Is your company in a death spiral? Are secrecy, blame, turf protection, and helplessness running rampant? Does no one seem to know how to reverse the decline, never mind halt it?

If so, now is when your leadership matters most. But how do you spearhead a turnaround? Smart financial and strategic decision making help. But they’re useless without a psychological turnaround—restoring your people’s confidence in themselves and each other.

To engineer a psychological turnaround, initiate four critical interventions: promote dialogue in lieu of secrecy, engender respect in place of blame, spark collaboration instead of turf protection, and inspire initiative that vanquishes helplessness.

The Idea in Practice
A corporate death spiral culminates in a companywide sense of powerless that spawns collective denial: People pretend to ignore what everyone individually knows, and no one is willing to declare that the emperor isn’t wearing any clothes. The only way to reverse the spiral is to empower people anew—with these antidotes:

Vanquish … With … Example Secrecy and denial—covering up facts; denying involvement in decisions Dialogue—reopening communication channels Gillette CEO Jim Kilts pushed communication by exposing his top team members’ performance data through quarterly report cards he posted for all to see. Scorecards were followed by open presentations of priorities for the next quarter. With no way to hide information, secrecy and denial went into the trash bin. Blame and scorn— not taking responsibility for problems; denigrating colleagues Respect—encouraging appreciation of one another’s abilities and ideas British Broadcasting Corporation CEO Greg Dyke drove home the importance of showing respect for one another’s ideas by creating yellow cards resembling those used to signal a penalty in soccer matches. Labeled “Cut the Crap: Make it Happen,” the cards were presented whenever someone trampled an idea. BBC leaders learned not to second-guess each other but to extend trust. Avoidance and turf protection—avoiding meetings and other peer interactions Collaboration—promoting collective commitments to new courses of action Kilts formed cross-matrix operating committees with representatives from all functions on which a business unit depended. The new view across the organization revealed opportunities hard for any one unit to see by itself. A result? The battery-powered toothbrush—born of collaboration between a U.S. and German division. Passivity and helplessness— feeling powerless to make a difference in the company’s fortunes Initiative—making people believe they can change things Dyke forced managers to think for themselves and fostered idea generation from the top down and bottom up through “One BBC: Making It Happen” brainstorming sessions. Ten thousand of the BBC’s 24,000 people participated. They submitted 2,000 ideas, 700 of which were implemented. Dyke personally responded to many of the suggestions, inspiring managers to act fast. Divisions set up special funds to pay for projects suggested by staff. Purchase the full-length Harvard Business Review article.