Whenever you are at work, you are not truly yourself, you are playing a role. You behave (hopefully!) in ways demanded by the environment, often contrary to how you feel and think. This is not necessarily a bad thing. From the earliest times it has been an essential survival strategy, sacrificing personal inclinations in order to enjoy the safety and security of the tribe. It is therefore important to give your employees a psychological stake in the business. Pay alone will not foster loyalty and high morale amongst your workers. In fact people can be paid well above the going rate still hate their jobs. If people do not feel like an important part of the team

I would not for a moment suggest that you can afford to ignore the balance sheet, but neither can you ignore the effect on the balance sheet of ignoring what goes on in people's heads. As well as clear operating and disciplinary procedures, keep your employees informed what's happening (and why) in their department (don't bore them with the stuff irrelevant to them). Recognise effort and initiative, tell them what's good about them and do it regular, not just at the annual appraisal. In addition, show some flexibility when their personal life is clearly going belly up. It's also important to give "local commanders" the power to be flexible about company policy, on the understanding that they deliver results.

Leaders have to be particularly effective role-players, as well as having lots of self-belief and the ability to be objective under pressure. Those under them will take their lead from the leader. If the leader, is calm, happy and apparently in control, they will inspire confidence in the majority. There is always the odd bitter resentful awkward s*d but they will alienate themselves from their peers as well their leaders. If however the leader is stressed, tetchy and rude, overall morale (and productivity) will be badly affected.

It can thus be seen how crucial is the attitude of the one at the very top of the pyramid. The chief exec sets the tone for the whole organisation. The psychological message sent out from from this lofty vantage point precolates via the lieutenants all the way to the cleaner.