The psychological impact of bad times
By: Christina Le Beau April 14, 2008
When recession talk spreads, employees start to feel insecure about their jobs, affecting everything from productivity to morale. Crain’s asked Gail Golden, 45, a management psychologist with RHR International Co. in Wood Dale, how to calm nerves.
CRAIN’S: What’s the biggest mistake business owners make with their employees during bad times?
MS. GOLDEN: They go into survival mode and lose sight of the fact that if they lose people, they’re going to be in trouble for a much longer time. Either they lay off the best people or they create an environment that is so negative that the good people leave.
How should you reassure employees?
Tell your people how business is doing, what your strategy is and what you expect from them. When leaders don’t communicate, employees create their own stories, which leads to misconceptions, increases stress and undermines people’s ability to focus and do their best work. Leaders sometimes underestimate the contributions their people can make if they know the facts and they’re asked for input.
Like what?
Employees can see waste in places the boss doesn’t, maybe even something as simple as what kind of copier paper they’re buying. One restaurant I heard about that was deeply affected by Sept. 11 asked employees for cost-saving ideas. Employees voluntarily reduced their hours, taking a temporary salary cut. That strengthened the company culture and gave everybody some ownership in the success they ultimately achieved. Employees are willing to step up and make little sacrifices, too, like giving up free lunches in the company cafeteria.
Doesn’t taking away perks hurt morale?
It’s a completely different experience if employees suggest it than if the boss takes it away. And when a business leader is asking people to sacrifice, that has to be seen up and down the ladder. If people at the top are still getting the big salaries and fancy perks while everyone else is tightening their belts, that sends a negative message.
Is there anything you should never cut?
You have to know what your people really need — benefits like health insurance, for instance — and what they might be able to say goodbye to, at least for a while.
Is there any danger in sharing too much information?
Sharing the facts is rarely a bad idea, but there may be danger in sharing too much of the leader’s personal anxiety. Sharing every time you have a sleepless night because you’re worried about the company’s future will undermine people’s confidence.
What if you do have to lay off people?
Ideally, make your cut once. Don’t do death by a thousand cuts, because it’ll only demoralize your workforce. You can use a layoff as an opportunity to see who your most valuable and least valuable players are. But you also have to think about the impact on the people who stay behind. Acknowledge this could mean more work for them and, if you’re asking them to do work beyond their current skills, offer training.
What about the opposite: hiring during a recession. How can that benefit you?
You may have the opportunity to attract talent that in economically more prosperous times you couldn’t get — somebody really good who was laid off by one of your competitors. That’s especially helpful if you’re maintaining that longer-term horizon that says, ultimately, we’re about growth.
©2008 by Crain Communications Inc.