Surviving tough times requires communication, retention, cost containment
– Charles Darwin
For those who manage organizations, there’s no avoiding the realities wrought by an economic climate as difficult as this one. Company leaders and HR professionals must guide managers as they consider making painful decisions, and must help employees as they struggle with the fear of losing their jobs while watching their retirement savings vanish.
But amid all the depressing news, it’s important to recognize that many organizations in the Rochester area are actually doing well – not only sidestepping layoffs but also managing to grow amid the turbulence.
Those who emerge on the other side of the recession as stronger organizations will have done so by communicating exceptionally well, retaining and motivating key employees, and containing rather than slashing costs.
Finding reasons for optimism in 2009
Far from considering cutbacks, Pictometry International Corp. anticipates that 2009 will be yet another year of disciplined growth, says CFO Darryl Canfield. Pictometry officials expect to make a select few new hires next year and will keep expanding the markets it serves.
Founded in 2000, Pictometry is a leading provider of geo-referenced, aerial image libraries and related software. A rapid-growth company, Pictometry currently employs about 200 people, most at its Rochester headquarters.
Meanwhile, at St. Ann’s Community, supervisor and leadership development will continue in 2009, says Pat Thummel, vice president of human resources. In addition, the organization is alert to the additional training that will become necessary if some of the sweeping labor and employment law changes proposed by President-Elect Barack Obama come to fruition. Additional training at St. Ann’s will involve better budgeting and clarification of how money flows through the organization, which employs 1,100.
Like Pictometry, St. Ann’s is hiring. To strengthen its hiring and retention practices, Thummel says, the organization will launch a peer interviewing process in 2009, whereby hiring managers will create a short list of candidates and allow peers to make the final decision.
And at LeCesse Construction Co., next year’s focus also will include hiring, with improved interviewing strategies designed to attract the “best of the best,” says Elizabeth Franz, director of human resources and strategy. At the same time, the 78-employee company will continue its commitment to developing high-performing teams.
LeCesse also is investing in HR technology that will save money for the long term. The company has installed a new HR information system that Franz expects will improve its HR and benefits functional efficiency for 2009 and beyond.
Communication: Never more important
In tough times as well as good, nothing trumps communication for keeping employees engaged. In every organization, the CEO and managers must communicate candidly with employees about how the business is doing. As Carl Jung observed, "When facts are few, opinions loom large" – and that’s especially true when employees fear for their jobs.
If the business is prepared to weather the recession, its leaders and managers should tell the employees that – frequently, and with consistent language. If bad news is coming, then they should be honest about that too. Company leaders also should not be afraid to say they don’t have all the answers but are controlling what they can.
Savvy leaders also will recognize that employees can be rich sources of ideas for withstanding the downturn. Some companies encourage – even pay – employees to submit cost-saving suggestions, which can reap a double dividend: Employees who feel involved in helping the company survive will not only identify and trim waste but also will more likely step up their own performance.
Most important, leaders who remain as upbeat as possible without sugarcoating reality will be better motivators.
Retaining key employees
When times are tough, an organization can be vulnerable to losing the employees it most needs. To ward off poaching by competitors and others, management should spend more quality time with employees, listening to concerns and taking note of circumstances, such as a spouse’s job loss or a mortgage foreclosure.
In particular, senior management should pay special attention to top performers, whom the organization needs now more than ever. An organization can better retain and motivate its stars by identifying their key motivators and development goals, recognizing their contributions – and ensuring that they receive a significant share of any pay-raise budget.
Controlling costs
Even in organizations that are poised to withstand the recession, controlling costs will be important in 2009.
For some companies, a downturn provides the impetus for investing in technology that will streamline operations and therefore save money over the long term. Technology is now available that allows even small businesses to reap substantial savings, for example, by automating HR, recruiting and benefits functions.
Nationwide, travel and entertainment spending, often the first to go when budgets are tight, is sure to drop in 2009. Seventy-four percent of 400 clients responding to an October survey by Towers Perrin planned to cut travel and entertainment spending, while others mentioned instituting or considering hiring freezes, pay reductions and layoffs. Some companies are reducing overtime and slashing or eliminating severance packages.
For many companies across the United States, trimming pay raises will reap the greatest savings. Forty-two percent of executives surveyed by Hewitt Associates in late October said they planned to decrease pay raises by 1 percentage point next year, to an average of 3.1 percent, the lowest since the period following the terrorist attacks of 2001. Another late-October survey, conducted by the Bureau of Labor Reports, found that 37 percent of respondents will boost compensation by only 2.8 percent on average, while another 39 percent will freeze all wages or delay the effective date of raises.
Conclusion
Managing through these turbulent times is a tall order, and no one has a magic bullet. But leaders who overreact, remain silent or wallow in anxiety and inaction will only make things worse, and will encourage employees to overreact or wallow as well.
Some companies may emerge stronger after the recession if their leaders can manage to control the controllable, contain costs, reassure and motivate their people resource, and keep customers happy.
