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Keeping Morale High Key in a Down Economy


By Brad Wolff

November 27, 2009

Courtesy of the Atlanta Business Chronicle

Amid our current economic downturn, many managers are realizing that keeping morale intact is more crucial than ever, yet far more difficult to achieve.   Businesses have to motivate survivors of layoffs as well as prepare to compete for talent when the economy rebounds.  With companies reducing their staff, employees are forced to do more work with fewer rewards (in the form of bonuses, raises, and benefits).   As a result, companies are faced with the challenge of producing equal or better products and services under more hazardous conditions. 

Sound fundamentals of human relations are of utmost importance in managing through these challenges.  Here are three approaches that can have a positive impact:

  1. Communication:  Send clear, unambiguous and well thought-out messages to staff about what’s going on.  It is better to err on the side of communicating too frequently versus not frequently enough.  A monthly face-to-face “status update” meeting between staff and executives to convey that there are no secrets at the company would be wise. These steps can cut stress, boost transparency, and convey the message that we are “all in this together.” 
  2. Fairness:   A sense of fairness has a direct influence on morale.  This means communicating in a respectful and kind manner, letting people voice complaints without repercussions, explaining the rationale for jbo cuts, and making those cuts as fairly as possible.  Allowing the staff to participate in solutions can go a long way when it is feasible.  For example, if you need to cut $500 in salaries, you can let the staff know that you need to either lay off 10 people or have each person reduce his/her pay by 10%.  Then let them vote on what they prefer.  This way they are involved in the solution and have a feeling of responsibility while management achieves its objectives.
  3. Acknowledgment of value:  Providing positive feedback and showing an interest in people’s work has a direct effect on morale because it increases feelings of importance and competence.  Simple emails saying “good job” or “thanks for your hard work” can go a long way.  In addition, giving workers a chance to enhance and broaden skills- by moving around within the organization or working with different people, also helps boost morale when salary increases and bonuses have been reduced or discontinued. 

Here are three approaches that can leave a negative impact.

  1. Social events:  If it appears that social events are used in lieu of more relevant measures, they can backfire.  It can appear that money is being poured into social activities instead of more useful endeavors.  Social events can be helpful when they involve simple gestures of gratitude.  Examples of this would include collaborative activities like a ping pong tournament, Scrabble contest, softball game, picnic- anything that allows people to interact in a fun way.
  2. Tolerating slackers:  With employees being asked to do more for less, workers who do not handle their fair share or do poor quality of work add an extra burden to those who do.  Don’t let good employees carry weak performers.  Letting some people get away with doing less work can breed resentment among harder-working colleagues.  It is also wise to balance out workloads if they appear uneven.
  3. Abandoning normal practices that are positive in your culture:  A downturn doesn’t mean employers should eliminate things that are appreciated and not overly costly.  How well an employer manages people (or how the organization treats people) in tough times impacts today’s morale as well as a company’s reputation in the market and sends a powerful message that may well matter when times improve.  For example, if your company traditionally has an annual Christmas party, it is better to scale down the cost of the event than simply eliminate it. 

Additional considerations of importance:

In addition to salary, rewards and benefits play an important role in employee morale.  Employees expect certain benefits even under challenging economic times.  The reality for employers is that they pay a large amount of money for these benefits, many of which are not truly valued.  Since what employees value changes over time, the downturn might be an appropriate time from employers to take an objective look at all of the things provided to employees and compare this with what they truly value. 

Addressing this now can involve a simple questionnaire for employees to anonymously communicate what benefits and rewards matter most to them.   With creativity and flexibility, employers can often achieve their desired result at equal or fewer dollars that they currently spend.  Since employees vary in what they value, honoring these differences while keeping the value of the rewards fairly equal can go a long way in improving morale and employee satisfaction.  For example, if employers cut back $2000 per year per employee on benefits/rewards, they can be replaced with choices from which employees can select.  One person may want to receive this money in cash compensation, while another wises to take an extra week of paid vacation. 

Additional ideas to consider for your organization:

  1. Rewards programs that include bonuses for bringing ideas that decrease expenses or increase revenue
  2. Telecommuting options
  3. Four-day workweeks
  4. Transportation subsidies

Wolff is the co-founder of JumpVine, a recruitment partner alternative, based in Atlanta.

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