"I have learned more about management and leadership during the past six months than I had in the previous ten years," one executive said recently. He is probably not the only one. Most CEOs and senior executives have never faced times as bad as these, and they are pushing themselves as hard as they can to keep their companies together.

There's a certain adrenaline rush to all this. But what happens when the adrenaline wears off? When it's not just two months of bad news, but 15? When every day is like the one before but a little harder, and the end isn't even in sight? That's when real leaders need to reach deep and pull out the best of themselves -- and their employees.

And make no mistake, senior executives will need the best from their employees to get through the dark days ahead. Even when the GDP picks up, as some economists say it will by late second quarter or early third quarter 2009, the jobless rate may not drop until 2010 or 2011. The employees left standing will be shell-shocked, scared, and worn out. And customers will almost certainly lack confidence, which means less spending and credit.

So employees' day-to-day functions will be charged with greater weight and significance. They don't have much margin for error when their organizations have none at all. Meanwhile, employees are also laboring under the same surplus of anxiety and pressure that senior executives are, and it can take a toll on their well-being.

If businesses are to survive, leaders can't overlook opportunities to boost productivity and profitability -- and that means employee engagement is more critical than ever. "There's a tendency right now to freeze -- to avoid doing new things for fear of doing the wrong thing," says Denise McLain, Gallup principal. "Freezing is a mistake. You can always change tactics later if you need to and adapt when more information comes in. But the worst mistake is to overlook engaging your employees. When times are tough, leaders need all the engaged people they can get."

Big boost

Employee engagement is an emotional attachment between an employee and a workplace. It is the result of a bond that produces remarkable financial results for companies. Gallup research has shown that business units in the top quartile of engagement have 12% higher customer advocacy, 18% higher productivity, and 12% higher profitability than bottom-quartile business units.

Engagement also links powerfully to financial performance, which is a saving grace when Wall Street is in turmoil. When compared with their industry peers, organizations with more than four engaged employees for every one actively disengaged employee saw 2.6 times more growth in earnings per share than did organizations with a ratio of slightly less than one engaged worker for every one actively disengaged employee. And earnings per share for top-quartile (in engagement) organizations outpaced the earnings per share of bottom-quartile companies by 18%. (See "Investors, Take Note: Engagement Boosts Earnings" in the "See Also" area on this page.)

As much as engagement boosts the bottom line, disengagement damages it. The bottom quartile of business units have 51% more inventory shrinkage, 31% to 51% more employee turnover, and 62% more accidents than business units in the top quartile.

The same boat

All this begs the question of how to get employees engaged and keep them that way. Financial chaos and its repercussions, which leaders will be dealing with for years, don't necessarily disengage employees. In fact, they can present an opportunity to create engagement -- but only if handled well.

First, leaders need to remind everyone that they're all in it together. "Communicate what you're doing and why," says McLain. "The way you talk has to include empathy. Ensure that you convey an understanding of any hardship this may be placing on the employees. Employees need to understand the rationale for the company's decisions and how it's countering what the competition is doing. They also need to know that the company did not make these decisions lightly. Providing that information helps get everyone involved and gives employees a feeling of inclusion and shared purpose."

A practical strategy is to ask employees to contribute their ideas for cutting costs or for growing the business. Two of the 12 key elements of employee engagement measure the extent to which employees think that someone at work cares about them and that their opinions seem to count. (See graphic "The 12 Elements of Great Managing.") Telling people "We're all in the same boat" then asking them how to plug the leaks reinforces their value to the company. This approach can go a long way toward building engagement -- as long as leaders listen and respond to employee comments and suggestions.