Rules of engagement: these days, to gain an increase in productivity and profitability, entrepreneurs must boost employee morale.
by Dixon, Ayana
Black Enterprise • July, 2009 • SMALL BUSINESS
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“IT WAS VERY DIFFICULT FOR ME TO FIRE PEOPLE BECAUSE WE ARE LIKE A family here,” says Gregory Cancryn, owner of Payment Transaction Systems in Atlanta. “For me it felt like a personal failure.” Cancryn had been running his 29-employee credit card processing company for 10 years, when in late 2006 he first noticed a decline in consumer spending and the trickle-down effect that it had on his company’s bottom line.
Actual revenues were significantly lower than his projections suggested–they should have been 50% higher. “As a business we saw revenues drop, we reacted accordingly,” he recalls. “We cut costs, renegotiated contracts with vendors, eliminated services, and brought the services we could in-house. We cut employees who were not pulling their weight and had people doing more than one thing. Rather than laying people off, we decided to fall a month behind on paying the lease for two of our offices. And that’s how tight things got.”
Cancryn says he figured things would get better and the next month, he would just double-up on the payment. But things did not get better, so he was forced to lay off six employees over the course of the next two years. “It was a last resort.”
While layoffs, salary cuts, and furloughs can help some small businesses stay afloat during an economic downturn, living through it can be traumatic–causing feelings of anger, anxiety, insecurity, and a sense of betrayal for those who are let go as well as for those employees who remain on the job. And, like Cancryn, business owners may feel a personal sense of failure for having to take such measures. Left unchecked, any of these negative emotions can wreak havoc in a workplace already weakened by financial crises.
“The first casualty is usually morale, quickly followed by performance and retention of top talent,” says Chris Bryant, founder, executive coach, and national speaker of Beverly Hills, California-based Rapport Strategies Group (www.rapportstrategies.com). With fewer resources, small business owners must face these difficult times and make hard choices.
In doing so, they regrettably have to manage the results. According to a 2007 study conducted by the global professional services firm Towers Perrin (www.towersperrin.com), there is a strong connection between employee engagement and company financial performance (see charts). In Closing the Engagement Gap: A Road Map for Driving Superior Business Performance, engagement is defined as employees’ willingness and ability to contribute to company success. Findings conclude that “the more engaged the workforce, the better the company is likely to perform on a range of key financial metrics.” With a direct correlation between productivity and employee morale, a solid confidence and engagement throughout your company–from the top down as well as the bottom up–is necessary if you intend it to increase profitability and thrive.
All Together Now
“First, be aware that what it takes to motivate employees during a downsizing period is different than during a period of growth,” says Bryant. In times of prosperity, employees basically feel grounded and can focus on their daily tasks. But these days your employees are likely to be distracted and disengaged by the reports of “doom and gloom” bombarding the airwaves and the rumors swirling around the office at work. Now, more than ever, they are looking to you for positive leadership and reassurance.
For example, one of the most powerful things you can do as a leader, to show your employees your loyalty toward them and usher in an environment of camaraderie, is to be the first person in the company to take a salary cut. “If you take this step, they are sure to follow if they care about saving the company and preserving a job for themselves later,” says Adrienne Graham, chief talent acquisition consultant and CEO of Hues Consulting & Management Inc. (www.huesconsulting.com) in Alpharetta, Georgia.
It’s also important to let employees know that it requires a team effort to get through the tough times, according to Tanisha Russell Day, managing consultant of KEY HR Consulting L.L.C. (www.keyhrconsulting.com) in Teaneck, New Jersey. “When they see you roll up your sleeves and assist with duties outside of your core responsibilities, that will promote teamwork and boost morale.”
Communication is critical during times like these. Pretending things are OK or keeping silent about the state of the company are big mistakes. “Before this recession you could just tell your employees how things were going to be done. Today, you need to ask them to participate,” says Douglas Duncan, a 30-year human resources veteran and president of Maplewood, New Jersey-based Your HR 9-1-1.com (www.YourHR911.com).
For example, when you are looking for places to cut costs, instead of singling out one department to take the brunt of it or making across-the-board cuts, ask your people where they think they can save the company money or what revenue-generating ideas they may have, such as utilizing free or low cost Web conferencing systems such as Skype (www.skype.com) or telecommuting to save money on utilities. “If you ask them to cut back, you cut back as well and show them. It could be carpooling to work, converting travel meetings to Web conferences, or bringing in your lunch. You can scale back on expensive items and client entertainment expenses,” says Graham. “Whatever you choose to do, make sure your staff knows about it.”
During an economic downturn, employees often feel high levels of stress and powerlessness–a toxic combination. It’s up to you to remind them that you are all invested in the success or failure of the business together. Making the effort to invite each employee into the fold during formal and informal settings and giving them the opportunity to contribute to the continued success of the business in new ways can calm fears, create a sense of camaraderie, and enhance productivity.
Letting Go Gracefully
Cancryn says he didn’t want any of the employees he fired-mostly support staff he interacted with on a daily basis–to feel betrayed. So, before letting anyone go, the 49-year-old exec spoke to each of them individually so they would know their positions were in a vulnerable spot. “I told them where we were as a company, I shared my decision-making process about the layoffs, and I also gave them a chance to give me their feedback,” he recalls. “They weren’t really surprised by the news because they already knew what was going on in the economy and they could see that the work just wasn’t there for them the way it had been in prior years. But, I think they appreciated the communication because they still came to work, they did a good job, and most weren’t speaking negatively about me or the company itself.”
