciate what good leadership can actually achieve.



Model Behavior

George S. Everly, associate professor of psychiatry at Johns Hopkins School of Medicine, says that all four of the core attributes demonstrated by resilient individuals (optimism, decisiveness, integrity, and open communication) can be learned by company leaders. When a small group of highly visible, trusted leaders model these traits for subordinates, they can alter an entire corporate culture, thus making a company more resilient.

Everly offers a four-part framework for achieving this:
• Structure work so that people succeed, especially early in their careers. As they do, increase the difficulty or complexity of their workloads. "The esprit de corps that comes from being affiliated with a highly regarded team is palpable; you feel better in the presence of your teammates," he says.
• On a related note, help workers experience "vicarious success" by assigning them to work groups in which they can observe, and to some extent share in, the successes of people who are working at a higher level than they are.
• Be a mentor and offer support at every opportunity. (For more on how important this can be, see "Taking the Next Step," July/August 2011.)
• Training in how to manage personal stress can be useful, though Everly cautions that if the organization's culture fosters stress, then expecting employees to be able to manage it at the individual level is largely futile. — S.L.




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