As companies struggle to cut costs, job cuts or even business closures are becoming more commonplace. In brighter circumstances, organizations are limiting pay raises or even suggesting across the board pay reductions to keep the doors open and keep employees working. Incentives may be in short supply and employee workload may be up.
Workforce Management reports on a Mercer survey with over 400 participants that shows “One in four companies have instituted salary freezes for 2009.” While some companies will continue to offer a pay increase for 2009, many of those have been scaled back as well. In November of 2008, a Towers Perrin survey with representatives of over 450 companies showed how companies are cutting costs (the breakdown can be found on a chart at the bottom of
this article). Meanwhile,
Hewitt Research reports other tactics such as “increasing time between increases” and “reducing promotions.”
Considering these circumstances, the challenge may be to retain and motivate employees. This week’s free sample Athena Online video at HR.com with Michael Lee Stallard is a good place to start for ideas on how to engage employees. In the video, Stallard points to the fact that we need to acknowledge the level of stress that we are all operating under. Although it was written in 2001,
Gary Vikesland’s article
Motivating the Survivors of a Downsizing has relevance today. Vikesland stresses the importance of communication and empathy when interacting with employees after a downsizing. He does, however, suggest that after two to three weeks, the message must turn from one of empathy to one of hope for the future.
A September 2008
Deloitte study with 151 participants finds that some companies are changing performance targets or measures to adjust to the economic circumstances. Beyond that, some companies are implementing flexible working conditions--such as compressed work weeks to reduce transportation costs--to help employees cope.
Things to consider:
If employees feel they can contribute to the success of an organization and will benefit when economic conditions improve, then it may be easier to motivate them during periods during which compensation may not be as plentiful as it has been in the past.
If employees are treated well and organization communication is honest and open, employees will feel more in control of a difficult situation.
If the organization has a clear direction and plan for how to survive during the downturn, employees will feel more hopeful.
References:
Deloitte Development LLC.
Retention strategies during difficult economic conditions. Deloitte, 2008.
Hewitt Associates.
Hewitt Reveals Most Companies Around the World Cutting 2009 Salary Budgets to Help Reduce Costs [www. hewittassociates.com]. February 4, 2009.
Lawrence, Ron. “Managing Performance in the Knowledge and Innovation Worker Age.”
Human Capital Insights [www.humancapitalmedia.com]. February 2009, pp. 6.
Lowman, Don. “Hug Your People.”
Closing The Engagement Gap Blog, Towers Perrin [http://engagementgapblog.com]. January 28, 2009.
PriceWaterhouseCoopers. “Recognize the value of your people; Managing in a downturn.” [www.pwc.co.uk]. 2009.
Quinn, Matthew. “Survey: One in Four Companies Has Frozen Salaries.”
Workforce Management [www.workforce.com]. February 9, 2009.
Towers Perrin. “Employee Anxiety Levels on the Rise.”
Towers Perrin [www.towersperrin.com]. January 2009.
Towers Perrin. “Sour Economy Prompting Reviews of Compensation and Incentive Programs.”
Towers Perrin [www.towersperrin.com]. November 2008.
Vikesland, Gary. “Motivating the Survivors of a Downsizing.”
Employer-employee.com [www.employer-employee.com]. 2001.