Experts applaud Cancryn’s approach, noting that open communication with employees about pending layoffs is a key ingredient to keeping morale high. “If you know a lot of people are going to be laid off, it’s better for everyone to hear about it as much as possible beforehand,” says Russell Day. A failure to communicate openly and honestly with employees can be a recipe for disaster.
Layoffs may be necessary to help your company’s bottom line, but a poorly managed execution is a distraction that can burn bridges, destroy morale, and hinder productivity. If you must terminate an employee, do so with kindness, honesty, and respect–for the good of that individual, the morale of the coworkers they are leaving behind, and your company’s reputation. How you operate during these tough times will impact how well you move forward once they’re behind us.
The Right Way to Say Goodbye
When severance or career-transition services to terminated employees may not be an option, employ any one or all of these no-cost acts of good-will instead:
1. Give at least two week’s notice.
2. Be honest about the company’s bottom line and personally express your regret.
3. Offer job leads or advice on positioning themselves in the marketplace.
4. Provide them with a letter of reference.
5. Hire them on a contractual/ freelance basis (if available).
6. Let them know they are welcome back when times get better (if this is true).
The Company You Keep
Sometimes small business owners believe that surviving employees should feel grateful that they didn’t lose their job–but that mind-set is a huge mistake. “Employees who remain must be handled with care and leadership, and you must focus on keeping them engaged,” says Chris Bryant, founder, executive coach, and national speaker of Beverly Hills, California-based Rapport Strategies Group. A period for rebuilding trust, confidence, vision and employee engagement must occur. Start by setting new goals which reflect the new realities of the business. This could include setting new sales goals that realistically reflect the downward sales projections, new cost goals, and new performance targets for each individual to reach.
Also, if you’re not in the habit of saying “thank you” and showing appreciation to your employees in ways that are meaningful to them as individuals, then get started. And, if you are, then take it up a notch. “Acknowledging and rewarding excellence becomes even more important during layoffs than it was before as those who remain have to take up the slack for those who have gone,” says Bryant.
There are a number of low-cost solutions small business owners can implement to show appreciation to remaining staff members including half-days, raffles, movie screenings, or bringing in your vendors and local experts to provide on-site educational seminars (for professional or personal development). “We began to offer our employees’ things like gift certificates and event tickets as tokens of appreciation,” says small business owner Gregory Cancryn. You may also consider orchestrating an out-of-office activity such as bowling or lunch. These are all great ideas if you can afford them.”
However, more often than not, small businesses that are struggling to survive won’t have money to spare for any of this. Joanne Sujansky, author of Keeping the Millennials: How Companies Are Losing Billions in Turnover to This Generation and What to Do About It (Wiley; $24.95) and founder of KEYGroup (www.keygroupconsulting.com), an employee retention consulting firm based in Pittsburgh, insists that boosting employee morale can be done without spending a dime. “In my own office we’ll all occasionally bring brown bags and eat lunch together. Another employee loves to cook so she sometimes brings food to the office to share with everyone,” she says. “It’s not always about money, but kindness and partnering.”
Adding Assets Not Injury
An engaged employee is your company’s greatest asset, while a disengaged employee will cost you money. “Studies have shown that the No. 1 reason customers leave and never return is due to an attitude of indifference on the part of an employee they encountered,” says Bryant. “So, take care of your remaining staff members, they will take care of the customer, and ultimately you.” Utilize these six tips offered by Bryant and Sujansky to engage your remaining employees:
1 Energize employees with creative leadership. “Don’t just think out of the box … ignore the box,” says Bryant. Examples may include job rotation, flexible work schedules, cross-training, telecommuting, or hiring interns.
2 Notice the signs of low morale. Indicators include: attitude changes, mood swings, poor attendance, a rise in errors, lower productivity, and introverted behavior.
3 Allow employees to be heard and ask questions. A lack of information can lead to misinformation. Employees must have an avenue to express their feelings, share ideas, and gain clarity–even if it’s anonymously.
4 Acknowledge and reward excellence. Find out what motivates each employee and strive to meet his or her specific needs. A “one size fits all” approach will not suffice.
5 Get feedback from employees with quarterly “keeper” interviews, “Use these “keeper” interviews to gauge how well you are meeting employees’ needs, and seek out suggestions on what you and the company can do to improve,” says Sujansky.
6 Help employees achieve work-life balance. This may be as simple as encouraging them to attend a child’s recital or take a vacation. Engagement Levels in the United States Engaged 29% Enrolled 43% Disenchanted 22% Disengaged 6% * Engaged Those giving full discretionary effort, with high scores on all three dimensions. * Enrolled The partly engaged, with higher scores on the rational and motivational dimensions, but less connected emotionally. * Disenchanted The partly disengaged, with lower scores on all three components of engagement, especially the emotional connection. * Disengaged Those who have disconnected rationally, emotionally and motivationally. SOURCE: TOWERS PERRIN GLOBAL WORKFORCE STUDY 2007-2008 Note: Table made from pie chart. How Engagement Affects Financial Performance
Companies with high Companies with low
employee engagement employee engagement 12-month change in operating income 19.2 -32.7 12-month net income growth rate 13.7 -3.8 12-month earnings per share growth rate 27.8 -11.2 SOURCE: TOWERS PERRIN GLOBAL WORKFORCE STUDY 2007-2008 Note: Table made from bar graph.
COPYRIGHT 2009 Earl G. Graves Publishing Co., Inc. Reproduced with permission of the copyright holder. Further reproduction or distribution is prohibited without permission.
Copyright 2009 Gale, Cengage Learning. All rights reserved. Gale Group is a Thomson Corporation Company.
NOTE: All illustrations and photos have been removed from this article.
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