Help is at hand for dealing with the downturn's emotional fallout - anxious managers are turning to the 'coaches in white coats', writes Emma Jacobs

"ANXIETY" AND "paralysis" were two words that came to mind when Prof Binna Kandola, a business psychologist, visited an engineering professional services organisation that was making redundancies.

"Everybody was frozen, the employees and the managers," he remarks.

Such a response is not uncommon, he says. When managers announce redundancies, "people tend to catastrophise - imagining that they'll lose their job, their home, then their marriages will fall apart.

"Uncertainty is incredibly stressful. A lot of mental energy goes into worry - energy that is diverted from our job."

So how can managers support the workforce through the upheavals of an economic downturn?

Therapeutic consultancies, such as the UK's Grubb Institute of Behavioural Studies and the Tavistock Consultancy Service, offer some intriguing answers and are reporting increased interest in their services as the gloom deepens.

"Managing a fearful workforce is one of the greatest problems for companies in the current economic climate," says Dr Bruce Irvine, executive director of the Grubb Institute. He says that, if organisations do not manage anxiety in tough trading conditions, employees will not work effectively and performance will suffer at a time when every penny of revenue counts.

"In times of recession, people can behave defensively in order to avoid reality," says Judith Bell, director of the Tavistock service.

"We try to get teams to address some of the difficulties that lie under the surface and [that] prevent people from getting on with the task in hand."

Dubbed the "coaches in white coats" by one investment bank, the Tavistock service draws on therapeutic models to examine employees' behaviour at work.

Part of the National Health Service, it has worked with organisations ranging from government bodies to Mars, the food group, and Morgan Stanley, the investment bank.

Scratching beneath the surface of employees' behaviour is critical to solving problems, says Ms Bell.

She cites the example of a female executive in the operational side of an investment bank who felt persecuted by the trading floor and believed she was wrongly shouldering the blame for their problems.

In fact, the difficulties were less to do with her management style than with broader issues at the bank. Traders, who were under huge pressure to succeed, could not admit any faults and projected any failings on to the operations department.

Tavistock coached the woman using a "systems psychodynamic approach", which, Ms Bell says, "helped her see the anxiety she was feeling was part of the organisational response to (the operations department)".

At the same time, they helped her explore her own upbringing, which had made her "very self-critical".

The service, founded 12 years ago, has its roots in the Tavistock tradition, which, Ms Bell says, helps clients address the emotional dimensions of organisational life.

One of its original exponents was Wilfred Bion, a British psychoanalyst who applied lessons gained through the experience of observing officers under fire in the first World War to helping organisations including Unilever, the consumer goods company.

Ms Bell says that, in highly stressful conditions, people often believe that "aggressive or bullying behaviour is justified". In fact, she suggests, leaders may need to take more care to understand why people are not performing well, and work harder to motivate them.

Dr Irvine agrees.

He has witnessed organisations take fright at the economic downturn and simply repeat behaviour that has, in fact, been shown not to work.

"Team leaders may become more reactive, autocratic and resort to a tried-and-tested approach."

Sebastian Parsons, chief executive of Elysia, the UK distributor of Dr Hauschka beauty products, will be using the Grubb Institute to help him motivate his staff and weather the downturn.

He first approached the consultancy three years ago to help him expand from a family-run company to one that has 50 employees.

"Looking back, those were happy problems compared with the ones we face now."

While he is confident the company is robust enough to ride out the downturn, the challenge is to come up with new ways of marketing to cash-strapped customers. Cracking the whip may be counterproductive and engender suspicion of management - many of his employees have left companies that "treated them like a machine".

Encouraging staff creativity is key.

"I can't simply ask my employees to work harder and become automatons. It won't help the company." - ( Financial Times service)

• Lucy Kellaway's column returns on December 8th