Employers should stop glossing over their firms' problems – workers aren't stupid and they respect a firm grip on reality, writes Stefan Stern

“WORRIED ABOUT the recession?” the nice young woman at the top of the stairs asked as I came out of the Tube station the other morning. She was offering little orange leaflets to commuters and she had a lot of takers. What were the leaflets advertising? Unemployment insurance.

But back on my desk in the office lay a pile of material on almost precisely the opposite subject: “employee engagement”. This stuff had been building up over the past few weeks.

Employee engagement is a venerable management theme, long seen as a magic ingredient for corporate success. Build an engaged workforce, the gurus tell us, and all will be well.

But today you have to ask: engage with what (or whom)? Employers are trying to disengage themselves from significant parts of their workforces. Contracts are being torn up. The engagement is off. Is there anything managers can do to reinstate it?

Gallows humour prevails in many workplaces right now. People worry that they might be, as one newspaper executive used to put it, “in the fingertip club”. When asked what he meant by that, the executive explained: “You’re hanging on to your job by your fingertips.”

Employers are in a lose-lose situation. Redundancies are necessary but disruptive. Survivors find little reassurance in what they see, perhaps rightly, as a temporary stay of execution. At the same time, they feel guilty about being spared and wonder whose turn is next.

The anxiety of not knowing your fate can be so intense that some, like business psychologist Binna Kandola, argue that the certainty of getting fired is preferable to the uncertainty of not knowing your fate. “We risk over-engineering and mystifying what is at heart a pretty basic human response: the desire (or lack of it) to do a job well.”

Yes, times are bad. It was clearly the right moment to deal with the backlog of “engagement” documents on my desk and see whether there was anything important to understand. I found quite a few interesting nuggets of information, and rather more that left me feeling underwhelmed.

The Engage Group, a London-based consultancy, says that a “new inclusiveness” will help boost levels of employee engagement. This will involve – you may not like this – “sharing power”.

“The old model of the charismatic, controlling chief executive who leads from the front and barely looks back is not only dated but has a hugely negative impact on employee engagement,” the group argues. So far, so plausible.

Colette Hill, chairman of communications consultancy CHA, says (unsurprisingly) that, in worrying times such as these, clear, honest and timely communication is vital if you want people to remain engaged. You are steering the ship through very choppy waters. “Will your employees act as your crew or will they become disgruntled passengers?” Ms Hill asks. Good question.

Best Companies, the workplace consultancy, is launching an employee engagement “experiential learning attraction” in April. The interactive training features a series of “zones” that are meant to show how employers can build greater engagement in the workforce. It will be a 3D, virtual reality extravaganza.

Getting back to Kandola’s point, I think we risk over-engineering and mystifying what is at heart a pretty basic human response: the desire (or lack of it) to do a job well. We have created an entire dictionary of terms to describe the same thing. Will colleagues “go the extra mile”? Will they offer “discretionary effort”? I heard a new one recently, based on the words of the old wartime song The Hokey-Cokey. Do your employees, asked Bruce Rayner of workplace consultancy You at Work, put their “whole self in”?

There are two routes to winning your employees’ goodwill. You can splurge cash on them, as Wells Fargo, the rescued US bank, proposed to do, by taking colleagues on “employee recognition outings” to fancy hotels in Las Vegas. This idea has now been dropped.

Or you could try telling the unvarnished truth. Last week, I met Archie Norman, the British businessman who led the hugely successful turnaround of the Asda supermarket chain. How did he manage to get the buy-in of an anxious workforce?

“We stated it as it was,” he told me. “You have to get people to face up to the reality. People will follow you . . . what they can’t stand is unrealistic, deluded leadership. When we said that the situation was very bad, that we were in survival mode, we got three cheers from the front line,” Mr Norman explained. “They said: ‘At last, somebody’s arrived who realises what it’s really like out there.’ ”