04/13/2012 07:46 EDT | Updated 06/13/2012 05:12 EDT

How to be a Leader in Bad Times

For those that survive the government's deep budget cuts, greater challenges lie ahead. In good times, even bad leaders can be effective. However, when the winds of growth die down, truly effective leaders with the qualities and characteristics needed to inspire and engage will reveal themselves.

In the long trail of job cuts and salary freezes left by the federal government's latest budget, we will get to see the stuff that Canada's real leaders are made of.

A new age of austerity has begun.

Overall, some 19,000 civil service jobs are set to be wiped out as part of a review that will chop $5.2 billion in spending over three years from federal government departments and agencies.

For those that survive the deep cuts, greater challenges lie ahead. Many will watch as friends and colleagues depart, workloads increase and promotions and raises are delayed or scrapped. It is in this environment that even the most optimistic employee will begin to question their purpose and their commitment to the job.

However, contrary to popular belief, it's not the spending cuts themselves that destroy morale, but ineffective leadership.

In good times, even bad leaders can be effective. Leaders who don't communicate their visions, who fail to see the greater picture or don't create opportunities for their employees can get by, largely buoyed by the success of the organization. In strong winds, even turkeys can fly.

However, when the winds of growth die down, when budgets are cut and salaries frozen, truly effective leaders with the qualities and characteristics needed to inspire and engage, will reveal themselves.

The most effective leaders understand what most of us do not -- employees don't stay in jobs because of money. Research has proved this fact time and again. Money and financial rewards are a hygiene factor. While the absence of money can hurt morale, the presence of it isn't necessarily what drives people.

While many of our value systems in business are tied to money -- pay and promotions -- decades of research show that money alone doesn't make people happy in their jobs.

In fact, there are five reasons an employee remains at their job:

• The job is meaningful to the individual. It is aligned with their values and gives them personal fulfillment.

• The job provides an opportunity to learn, grow and build their skillset.

• The job provides recognition and validation for the work they do. Their work is noticed and appreciated by colleagues and management.

• The job allows them to create a community and a connection with like-minded people.

• Their employer has respect and admiration in the broader community. There is status working for the employer.

This is good news for those in Ottawa. The lesson here for leaders in government, and in business, is that in tough fiscal times, they must engage employees beyond traditional rewards systems. Effective leaders will find innovative ways to communicate and demonstrate a shared vision for the team, even in the absence of money.

This is a simple concept, but one that very few leaders are effective in executing.

Leaders in Ottawa, and in business, facing lean times can continue to engage and motivate employees in several key areas:

• Create a shared vision and sense of purpose.

Finding a vision is hard when there are dark clouds on the horizon. It is easy to give in to the fear. Leaders have to re-engage people by giving them a sense they are a part of something larger than themselves. This has happened in healthcare industry, which has experienced cutbacks for decades. Healthcare leaders have had to remind workers why they entered the profession in the first place.

At the end of the day, most healthcare workers didn't go into the industry because they wanted to get rich. They chose healthcare because they wanted to improve the quality of life for others. Communicating this vision to healthcare workers reconnects them to their passion, improving their career satisfaction.

A similar call to action is needed in the civil service. Leaders need to ask employees why they chose their career path. What about the civil service called to them? Leaders can help by asking the big questions and telling the powerful personal stories of their own journeys through challenging times. This narrative, and this vision, helps people realize that even in tough times, at the end of the day, another job wouldn't be aligned with their values.

• Use non-monetary rewards to keep passion and learning alive

Even in times of limited budgets, don't ignore that people have a thirst and a desire to grow and develop. With budget constraints, it might not be a promotion that fills this appetite. Instead, look for opportunities to see how people can learn more from colleagues. Set up peer coaching. Look for lateral moves that will help them grow and develop. Growth and learning opportunities don't require budgets or promotions.

Ensure you put aside coaching and mentoring time for these people. Just because they work hard, don't forget them. Be deliberate. Ensure you are focused on giving the coaching time to the best performers in your team.

• Ensure staff have what they need to succeed

Even if you ensure your high performers have a higher sense of purpose and receive coaching, they won't succeed unless you give them the tools for enablement they need. Perhaps they are being hamstrung by outdated policies or procedures, or problems with other departments. You as a leader play an important role heading off any interference with your team. Your job is to clear the decks and ensure your team can succeed.

• Don't absolve yourself of responsibility

Reduced budgets can give convenient excuses to throw up your hands and give up. Leaders have far more control over engaging and enabling employees than they realize. Don't use budget cuts to absolve your self of responsibility. This is the biggest threat the federal government's latest budget poses. The psychological effect that causes people to feel things are out of their hands has a greater potential to cause damage than the cuts themselves.

This brings us back to the impact of leadership. This is when real leaders have the opportunity to shine and where poor leadership will have a real impact on the ability of others. Good leaders will soar and the bad leaders will only get worse. From the Prime Minister down to department managers, it is on leaders themselves to take up the mantel of the public service, keeping employees engaged, motivated and ready for the lean times ahead.