turnover and morale during a recession

by Alison Green on April 19, 2009

A reader writes:

Like most companies today, we have recently gone through a series of layoffs, budget freezes, cost-containment measures, low morale, and just plain difficult times. We have traditionally been a company that has overflowed with abundance, and our employees are finding it extremely difficult to cope with the complete turnaround to a company that is now struggling. We are seeing some turnover from those employees who “survived” the layoffs, while other employees who have remained with us are simply “putting in their time” with no passion or enjoyment of their job. This is not a fault in the employees, but rather a result of the economic times.

What measures are your company, and other companies taking to try and stem turnover and improve morale during a time when most budgets are “frozen”? That is, how can we work on improving our morale and reducing our turnover without spending money? Communication obviously is key, but I would be interested in what other companies are doing.

I’m interested in hearing others’ opinions on this too, including what has and hasn’t worked at their own companies.

I tend to believe that the most important thing in a situation like this is to be open and candid. Too often, companies try to hold information close and not let it get out — but then either (a) employees can tell that they’re in the dark and that alarms them, or (b) information gets out anyway, through unofficial channels, and it gets mangled in the telling and/or it comes without the sense of perspective that could have been attached had it come out more openly.

If you’re open and candid with employees about the company’s situation, worries, and future plans, most people feel more a part of the company, that you’re all in it together. You get people offering suggestions and feeling and acting personally invested. Not everyone, of course. But many.

Similarly, I think people get it when you say, “We’re not doing salary increases this year because we’re focused on protecting everyone’s job stability right now. We’re going to take care of you with raises once we can do it safely.”

Yes, some people may jump ship if they hear bad news — but I’d rather be honest with someone and let them make the decision they feel is right for them based on accurate information than not. And really, in this economy, most people are worried there’s bad news whether they’re hearing it from you or not.

Aside from that, I think the most important things at a time like this are the things that are important all along but which plenty of us don’t get right — making sure people feel valued, get recognized for good work, are getting useful feedback, have clear goals, have the resources they need to do their jobs, and so forth.

That’s a boring answer though. I know the alternatives might be things like creative recognition programs or new free benefits, but I really think the above is what ultimately makes people feel as secure as anyone can right now and makes them want to stay.

What do others think?

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{ 15 comments }

{ 15 comments… read them below }

  1. Clare*

    I agree that openness with employees is absolutely crucial. It’s almost impossible to pull together as a team when there’s a lack of information. And another point you make – that lack of information leads to misinformation – is also true. Much better to manage the “conversation” yourself than risk a potentially wrong message getting out.

  3. Wally Bock*

    Shared sacrifice is often overlooked in these discussions. If the only people laid off came from the bottom of the pyramid with no sacrifice at the top, the message is clear. The bosses are out for themselves so you might as well be. On the other hand if paycuts are greater at the top and there’s an effort to keep people, the message is that people are valuable.

    Also, too many bosses, figure they can throw a switch and turn on transparency. It doesn’t work that way. If you haven’t been transparent all along, it’s going to take a while before people believe you.

  4. Mel Vault*

    It does seem pretty easy in the current economy for a company to get an “Office Space” sort of vibe. When there’s no chance for a raise, many people are just going to show up and do enough not to get fired until they find something better.

    The part about making employees feel valued and giving recognition I think are dead on in times like these.

  5. The HR Store*

    What has worked: candid communication, shared sacrifice, transparency, lay-off’s the humane way (every one knows these are tough times, yet people ‘IN’ will watch closely on how people went ‘OUT’), getting managers (across locations, geographies, wherever they were) in-sync with business strategies (ideally you want the entire company to be in-sync with your message, but they’ll still wait to hear from their managers), delivering on feasible promises in the short-term (taking it one quarter at a time), setting an employee grievance center (employees want to be heard, gave them a channel for that), among other things to build trust,

    What has not worked: damage control (such as handling news from outside sources), trying to be in control of people’s choices, counter-offers.

