Reality has a tendency to bite back; when you least expect it, and no matter how hard you try to hide it. Maybe especially when you try to hide it.

When things do go badly wrong, what is the appropriate response? Should we all give up and go back to bed, or should we fight like tigers to overcome the challenge that faces us?

According to Evelin Linder:

“Pessimism is a luxury of good times. In difficult times, pessimism is a self-fulfilling, self-inflicted death sentence”.

Strong stuff; and very relevant for human resources in the current economic crisis. China has had a full decade and a half of good economic times, and more than its fill of optimism. Recently, human resources has been fighting against a tide of delusion about the future, at the same time as they have been signing off on redundancy slips.

The peak of inflated optimism was reached last year when many people clearly suffered from Beijing Olympic Delusional Syndrome (BODS), which is characterized by an unwavering belief in the ability of the Chinese economy to avoid the global financial crisis (China decoupled). This syndrome is deeper than we might imagine because it is also supported by another belief that even if there were repercussions for the Chinese economy from this ‘foreign crisis’, the Chinese government has an infinite capacity to calmly smooth the waters. Cash will fix any issue that arises.

So China’s problem is the opposite of the US; untethered optimism. This is a great thing to have but it’s difficult to get people to fight hard to solve a problem if they believe that the problem will, or has been, solved already by someone else. The fact that many problems have always been somebody else’s responsibility makes it doubly difficult.

Dawn Breaks

At the same time as the bad news is finally getting through, there is a dawning realization in China that the cavalry is not coming to the rescue, and pessimism may become the new paradigm.

We can see from Evelin Linder’s comments above that pessimism can be a negative feedback loop that spirals downward towards a fatal ending. At best, pessimism negatively colors our perception of future events, and makes it that much more difficult to mount an effective response.

OECD Composite Leading Indicators

As both China’s imports and exports fall again in May; the World Bank ratchets things down lower; and jobs are a scarce as hen’s teeth, China’s employees and graduates are finally coming down to earth, with a bump.

Job fairs no longer provide jobs, so graduates and experienced hires have to rely on their Guanxi network; colleagues, acquaintances, friends and family, to get a job; any job. Correctly, graduates have adjusted their salary expectations downwards in the hope of increasing their chances. According to Caijing Magazine they have ‘plummeted’ to below RMB3,000, a figure that I would regard as still on the high side. I base this one the availability of skilled staff in China, and the necessity of government schemes that allow you to hire graduates for free.

There is a minimum number of hires in each scheme, and the schemes vary by locality, but local government now pay interns an average of about RMB1,000 per month on your behalf. The only requirement is that you commit to training them. You don’t need to pay anything but it would be advisable to top up the figure in order to get your pick of the skills.

There is some good news in the market but the fact that urban investment is rising, or that the stock market is rising does not affect experienced job seekers or new graduates. It won’t get them a job any time soon. If an employee’s company is in danger of imminent closure, urban investment is unlikely to keep it open, unless the company happens to be both local and in the infrastructure industry.

Negative Strength

From the research it appears as if pessimism is stronger than optimism. We are actually genetically hard-wired for pessimism because being attuned to possible dangers is far less fatal that being attuned to the possibilities of a bright tomorrow.

Dreamers die, and don’t pass on their genes. If you stop paying attention to that mastodon beside you, and drift into a pleasant reverie, you will soon become lunch. Repeat this process for hundreds of thousands of years and you get a predisposition to be sensitive to danger.

The evidence that pessimism is natural can be found in the fact that humans can detect sweet tastes at a ratio of 1 part in 200, but we can detect bitter at a rate of 1 part in 1 million. Bitter is a signal from nature that the food source is potentially poisonous. Sweet foods are a great source of calories.

We also know from game theory that people are more focused on losing than winning. People will do almost anything to avoid losing, but not so much to win. Basically people hate to lose more than they love to win.

Taking Root

Eating bitter is often the way to get through tough times, but it doesn’t mean we have to succumb to negativity when we fight back.

Pessimism could easily take root in our homes and offices, and for many it already has. It would have been better if the system had offered people an honest perspective of the challenges ahead, but there is little point in crying over spilt milk.

Management and HR need to keep the up the focus on costs and sales. They need to compensate for the fact that many people around them have little idea of what is happening on the ground, and no previous experience to tap into to deal with the current crisis. We study history to learn from our mistakes, but when you haven’t had a history of something you are effectively blind to it. China has no recent history of economic decline, and a whole generation see recessions as a part of the historical narrative.

The gap between the experience around you, and the level of adaptation needed to meet the challenge of this crisis, is so great that in the end the difference between the winners and losers will just be the level of persistence. Sheer-dogged-persistence.