Sitting at the top of Canary Wharf last week enjoying a ubiquitous americano with a Director of one of the big investment banks, I was given a fascinating insight into the psychology of the credit crunch, and a clue maybe as to how we as leaders and managers of mere mortals should react.

Once I strutted.......

The Director said "Look it's simple - 6 months ago my colleagues and I were not just paper millionaires, we were paper multi-millionaires. I strutted into meetings with the confidence of someone who worked for a great firm, and who could afford to take a risk that the client might not like what I had to say. I had no fear, after all, the worst fate that could befall me was if I was fired - cue retiring to my country house with my cashed-in share options and the prospect of a lie in on Monday morning. It might even have been fun! Contrast that with today - I work for a firm with a reputation that's shot to pieces, my share options are totally worthless, and frankly I don't know if I will still have a job next week. Today I am full of fear, and the real problem is that even if we get through this, I think I am going to grieve so much for my lost millions, that I will never be the same again. 6 months ago, with no fear, being treated with respect and even a little awe by clients, and with the genuine belief that I could jack it all in at a moment's notice if I wanted to, the job was fun. Today, full of fear and being treated like a pariah, the job sucks." And as he spoke, I held the silent thought that in his present state, I would not buy from him. I would sense his fear and say a polite 'no thank you'.

But what has actually changed?

And yet I mused, as he railed against his situation, what precisely has changed? I looked out of the window on a simply stunning view over the river - the sun was still shining, the river was still flowing and the cranes were still creating new buildings. I looked around me at the throng of people sipping their cappucinos and hububbing about today's financial news - still employed and still earning decent salaries. And I looked back at my coffee partner - still with a phenomenally exciting and intellectually stimulating job. The truth is that nothing has changed, other than our attitude. If we are still employed, then the job is just what it was yesterday. We still have to represent our companies with pride and integrity and we still have to provide true added value to our customers. Everything else that we are feeling is because we have allowed ourselves to get into the most precarious position of all - thinking that we are in control. And now we are finding out that we are not. And we have a choice - we can feel the fear or we can feel the excitement. The problem of course, as with my coffee partner, if others sense the fear, they will not buy what you have for them. In other words, if you are fearful you will surely fail. You will be your own self fulfilling prophesy.

It's all in the mind.......

Although our colleagues and our employees may not be grieving for lost paper millions, they are still anxious and worried about the current economic times and the impact they might have. People will now be genuinely worried about their jobs, and thus about their ability to provide for their families. They too had been feeling in control; confident enough to borrow money; to take an expensive holiday; to send their child to that school. And that confidence has been shattered. Very understandable, but as their managers and leaders we have to intervene to change their attitudes, for as we have seen if we do not we will preside over their failure. But help is at hand, because although extreme, all that is happening in these times is that people have been rocketed back to the start of the cycle of change. If we recognise this, and set our strategy as managers and leaders to take people through the cycle again, to a place where they once again feel some control over their own situations, we can create success, when all around us is likely to be very dodgy indeed.

The 'grief cycle' is actually a change model

Elizabeth Kubler-Ross came up with a 5 stage 'grief cycle' noticing that a human being goes through 5 emotional and psychological stages in the face of the death of a close relative or partner. I believe that this cycle is fundamentally a change model that can help us to understand and assist people dealing with their personal reaction to a trauma, ie when presented with a fundamental change of circumstances that were not of their own choosing. These are the stages:

Stage 1 Shock and denial - on hearing the news, or at the point of realisation, we will go into shock and will then attempt to refuse to believe or accept that what has happened has indeed happened, or at the very least we will start to argue that it is not as bad as people are making out. Anything to avoid coming to terms with the news and changing.

Stage 2 Anger - there must be someone to blame! If we get angry enough or frustrated enough, we will not have to deal with the problem or change

Stage 3 Bargaining - surely we can negotiate? If we could just work out some compromise? Please let me have something.......

Stage 4 Depression - well, since it really is that bad, and there's nothing I can do, maybe if I just crawl back under the duvet.......if I just say 'yes' to the boss, maybe he'll leave me alone......

Stage 5 Acceptance - ok, I've tried denying it; I've tried getting angry and blaming others; I've tried negotiating; I've tried ignoring it........actually why don't I just get on and deal with it, and if I'm going to do that, then I will find a way.....

The importance of the model is to notice where people are, and then lead them to the next stage. I'm always intrigued that change managers get really frustrated when employees try and bargain with them, instead of recognising that they are in fact half way to acceptance. Stages should be almost celebrated!

So our job as managers, assuming we can put aside our own fears, is quite simple - help our people move through the stages listed above. Sit with them while they do this, but gently insist that they face each stage. The winners in the current economic times will be those companies who get their employees to acceptance first. Will your company be one of them?