The markets are going through a funk. The data in the reports from the central bank is depressing. The currency markets are more volatile than companies have stomach for. The markets seem to move only in one direction – down! Times are tough. Costs need to be pared. But before you reach for the good old financial-machete and start slashing ‘non-essential expenditure’ – take a moment and think. Do your employee engagement programs constitute essential or ‘good-to-have’ expenditure?
Let me put it this way, if getting the work done, surviving the market conditions and meeting your targets is ‘good-to-have’, then so is employee engagement. If you feel that your top-line and bottom-line targets are non-negotiable, then you better invest in your employees more than ever.
The excel sheets might tell you that a salary freeze, with a reduced bonus component and total stoppage of other rewards might just help you scrape through to fight another day when markets improve. But what the spreadsheets can’t tell you are the hidden costs of not engaging with your workforce when there is so much uncertainty. You need your workforce to do things smarter and better, not panic and freeze up. Gallup did a research study covering about 1.4 million employees in 192 organizations, across 49 industries in 34 countries and concluded that “employee engagement strongly relates to key organizational outcomes in any economic climate”.
Gallup found that companies in top-quartile of employee engagement had 37% lower absenteeism, 28% less shrinkage, 21% higher productivity and 22% higher profitability compared to those in the bottom-quartile. Doesn’t get more obvious than that, does it?
So how do you go about ensuring that your employees remain engaged when the chips are down?
“Mistrust demoralises and fear paralyses, so they must be wrung out of tomorrow’s management systems”
– Gary Hammel.
Getting from “OMG!” to “Yes, We can!”
The short version:
Communicate, Communicate some more and then repeat it all over again.
The long version:
First the list of DONT’s:
- Don’t lock yourself up in the ivory tower and stop all communication.
- Don’t add to the problem by going around looking worried. You will just be the cause of more rumours than you care for. Everyone reads the news sites. A bad economy coupled a worried looking manager doesn’t send a good message to the team.
- Don’t go all recession-mode on the team. When the cookies and tea-bags disappear without a heads-up, people assume they are next.
- Don’t overload the team to breaking point. Its counterproductive – costs might seem to go down, but the eventual dip in product quality will come back to bite.
Where there is fear, rumours spring up. Things quickly snowball as people start to believe worst-case scenarios and soon panic sets in. Add to that the fact that a tweet or a facebook post is just a click away and things can get ugly really fast. The employees get worried if they think job cuts are going to start. Which departments? Which teams? More rumours, speculation and more panic. The best possible action that a company can take is to quell rumours. This is not the time to ‘respect boundaries’, to play company politics, to lock the truth away with the excuse of ‘only-on-a-need-to-know-basis.’
Candid is good: Start off by explaining the situation of the company to everyone – good or bad – candidly without causing panic to everyone. This doesn’t mean you open out the entire cash flow details in the town-hall meeting. Besides opening up complex financial statements to employees who are untrained to read and understand them might only add to the anxiety. You need to pick out the financial and operational metrics that employees can relate to and present them. Karen Berman and Joe Knight in a WSJ article, point out how in their experience all employees can benefit from understanding the financial big-picture but people in different departments are likely to work smarter when they see relevant data and trend lines. Put in the leg work; make the financial data you present both understandable and relevant.
Trust is a two-way street: Once you have explained the true picture of where the company stands, enable a frank discussion rather than have a monologue from the CEO/CFO. When presented with worrying information people tend to have questions. Not having those questions answered only makes things worse. Present the data, face the questions, and answer them truthfully. Establishing trust with the workforce is of paramount importance, especially if you are asking them to make sacrifices.
The first responsibility of a leader is to define reality. The last is to say thank you. In between, the leader is a servant. —Max DePree
Opening up to employees will also get them thinking on ways to do things better, faster and save costs as well. Never forget that people on the ground, executing the processes, writing the code, shipping the products, talking to your customers know the minutiae of how the systems works. It’s not surprising that they will be able to figure out ways to improve the flow much better than anyone else.
Have a plan of action to address the current and future situation that you expect. Just presenting the situation doesn’t help to assuage employee concerns. Everyone needs a plan to which they can align. A laundry list of issues or ideas that might work is not a plan.
A leader takes people where they want to go. A great leader takes people where they don’t necessarily want to go, but ought to be. —Rosalynn Carter
Keep the flow going: And now the biggest challenge – you have to figure out a way to keep the mojo intact in-between the discussions. The new readers screaming about a collapsing currency and stock markets are going to make it very difficult for your employees to remain motivated. You have to make your workplace a refuge away from the fear mongering through actions.
Keep the focus on getting the work done. Recognize good work done and do it publicly. Small sparks of hope have the effect of spreading cheer. Instead of waiting for the annual company meeting to hand out awards, split the budget into hundreds (or thousands) of small rewards and empower your managers to hand them out. More the merrier – literally! Instantaneous recognition has a far superior reinforcement effect.
The greatest leaders mobilize others by coalescing people around a shared vision. —Ken Blanchard
Continue to explain the company position to all employees at a regular interval and keep a transparent record of actions that were taken and the outcomes. This will reinforce the trust employees place on the leadership to guide them out of troubled waters. In tough times, leadership has to evolve from the traditional command and control version to one that relies on building trust and respect with their workforce. It’s only if there is a buy-in from the employees into a shared goal that they will wholeheartedly commit themselves to achieving.
In volatile times, fear and doubt spread like contagion. With uncertainty looming large at every corner it is difficult for people to stay focused and deliver their best – unless their company actively helps them to do so.
Leaders should be willing to listen and have a pulse on how the employees are feeling. They should not only be visible, but also accessible – especially so in tough times. The relationship between the employer and employees has to evolve beyond the traditional paternalistic set-up to one of mutual respect.
Companies that invest in building strong relationships and trust with their employees and continue to invest in them when the economy is down will not only remain competitive during the downturn but will also emerge stronger and better positioned to leapfrog competition when the economy improves.
References for this post:
Key findings, Gallup Q12 Meta-Analysis (2012), What Your Employees Don’t Know Will Hurt You And that includes a company’s financial results, Wall Street Journal.
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