With a painful sense of déjà vu, managers and the people who report to them are bracing for the workplace consequences of recurring economic and market turmoil.
Memories of the layoffs and cutbacks from the 2008-2009 recession are fresh in workers’ minds, so the stock market gyrations of the past few weeks and the worries about the European and North American economies are raising concerns about the health of Canadian companies.
With angst back on the table, how should executives and managers be trying to calm the waters?
Because the last downturn was so recent, it’s no surprise that people are scared that the cuts may return, said Sylvie Ste.-Marie, managing director of Canadian operations at talent management consulting firm Development Dimensions International Inc. “It’s like we’re trying to catch our breath, and here we go again.”
Consequently, the most important thing is for managers to be open and honest with employees, she said, while remaining calm about what’s going on. “It sounds like pretty basic stuff, but it’s what is needed,” she said. “It has to be about trust, and keeping those lines of communication open.”
Because employees have such fresh memories of the last recession – which for many young workers was their first experience of a downturn – the corporate response to new turbulence is crucial.
Indeed, a recent survey from consulting firm Mercer showed that the retrenchment during the last recession – pay freezes, training cuts and fewer promotions – has contributed to a sharp decline in employee engagement. As many as 58 per cent of Canadian employees have “checked out” on some level, the study said.
One key problem is that many executives want to wait until they know exactly what is going to happen to their business before communicating with employees, but that is a mistake, said Jodi Macpherson, leader of the Canadian work force communications and change practice for Mercer.
“The trap leaders sometimes fall into is that they don’t know all the answers, so they want to wait until they have them,” she said. “When we live in an age where we can get information in seconds, that’s not good enough for employees.”
At the very least, employees need to know that there is a plan in place if things go sour, Ms. Macpherson said. Even if that means layoff and cutbacks, managers should spell it out: “You need to communicate the good, the bad and the ugly.”
Executives who have been through all this before agree that getting information out is the key to keeping employees calm, and getting them to carry on.
“The only thing I’d recommend is candid communications,” said David Yager, chief executive officer of HSE Integrated Ltd., a Calgary company that sells health and safety services to industry, mainly in the oil patch.
In 2009, when commodity prices plunged and the resource sector went moribund, HSE had to lay off one-quarter of its staff. Mr. Yager’s advice: “If you think you have a plan that would reduce anxiety, share it. And if you’ve got bad news, get it over with.”
Two years ago, to make it clear that HSE’s managers were going to share the pain, all the executives took deeper pay cuts than the rest of the staff, Mr. Yager said. While salaried employees saw their pay drop by 5 per cent, the two top executives took a 20-per-cent cut, and all bonuses for senior managers were killed. That made it much easier to deal with any complaints, he said.
It is important to get employees involved in the efforts needed to make it through a downturn, said Ronald Burke, professor emeritus of organizational studies at York University’s Schulich School of Business. That means asking for help in cutting expenses and finding waste. There are many ways to trim costs short of laying off staff, which should be the last resort, he said.
Mr. Burke said it is also crucial that managers keep an eye out for employees who could end up truly in distress if the economy worsens – people whose spouse has lost a job, or those with severe financial problems. “[Managers]should keep their antenna out for people who might need more attention in terms of counselling or support,” he said.
Employers must also admit that they can’t foretell the future, and don’t necessarily know what is going to happen to their company, said David Zinger, an employee engagement consultant in Winnipeg. “You certainly don’t want to give any false reassurance, if something’s going to change in the future,” he said.
A key approach in uncertain times is to focus on what can be accomplished in the short term, Mr. Zinger said. Managers and employees alike should buckle down on specific jobs at hand, where they know they have control and can make progress. “If you get fully engaged in a task, your stress can disappear while you are engaged in it,” he said.