Animal Spirits

Animal spirits – First time I heard this term, really thought Professor in my MBA class believed in occult and after life! And I was ready to share my ghost stories with everyone, but then he disappointed me:) Animal spirits is a term used often to enunciate the sagging or euphoric morale of a country’s economy. Macro-economists world over see this term as an indicator for potential growth cycles or signs of deflation/recession as well as forecasting a country’s future economic wherewithal. However, the same concept of animal spirits gets lost at times when one looks at large, medium or small conglomerates of the world. Different connotations of this word exist at corporation level, mostly either in the leadership space or with the Human Resource departments.

In real world, Animal Spirits applies to organizations too. Without a motivated and optimistic workforce no organization can survive. Be it a start-up or \stable dividend paying conglomerates, all require this elixir to prosper. This applies to private, public, family held and even co-operative organizations! What would you think organizations do to up the ante? How to know if the animal spirits are high in an organization? Stock market analysts while researching and dissecting not only look at financials (Full year or quarterly results), but also work with “information at hand” (known as well as insider information) to rate a company’s performance. Certain key levers (tangible as well as intangible) which help ascertain the animal spirits in an organization (these can at times be missed at stock markets or indices) include:

• Accounts receivable and Payable
• Cash flow for Investments in last few quarters or years
• Attrition level in an organization
• Number of patents filed/innovations or awards received at
• Brand rankings
• Yearly announcements and internal Pulse check surveys
• External Customer Satisfaction surveys

Animal spirits even becomes a bigger challenge for multi-national companies, investments, employee motivation, attrition levels, brand recall value are all associated with it. CEO, executives and board members all aspire to keep the workforce engaged, connected through various announcements. Be it the carrots of bonuses or progressions or celebrating small milestones, all reflect towards raising the mood of an organization. But, what works best is finding people who love their work, have found the connect between personal and company’s goals. Personally I have seen leaders change the mood of an organization with their vision, sharing and shaping dreams. In times of falling revenues, recession, tapering consumer sentiment, nothing works like “Sharing a vision credibly” with people who can make it real. Sometimes leaders get lost in the Top-line so much that they do not see that bottom-line gets the most affected with a lack of “Mood”.

It would not be wrong to say that financial statements are a reflection of Animal spirits in a company. If employees in a company are motivated towards a company’s goals then it clearly reflects throughout the organization. Companies like Google, Amazon and similar names in the ilk, have created such an euphoria that people world over are attracted to work with them. “Mood Index or Temperature Index” would be my connotation to reflect the concept of Animal spirits in organizations.

Will be happy to learn about how other people perceive this in organizations globally.