The chain's executives were continually forecasting a turnaround that never came -- that's the wishful thinking beginning of this painful example. After a decade of steadily sinking performance and continuing layoffs, the company's morale had reached the bargain-basement level.

Optimism had disappeared. Everyone feared additional waves of layoffs or even going out of business at some point soon.

The people who worked in the stores were the most depressed because they were overworked, stressed by all of the problems, and in fear for their future livelihoods. A lot of the company's pension plan was tied up in the company's declining stock, so the outlook for retirement looked pretty bleak as well for older employees.

The irresistible force that this company was facing involved a steadily more discerning and busy consumer who wanted better value, better selection, and better service in a beautiful, interesting store to visit. This retailer ranked near the bottom in most of these categories, having reduced its effectiveness through cost-cutting to protect budgeted profits. These consumer-perceived reductions had occurred during a time when most of its retail competitors were increasing their effectiveness in these critical ways.

After the company finally improved itself a few years later by moving in a more successful new direction that improved effectiveness, executives were asked why the obvious, needed changes had not been made much earlier. The answer the executives gave was that morale in the stores had reached such low levels that they felt that it was more important to insulate these people from further pressure by leaving them alone than it was to try further to fix the problems. The executives feared a sudden, final collapse if the store employees were asked to do any more than they were already doing.

This perception turned out to be a misreading of the store employees' moods. When needed changes were introduced, the morale of stores employees quickly increased and business results soon followed. Morale, in fact, had become worse by the store employees' perception that the only thing the executives would do in the future was to cut more jobs to reflect lower sales volumes, rather than to address the causes of the sales slide. Helplessness had overwhelmed the organization from the top and the bottom.

Because the executives had no prior experience with turning around low morale among store employees, they felt helpless and waited much too long to make fundamental changes. This circumstance could have been avoided by visiting other retail chains that had previously turned around their negative sales trends in order to understand how employees had perceived efforts to improve. Such an experience would have provided valuable information about how to improve, as well as an earlier understanding of the positive effect that efforts to address the fundamental problems would have on employee morale.

When asked why they had not taken this step, the executives admitted that they felt embarrassed to seek help from others. They felt that they should have known the answers already, which added to their feeling of helplessness when they didn't see what those answers could be. The vicious cycle of helpless spiraling down was quickly ended when a new management team was recruited with experience in turning around similar situations.