05/15/2009 05:12 am ET Updated May 25, 2011

Are You Working in a Fear Factory?

You can catch much worse than the flu at work. W. Edwards Deming, the father of the total-quality movement in business, once said that the primary duty of every leader is to remove fear from the workplace. Smart man. Today, our workplaces have become "fear factories," with an emotional contagion far more serious than the cold germ. Successful companies create a kind of psycho-hygiene that can immunize employees against the fever charts of misery that exist in most workplaces today.

Recently, neuro-economist Gregory Berns wrote in the New York Times, "We are caught in a spiral in which we are so scared of losing our jobs, or our savings that fear overtakes our brains. And while fear is a deep-seated and adaptive evolutionary drive for self-preservation, it makes it impossible to concentrate on anything but saving our skin. Ultimately, no good can come from this type of decision making. Fear prompts retreat. It is the antipodes of progress. Just when we need new ideas most, everyone is seized up in fear, trying to prevent losing what we have left."

Berns conducted an experiment and found that people would rather expedite a bad experience rather than wait for it. He writes, "Nearly a third feared waiting so much that, when given the chance, they preferred getting a bigger shock right away to waiting for a smaller shock later. It sounds illogical, but fear -- whether of pain or of losing a job -- does strange things to decision making." I've experienced this kind of "shock me now" illogical thinking recently in my business. We were in the midst of launching a San Francisco restaurant and a Southern California hotel when two separate owners independently decided to potentially shutter the new restaurant and the new hotel after spending millions of dollars and time to create them due to a severe case of fearitis. Fortunately, in both cases, we were able to convince the owners (as my company, Joie de Vivre Hospitality, is the manager of both properties) that it made more sense to launch the venture and not layoff all the managers and staff that had been hired and trained as opposed to mothballing the business for a year until times were better.

The irony is that risk aversion is running rampant just at the time that creativity and innovation are needed more than ever. Downsizing and the fear associated with it is part of the business landscape, but corporate anorexia -- companies that downsize to get too thin -- isn't healthy for an organization or its people. But, just as the anorexic doesn't have a realistic perspective on his or her body, the corporate leader who is possessed with thinning the company has no clue what kind of long-term negative impact they're creating on a cellular level in their organization. One of the most important questions any leader needs to ask before they downsize is, "What do we want this company culture to look like at the end of this downturn?"

New thinking in both psychology and medicine suggests that wellness isn't just the absence of disease, but, instead, it's the prevalence of fulfillment and vitality. This is just as true in an organization as it is in someone's body. We need to practice a radical rethinking of the idea of management. Notice I used the word practice as my friend and fellow entrepreneur Jesse Jacobs recently pointed out to me that doctors, lawyers, religious professionals, and athletes all practice their craft, but no one uses that word to describe businesspeople.

First, peak-performing leaders need to practice clarifying for their associates what's within their grasp to change and what's beyond their grasp. Life is full of constants and variables, just like algebra. Those companies and leaders that create serenity in place of fear know how to practice accepting the things they cannot change, having the courage to change the things they can, and the wisdom to know the difference (credit the Serenity Prayer). Fear comes from the unknown and the uncontrollable, so it's essential to redirect the corporate energy from the light at the end of the tunnel to the metaphorical candle you can light in your hand. And, creating a couple of small wins will help build the momentum such that a positive emotional contagion can grow.

Secondly, companies are meant to be the vehicle for the aspirations of their workers as integrated human beings. And, great leaders are truly those who awaken potential, not managers of experience. Many of us are asleep to what we are capable of becoming, yet a brilliant boss and times like these can be the actualizing alarm clock you've needed to awaken to all you have to offer to your company and the world. Fear can be a motivator, but the scent of possibility is so much more powerfully sustainable. When one door closes, another opens, but quite often we look so longingly and regretfully upon the closed door that we do not see the one which has opened for us. In fact, too many of us become enamored with the open window as our escape.

If you practice these two steps -- focus on what you can control and help people see and actualize their potential -- you will build confidence and reduce fear. And, that bundle of human energy that we call your company will weather this storm just fine. In fact, our emotionally-intelligent President is trying to use this two-step dance to immunize the country from the fear tailspin we're in collectively. Fear creates failure. The strange irony is that on Friday, the U.S. shut down its 22nd bank of the year and it was called Cape Fear Bank.

On a personal level, I've noticed the change in the corporate mood of this country. When my book, PEAK, came out a year and a half ago, most of the questions I was asked at speeches related to how to create a more vital workplace, but today the questions are more survival-driven. From fulfillment to fear and from mojo to malaise, I've seen a dramatic shift in where we are paying our attention. But, one thing we can learn from the great spiritual practices of the world is life is all about where you pay your attention. Practice paying your attention to the higher needs of your employees, customers, and investors, and, miraculously, you'll find that this is the true differentiator when everyone else is stunted at the bottom of their Hierarchy of Needs pyramid.

Chip Conley is the Founder and CEO of Joie de Vivre Hospitality and the author of PEAK: How Great Companies Get Their Mojo From Maslow.