  6. Anonymous*

    Also, don’t forget the tendency for people to speculate when there isn’t any news. I’d like to congratulate Wally and HR Store on their posts; the second paragraphs are really accurate.

  7. Anonymous*

    If you’re company has been in layoffs, employees may look around for another employer with more economic stability. This isn’t a referendum on you as much as a reflection of their need for a paycheck. I don’t see why you would begrudge them this. (In fact, how stable is your job at this firm? Do you need to be looking around?)

  9. Rebecca*

    The boring answer is the right one. Cheap gimmicks are only going to make you look totally out of touch with your employees. Even efforts that aren’t gimmicks will only seem like you’re begging people to stay on a sinking ship (unless you’ve been making these efforts all along).

  10. George Guajardo*

    I have seen this topic coming up more frequently these past 2 weeks. Maybe we are getting the idea that the worst of the recession is about over and now we are looking towards what happens next.

    I love the suggestions posted here so far. Honest, proactive communication is important, as is sharing of the pain. However, we can also be creative about how we compensate, or communicate about compensation.

    For instance, we may not be able to give you a raise (or maybe we cut your pay to survive) but we can give you something in exchange: A few extra hours of personal leave does not cost real capital. As work loads permit, give people a surprise afternoon off.

    It is also important the people understand this year was not a sunk cost. If business rebounds next year, we will make up for your sacrifice this year with larger than normal raises (or perhaps a one-time retention bonus).

  11. Hayli @ Transition Concierge*

    I think George has got the right idea. If you must announce a lack of raises this year, be clear about the reward to come when business rebounds and also add in extra fringe benefits to compensate. As Rebecca said, it may look like you’re desperately begging them to stay, but that’s actually not far from the truth. So what? It just might work.

    Something else that may cost little-to-no capital: Bartering for discounted services like gym memberships, dry cleaning pickup and delivery, entertainment discounts at movies/restaurants, etc. These employee perks can be impressive to workers and their friends, but actually cost the employer very little in this economy because everyone is willing to negotiate prices – especially for inside, direct access to a large organization of workers.

    The ones aiming to jump ship after losing out on the annual raise are looking out for number one. They may be more inclined to stay if the employer is inclined to at least give them something cool to show appreciation, even if it’s just more personal time as George suggested.

  12. Susan*

    Being open and honest, even with bad new, is definitely the best approach. I’m a public high school teacher, and I found out today from a student at my school that my job has been cut for next year. I can’t tell you how bad it made me feel to find out that just about everyone in my workplace, including the children, knew about my career before I did. I know that my job was cut due to the school’s finances, but this has left me feeling like I must have done something wrong if my boss didn’t even want to let me know. By all means, don’t let an employee find out from a peer or a customer/student that their job is going away. Nothing diminishes a person more than to realize everyone else knew all along and you were completely in the dark.

  13. Ashley*

    What our company has done is actually increase our employee appreciation budget instead of freezing that portion of it. Employees need to feel appreciated, and we have made cuts elsewhere in our budget so that we can spend a little bit more on them. We do small things – a treat with paychecks, e-mail games that get everyone involved and the prizes were between $10-$15, and we are also holding company wide conference calls with our CEO and having employee meetings to open the communication. Each month, we are choosing one “wacky” holiday to celebrate (this month it was take a wild guess day, and we played a trivia game). They are not terribly expensive, but are allowing our employees to have fun and know they are appreciated.

  15. Office Humorist*

    These are some great comments and I agree that the key is openness and honesty.

    Given my passion (humor at work), now is particularly challenging in terms of trying to bring fun to the workplace. Many people feel uncomfortable doing something “fun” at work when they know people who were just laid off.

    The key to me is being tactful and using resources carefully. There are a number of free ways to try to lift morale including sending anonymous praise, holding appreciation lunches, or taking a few moments each day to laugh.

    The process will likely take time, but it is important to keep a positive attitude and remind people that you’ll get through it. The companies that buckle down, continue to think creatively, and plan well will all come out of these hard times an even stronger company.

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