Despite Australia’s bounceback from the global financial crisis, everywhere we go, Worklogic’s clients tell us about the challenges they face in the current economic environment.

Trading conditions, retail spending and commodity prices have fallen, meanwhile wage increases and the high Australian dollar squeeze businesses’ profit margins.

Just in the last few weeks, significant business contraction or redundancies have been reported at Fairfax, Telstra, auto parts manufacturers, BHP Billiton, universities, airports, RailCorp and many State government departments. When CEOs are being pressured to forego their bonuses and pay rises, no one is immune.

What does all this mean for how organisations manage their staff? How can you maintain employee morale, motivation, productivity and wellbeing, in the face of rising workload, performance pressures and cost-cutting initiatives?

Invest in the Leadership of your Managers

In times of crisis, employees will look to the leaders. Are your managers equipped? Will their leadership skills stand up to the test?

When the going gets tough, employees need to see that their managers are:

Communicate, communicate, communicate

How do managers demonstrate all this? Communication. Regular and transparent communication with every employee – not just between the CEO’s direct reports – is vital. Employees need open and honest information about the organisation’s challenges, in order to retain their focus on the tasks ahead and their confidence in the quality of the organisation’s leadership.

Everybody hates delivering bad news; this is probably why it is often done badly, or not at all. When business is challenging, many organisations don’t share any news with staff. In our view, this is one of the worst things organisations can do. Silence can exacerbate fears and worries, disempower people, and allow rumour and panic to flourish. Conversely, frequent and transparent communication can build solidarity and trust.

Do not ignore the wealth of information held by staff ‘on the front line’. Keep staff informed about what is going on, and at the same time, encourage them to share with management how things are going, what they are finding challenging and where improvements might be made.

Listen to the Objectors and the Resisters

When introducing major change, resistance is inevitable. Jeffrey Ford and Laurie Ford of Harvard University write that employees’ resistance to change should be ‘decoded’, understood and harnessed.[1] They argue that it’s wise to engage with the resisters, because their feedback can be used to make smart adjustments to the company’s initiatives. In this way, “Your biggest critics can be turned into your best advocates if you have the courage to listen carefully”.

Realistic and Optimistic

Now, more than ever, it is critical for staff to have clear and realistic objectives which will guide them through a confusing and challenging time.

Be realistic about what is and isn’t achievable. Be prepared to give up on the things that are not working, and focus on things that are. Make sure that the goals set for employees are reasonable, take into account the changed financial and industry landscape, and are adapted to any changes that have been made in the workplace. There is no point expecting your top sales person to grow the business by the same amount as last year if the market has dropped away. In our experience, the failure to adapt KPIs is a ripe source for bullying complaints.

Most employees want to be involved in the recovery effort. Acknowledge that times are tough, set out a plan for survival / recovery, and make it clear what is expected of staff. With concrete, achievable goals, employees will know how they can contribute to the organisation’s success, and this can be a great motivator. In this way, management can foster confidence and collegiality amongst employees – “we are all in this together”.

When Redundancies are the Only Option

Downsizing is always the last resort. Not only is downsizing a risky and (usually) short-term strategy, it is well recognised that there are indirect costs including the loss of skills and knowledge, low morale and productivity, absenteeism, stress and complaints. For this reason, most organisations actively pursue alternatives before ‘pushing the button’. Can work be reorganised to keep people employed? Can staff be offered reduced hours or job sharing opportunities? Are there any staff who may be interested in early retirement? Can staff be redeployed in a different part of the business which is performing better? As Winston Churchill said, “Although prepared for martyrdom, I preferred that it be postponed”.

If downsizing cannot be avoided, consider the psychological effects. According to psychologists, redundancy can lead to shock, denial, anger, depression, anxiety, feelings of powerlessness and worthlessness and ‘catastrophising’. Redundancy has even been described as leading to a sense of bereavement at the loss of income, prestige, status and social identity.[2]

The European Union is currently proposing reforms which would require companies to assess their workers’ psychological health when planning redundancies.[3] Companies would also have to consider the social impact of redundancies on the local community.

Staff facing redundancy should be treated with sympathy and humanity and if possible referred to counselling and offered outplacement services and financial advice. This applies not just to the staff who are leaving but to those who are left behind, who may be feeling shaken and anxious, unsure about what their own future holds and daunted by the prospect of taking on additional work.

Keep celebrating success!

When the organisation is responding to challenges, staff need to feel valued and acknowledged. This doesn’t have to cost a fortune. A Global Workforce Index survey conducted by International recruiter Kelly Services in 2012 [4] found that 51% of employees interviewed would choose one position over another based on personal fulfillment. Whilst the organisation may not be in a position to offer financial rewards or incentives, there are many creative and low-cost ways to recognise staff and keep them motivated. Inexpensive but genuine gestures of appreciation include afternoons off, taking staff out for coffee, access to a staff car for the weekend, or even something as simple as a hand written thank you note that acknowledges how hard they are working.

Tough times don’t last forever. But they are a genuine test of the mettle of your staff, managers and leaders. Continued investment in your people will stand your organisation in good stead now and in the long run.

See also our newsletter articles about:

• Having difficult conversations

• Volatility and the Workplace Response / The Pitfalls of Downsizing

• Excessive Workload: Risky Business


[1] http://hbr.org/2009/04/decoding-resistance-to-change/ar/1#
[2] Miles Hewstone, Frank Fincham and Jonathan Forster, Organizational Psychology in ‘Psychology’, British Psychological Society (2005), page 448
[3] http://www.telegraph.co.uk/finance/jobs/9470711/New-EU-employment-ruling-could-stifle-British-business.html
[4] Acquisition and retention in the War for talent published on www.kellyservices.com.au

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