In a tough economic environment dominated by increased competition for jobs, minimising uncertainty has become a key challenge for chief executives.
A new study by researchers from Monash University, University of Queensland and the Palladium Group found CEOs who fostered a more cooperative mindset during times of instability such as downsizing or mergers reduced the anxiety felt by employees.
The researchers, Monash University's Associate Professor Giles Hirst from the Department of Management and Dr Simon Moss from the School of Psychology and Psychiatry, together with the University of Queensland's Professor Charmine Hartel interviewed 40 CEOs from leading ASX 200 companies to find out how they would foster a more cooperative mindset during times of instability such as downsizing or merges.
The study found leaders who inspired their employees by highlighting the benefits or importance of a shared vision and approach minimised this uncertainty and encouraged employees to work together to support strategic change.
Associate Professor Hirst said most employees felt uncertain of their status, power and role in the midst of change.
"During times of uncertainty employees often compete against each other in an effort to secure their own positions rather than embrace change and cooperate seamlessly for the good of the organisation," Associate Professor Hirst said.
"In times of uncertainty CEOs play an important role in minimising competition and suspicion amongst employees by encouraging their employees to be more cooperative and selfless," he said.
Associate Professor Hirst said managers should develop a strategy that highlights the goals or experiences everyone in the organisation shares.
"Managers should implement a range of practices that show they care for the well-being of their employees. They need to take note of the concerns of each employee and recognise their needs to resolve their concerns," Associate Professor Hirst said.
The study also found that employees should be given the opportunity to meet with managers to discuss their role and how they can gradually adjust their roles and responsibilities to align with the new corporate strategy.
According to Associate Professor Hirst roles and responsibilities should not be imposed on employees but should evolve gradually as a consequence of conversations between individuals and their managers.
Explore further: How limiting CEO pay can be more effective, less costly