Call it trickle-down anxiety. Accustomed to hearing about budget cuts and layoffs from on high, employees at every level are becoming risk-averse. Dedicated, ambitious workers tell me they are so afraid of making a mistake that they feel it’s safer for their careers to avoid innovation and initiative. Managers need to realise that this paralysis threatens their companies’ health.

Of course, it’s completely understandable that company executives would want to keep their costs under control during uncertain economic times, and as they deal with issues like health care law, complicated tax regulations, patent issues and overseas competition.

Most employees I meet accept that these days, more work is expected of fewer people. They realise that performance that might have been good enough last year isn’t good enough today. Many consider themselves fortunate to be working at all. The factories and offices I visit are filled with realists who are convinced that job security ended when their parents retired.

But workers still want their leaders to spend less time voicing uncertainty and more time making things happen. They are disappointed in their immediate managers for making it more political at staff meetings to recommend cuts than to suggest hiring a top-flight employee.

Factory supervisors have been driving productivity gains for decades, but many find that their zeal is now accompanied by caution. Some of the boldest managers are confiding this kind of worry to me: “If it isn’t a slam-dunk, I’m not proposing it. My signature on a failed project could cost me my job.” A line manager at a steel mill recently told me he was unhappy with himself for not having had the courage to challenge an order cancelling a project he believed in.

Corporate mission statements may encourage innovation and entrepreneurial boldness. But these days, uneasy employees are far more attentive to small cues from their immediate supervisors. The manager of a furniture distribution centre recently told me: “When my boss rolls her eyes when I propose leasing recently vacated space at a great price, I shut up. I can only irritate her by suggesting future expansion when she’s been ordered to make cuts today.”

This new environment is breeding suspicion, too. Several of the most collegial management teams I work with are beginning to fracture as close associates become rivals for the few senior positions that remain after outsourcing and downsizing. Colleagues who once attended one another’s weddings may find themselves competing for the same job and are drifting apart.

A vice president at an insurance company told me that he had suddenly realised that a young woman he was mentoring could become a competitor for such a prized opening and decided, “I learned things the hard way; now let her.”

Recently, I interviewed a group of African-American executives, most of whom said they felt they were becoming outsiders in management teams whose members resent any advantage a potential rival may have - racial-diversity targets among them.

“I can’t put my finger on it,” one of these executives said, “but people on the team make me feel I no longer fit in, and I’ve been in management here for 11 years.”

Employees have told me they hesitate to take vacations, fearing they won’t be missed, or a once-trusted co-worker will say things go more smoothly in their absence. In such tense environments, it’s hard to imagine employees working co-operatively to achieve corporate goals.

Caution bred at the top is contagious, and it’s been drawing oxygen from the workplace. If the economy is to rebound, it will require a burst of confidence in employees who are now more cautious than creative, more tentative than decisive. That confidence needs to come from their managers, and the managers of those managers, all the way up to the chief executive.

Employees hunger for leadership that will make it safe again to act creatively and decisively. They don’t expect their senior management to ignore the realities of the marketplace or the flux of government policies. But they do want - and deserve - leaders who inspire them to commit the best of themselves to their work.