Investors and business leaders know all about the “January effect”, when the stock market rises in the first week of the year. However, in 2009 busines s leaders are having to learn about another effect of January, namely psychological depression. The weeks following Christmas are the most depressing time of the year for most people, and that’s in good years!  With jobs constantly being cut, the depression will only get worse this time round.

 A couple of years back, a British psychologist Dr. Cliff Arnall suggested that the 24^th of January is the most depressing day of the year. He even gave it a formula:

                                [W + (D-d)] x TQ

        M x NA

The equation is broken down into seven variables: (W) weather, (D) debt, (d) monthly salary, (T) time since Christmas, (Q) time since failed attempt to quit a bad habit, (M) low motivational levels and (NA) the need to take action. If Dr Arnall is right, then the key variable for business in 2009 will be M, the motivation factor.

With companies large and small laying off workers, there will be a pressing need to motivate the workers whose jobs are not cut…yet. In many cases this has been a sudden shift in company behavior. One moment financial results have been crowed about, the next redundancy notices have been hitting the workforce. The great case that business leaders can make is that everyone is affected. In other words, “don’t blame us, it’s the economy”.

Undoubtedly, some are using this as an excuse to downsize at a time when it has become socially acceptable to do so. Others are reluctantly matching their resources to the business flow. The other advantage has been that the Christmas season acted as a distraction for employees. There was something to look forward to. This may be lulling business leaders into a false sense of security, or complacency, about the docility of their employees.

So, here’s the newsflash to business leaders: They aren’t docile, they are scared and depressed. The rationale for taking actions to beat the economic crisis, and the distraction of the holidays, will give way to a new force in January. While there is a natural sympathy for those who have lost their job, what needs to be better understood is the effect on those still working. Watching colleagues leave causes anxiety for any worker, but is then added to insecurity that they may be next.

Which brings us to the January effect business leaders will have to face in January. In a normal economy, after the holiday splurge comes the guilt, and the bills. This calls on huge resources of self-motivation to sort out the bills, and to get through the remaining dark winter months. In this economy, motivation will be considerably more difficult than usual. The feelings of job insecurity will be magnified, and it is difficult to reassure employees that they are safe, since many companies are still going through a difficult phase of restructuring. More jobs will be lost in the coming months; both white and blue collars will find themselves on the outside.

This means that business leaders need to act, and act fast, if they are to maintain a healthy corporate culture. Rumours and speculation will be rife. Who’s next to go? How many will go in the next tranche? Will I survive this? Do I want to survive this? The level of corporate dissonance will impact two key areas, especially for industrial companies.

First, performance and productivity levels will suffer. Workers are distracted. More time is spent on the shopfloor exchanging nervous views, or round the water cooler discussing the difficulties the company faces or speculating about the “big guys” who will fall. Yes, business leaders are just as vulnerable as anyone else. This is a crisis that is affecting companies from the shopfloor all the way to the top. Executives trying to motivate their team will be harboring their own nervous views about self-survival as they try to reassure their teams that “we’re gonna get through this, together” . Togetherness may mean walking out the door together and collecting unemployment.

Second, health and safety will suffer. The uncertainty will strain nerves, and the anxiety will challenge the mental and physical health of employees. Employees will report in sick, simply because they are depressed about the daily grind of worrying or watching people go. The distractions on the shopfloor will cause inattentiveness, and as we all know that leads to accidents. Already industrial firms will tell you that December has seen a noticeable increase in safety incidents. By year end, the health and safety stats for companies will not look too great.

This all means that business leaders will need to put greater efforts into the health and spirit of their workforce. Health and Safety, Human Resources and Internal Communications leaders will need to work together to establish a motivational plan on the one hand, and to offer pastoral counseling for workers on the other. There are many external providers of these services, including business chaplains if you take into account the spiritual nature of most workers.

Understanding this January effect and supporting the workforce through this period, if done well, will have a positive effect on the company. It may even define a new corporate culture. All the talk of brand and values is going down the pan at the moment in corporate America, only actions speak to the workforce. Now is certainly the time to breathe life into tired values, and offer compassion and not just words and numbers.