A downturn in economic activity requires strong leadership to keep businesses afloat without sending employee morale and productivity to the bottom. Though effective leaders cannot make bad news good, they can help their workers stay hopeful. Personal styles may differ, but capable managers share several traits that help their companies weather bad economic times.

Manage Openly
Uncertainty is a big morale sapper. Wise leaders share information freely with their workforce, so that employees understand the business and its finances and see the role they play in helping to determine the company’s success. Showing employees hard numbers that clarify the impact of fixed costs, profits, volume, and cash flow helps them feel less like victims if layoffs become necessary.

Sharpen Focus
Select one or two key indicators that reflect the health of your company, and focus attention on boosting performance there. The measure a company decides to track will depend on the nature of its core business. Whether the numbers you watch are for new customers, total sales, market share, or net profit, the category should be chosen because success in that area ensures that everything else falls into place.

Play It Straight
Tell employees the unadorned truth, simply and clearly, especially when layoffs and pay cuts are necessary.  Don’t make promises and assurances you can’t keep. When downsizing is necessary, bring managers closest to the affected employees into the decision-making process and let employees know that the managers were consulted. That way, laid-off workers understand that the decisions were made with knowledge of their work.

Communicate Effectively
Find a communication medium that fits your operation’s size and style. For some companies, a regular newsletter works best; for others it’s regular staff meetings. Don’t overdo the frequency or length of meetings or newsletters. Some companies find a monthly one-page newsletter works best to keep staff up-to-date on how the company’s doing without overloading them with information. For others, a 10-minute staff meeting every few weeks might fill the need.

Share Good News Fast
Back up the sacrifices represented by layoffs or pay cuts with solid management efforts to improve business, and let your workforce in on your plans. When positive reports begin to surface, let workers know right away. If there’s a piece of really good news – say, a big new client or a dramatic improvement in productivity – celebrate with your employees.

Intensify Customer Focus
A rocky period in the economy signals the need to reconnect with customers. Some companies develop a concierge approach, personalizing attention to individual clients and making extra effort to find new ways to please customers. They call or visit their best customers to ask,  "How are we doing?" and thank them for their business. When clients respond to the attention with praise, managers share the success stories with employees.

Walk and Talk
Good leaders make themselves especially visible in times of uncertainty, spending more time walking around the office and talking to employees. High visibility reinforces the idea of a shared effort and helps to dispel fears that the boss is hiding somewhere hatching ominous plans in secret. Effective managers keep their office doors open during uncertain periods to encourage easy communication, and they make every effort to answer questions frankly.

Say ‘Thank You’
Especially in a time of layoffs and pay cuts, it’s important to show appreciation for your valued employees. Public thanks – on company bulletin boards, in newsletters, or at staff meetings – for extra effort can go a long way to help keep morale high. Giving recognition for extra effort takes on special significance when tangible rewards are limited.