The New Labor Stats and Lessons for Leaders

Today’s slumping economy is haunting millions of Americans. Veterans of the workforce fear being let go and never finding a job again. Middle age employees worry about supporting their families and maintaining their careers. And students in both business and law schools are trying to understand what's going on and adapt in order to find stable jobs upon graduation.

With these thoughts at the front of everyone's mind at the turn of the New Year, the Labor Department (DOL) just reported yesterday that 85,000 jobs were lost in December. This came as a pretty big surprise to economists who, after analyzing the net gain of 5,000 jobs in November, suspected that December would repeat the trend. And what’s worse is that reported numbers also show that more than 660,000 Americans dropped out of the labor force last month, meaning that the actual unemployment rate closer to ~10.5% instead of ~10.0%.

Although this change in calculation increases the unemployment rate to a near all-time high percentage, the bigger issue might be the fact that people are starting to drop out of the workforce, suggesting higher levels of pessimism than in 2009 and lower levels of hope than ever before. But if you think about it, this certainly makes a lot of sense. Many people have been closing in on a year out of work. And for the past twelve months, I've consistently heard so many people say that they have never seen things as bad as they are now.

Under this bright spotlight, America's leaders now have to juggle crisis management, media and investor relations, new firm strategy, and most difficult of all, the horrifying, daunting, and ambiguous task of communicating to its people what’s going on and where they are headed. Inherent in this task is the fact that the people are vulnerable and that many will become upset, angry, uncertain, and doubtful of whatever a leader might say. So while public leadership is something that has always hard, today it has become a near impossible challenge.

To be successful, the ability to communicate effectively will be critical. And going forward, modern leadership will less about the actual result than it is about inspiring others and building consensus. To do that, leaders will have to deeply relate to the issues of the people and also be able to deliver a compelling message. In times past, executives have overlooked this ability in favor of making quick decision and analyzing financial impact. But this method of leadership will not work today. Instead leaders will have to be more connected with people and be more conscious of how they make people feel and how they will impact their situations. And so the very best leaders will be those who not only analyze issues and make decisions but those who also understand that what matters even more is how you make others feel in the process.

To quickly clarify, actions always speak louder than words and leaders will also have to focus on achieving financial and operational results in the long run. This is the only way any organization can survive. But in times of panic and adversity and in ambiguous times where the people are calling for a leader, focusing on optimism and communication is a key first step. So today, the leaders that emerge will be those who are good storytellers. They will craft a story, tell that story to the people, and then inspire them with hope about how things can be going forward.

In the days to come President Obama (and CEOs of many companies) will embark on this very task. Though fiscal strategy and economic theory will be of critical importance in solving the issues, I hope that he reflects back to when he first became president and that he chooses talk more about his hope to rebuild the economy and create jobs than he does pure strategy.

In the end, how he frames and communicates these issues will determine his success.