Optimism and Pessimism

Stephen DeAngelis

September 21, 2009

Since the current recession began, I have been touting the importance of entrepreneurs in getting the economy back on its feet. One of the characteristics possessed by most entrepreneurs — one that makes them well-suited to doing business in bad times (or good) — is optimism. Having an optimistic boss is one thing, but an article in BusinessWeek claims that businesses with optimistic employees have an even larger competitive edge [“Is Optimism a Competitive Advantage,” by Michelle Conlin, 24 August 2009 print issue]. The article equates an employee’s optimism with his or her level of engagement in the company and concludes that “the link between a company’s employee engagement and its bottom line is real: the more engaged the workers, the higher the sales and profits.” Conlin writes:

“Most human resources managers base their motivational policies on a simple psychological premise: that optimistic, engaged employees are more productive and hence can help their employers grow and make more money. Put simply, workplace optimism, if nurtured properly, can be a competitive advantage.”

The reason that Conlin equates engagement with optimism is that optimism is hard to gauge. There are, however, a number of ways of judging a person’s level of engagement in a company and studies have shown that as engagement rises so do sales. Conlin continues:

“Companies don’t directly measure the optimism of their employees. Instead they rely on engagement scores, typically gathered by outside consultants who exhaustively survey the staff. As in: Does your boss support you in getting your job done? Do you have a best friend at work? Then the number crunchers analyze the results. Many companies see a link between employee engagement and the bottom line. Best Buy, for example, says a 2% increase in employee engagement at one of its electronics stores corresponds, on average, to a $100,000 annual rise in sales at that location.”

There are other benefits of having optimistic employees besides a better bottom line. We’ve all be around negative people in the workplace and the experience isn’t enjoyable. People like working with optimistic people. They are willing to go the extra mile to help them because optimistic people are generally the first ones to offer help when they see a need. Conlin points out that in times of grave uncertainty, like the current recession, instilling a sense of optimism and hope in employees is crucial to making it through the difficult time.

“‘The more optimistic [people] have better coping mechanisms and can help their organizations recover more quickly,’ says Binna Kandola, whose British firm, Pearn Kandola, has conducted ‘happiness audits’ for PricewaterhouseCoopers, among others.”

Kandola clearly equates optimism with happiness. That shouldn’t be too surprising since most optimistic people are happy because, as the old song goes, they “always look on the bright side of life.” If you don’t believe that optimism and happiness can make a difference, Conlin tries to persuade you otherwise by providing a case study.

“HR managers often point to Campbell Soup as the most compelling example of how an all-out assault on pessimism can alter a company’s fortunes. When Douglas R. Conant became chief executive in 2001, Campbell had a reputation as an exceedingly pessimistic workplace. Management’s engagement scores were the lowest of any big company Gallup had surveyed. Its stock was in the pits. Takeover rumors were rampant. And a leading securities analyst of the food industry likened the company to a ‘buggy whip’ maker. Conant decided that winning in the marketplace meant first winning in the workplace. He gave every employee the equivalent of a user’s manual that explained how he himself operated. He replaced nearly all of the company’s top 350 leaders, a signal, in part, that he was serious about heeding employee complaints that the place was broken. Then he set about transforming Campbell into a more employee-centric company. Conant created Campbell University, upgraded the recognition program that showers gifts and other awards on high performers, and penned up to 10 handwritten thank-you notes to employees a day. Today, according to Gallup, Campbell’s engagement scores are among the highest of any company it measures, and its earnings growth has handily beaten that of its peers.”

At a time when high unemployment is rampant, employers can forget how important it is to invest in their company’s human capital. Training is often one of the first things to be discarded during an economic downturn. The problem with that strategy is that it undermines the optimism and hope of employees at a time when those characteristics are critical for getting through tough times. Conlin asserts that “there’s no better way to stoke pessimism than by firing a lot of people.” She concludes her article by discussing what J.C. Penny and a medical technology company called Stryker have done to avoid layoffs.

Although I am a big believer in optimism, I’m also a realist. I understand that there is also a place for people who are willing to question company actions when they see a problem that optimists don’t. That is why I found it interesting that BusinessWeek published a companion article to Conlin’s that praised a bit of pessimism [“The Case for Pessimism,” by Patricia Pearson, 24 August 2009 print issue]. She writes:

“What American businesses can use at this juncture is the advice of professional nervous wrecks like me. Don’t scoff. It pays to pay attention to the Nervous Nellie in the house—the person who will tell you that now is a good time to back away from bravado and consider how an anxious, pessimistic temperament is linked to creativity, conscientiousness, and perfectionism.”

I must admit that I have never equated a pessimistic temperament with creativity, conscientiousness or perfection. I’ve always thought that creative people were having too much fun being creative to be pessimists. Pearson, however, lays out a convincing argument that worriers and perfectionists can make good employees because they pay attention to detail.

“One study that confirmed these correlations, ‘Can Worriers be Winners?’ by Adam Perkins and Philip Corr of the University of Wales, found that people of high intelligence who fret, who double-check obsessively, and generally go around in a state of high alarm expecting the worst, produce better results.”

Every company needs employees who worry about the details. There’s a reason for the old saw, “the devil is in the details.” Pearson, however, believes that there is a link between pessimism and problem-solving. She continues:

“There appears be a genetic tie between mood disorders and problem-solving creativity. When Sir Isaac Newton invented calculus, a new field of mathematics that revolutionized science, he didn’t mention his invention to anyone for 10 years. Why? Because he was beset by anxiety and neurosis. And he didn’t have a team leader who was paid to be upbeat. (Well, of course he didn’t—he lived in the 17th century, a time free of phrases such as ‘team leader.’ But you see my point.) And Sir Isaac wasn’t the only angst-ridden scientist. Psychologist Dean Simonton at the University of California’s Davis campus found that a third of eminent scientists are dogged by anxiety, depression, or both. In his view, whatever wiring they possess that makes them vulnerable to those feelings also makes them think outside the box. That goes for business, too. We tend to see pessimism as the bane of robust capitalism. Managers are frequently urged to screen for depression when hiring and to offer their afflicted employees counseling. But within a company’s psychological capital there exists a currency to be tapped: something known as ‘depressive realism,’ the ability bestowed by melancholy to view reality more accurately. Abraham Lincoln and Sir Winston Churchill, both intimately acquainted with melancholy, brought a sober, gimlet-eyed view to their respective missions, refusing to be carried away by irrational optimism as they searched the shadows for signs of their nations’ true states. Would Lincoln and Churchill have been persuasive at today’s relentlessly upbeat sales conferences? Probably not. Who wants to hear the ifs and buts?”

Pearson claims that every business needs people who are looking to the skies for gathering clouds as well as people scanning the horizon for new opportunities. Does that mean that a company is better off filling its empty seats with pessimists? I don’t think so. Even by her own admission, Pearson admits that two out of every three eminent scientists are not pessimists nor do they suffer from anxiety and depression. Her real argument is: don’t under-appreciate the value of naysayers just because they might not be pleasant people to work around. I believe the larger lesson is that individuals should not immediately submerge pessimistic thoughts when they arise. All of us — even the most optimistic of us — see problems when others see clear sailing or get depressed occasionally.

“‘Depression,’ writes [Dr. Paul Keedwell at the Institute of Psychiatry in London], helps to remove any misunderstandings, misguided goals, and ‘false optimism that have fueled goal frustration.'”

There is a balance between optimism and pessimism that must be found and I believe that optimism must outweigh pessimism most of the time for businesses to succeed. Business leaders must be optimistic as well as realistic. That means they must have trusted advisors who are willing to offer bad news or have the courage to tell the boss that his idea stinks. Although it may be ego satisfying to be surrounded sycophants, such people rarely provide value to a company. Most organizational gurus will tell you that there are a number of crucial roles that must be filled in order to make a good corporate team. Each of those roles may require a different temperament from its occupant. A good leader understands the value of each of these roles and selects a proper candidate to fill it. While it might create a pleasant working environment if people walked around humming Bobby McFerrin’s “Don’t Worry, Be Happy,” your business will do better if you embrace a philosophy that says, “Be happy, but worry some.”