SPECIAL OPS

Making the best of a bad employment scenario.

By Kristin F. Elson

When life gives you lemons, make lemonade." So goes the old saying, at least. For the technology, travel and hospitality industries especially — and any company serving them — recent months have seen an abundance of sour notes, including domestic terrorism, war abroad, failing consumer confidence and layoffs.

To avoid downsizing, many employers have turned to shortened work weeks. Those who last year were working 60-hour weeks and craving a day or two off are finally getting their wish, but at a huge penalty of reduced pay. Others who once enjoyed high salaries and a multitude of perks are now seeing smaller bonuses — if any — and fewer stock options.

Production is being cut, hours are being trimmed, and workers are being let go. So how do you maintain a positive outlook in the office?

The first step is to realize that this is just a pattern. Although the recovery process will take time, encouraging developments are already pointing to better days ahead. With that in mind, veteran chief financial officers at Atlanta-based Tatum CFO Partners suggest that firms refrain from laying off large numbers of employees. "The best teams dig in, and everyone works harder to make success happen," they say. "Instead of layoffs, consider pay cuts, reduced hours and revised incentive pay plans. Align employee goals with company goals by using creative compensation programs so you can retain skilled employees for a quick start in the next upturn. Companies that cripple themselves by cutting into muscle will be slow out of the blocks when the new cycle begins."

Creative Options
Of course, independently owned firms and smaller companies have more flexibility regarding options than larger chain organizations. Some smaller firms even put reduction decisions to employee votes, and, not surprisingly, employees are voting to cut their work weeks and pay by as much as 20 percent rather than see some of their co-workers pounding the pavement.

Large corporations also are turning to reduced hours and pay cuts but, in some cases, have the means to offer accompanying incentives. According to U.S. News & World Report, Motorola asked some workers to take the entire summer off without pay this past year but offered to pay summer school tuition for those affected. In another example, Acxiom reduced pay 5 percent for all workers making more than $25,000 per year but offered the workers the opportunity to buy $2 of additional stock options for every $1 of pay cut.

Other options include sabbaticals and leaves, buyouts and rehiring bonuses. Accenture, for instance, asked 800 consultants to take yearlong sabbaticals at 20 percent of their normal pay.

According to the same U.S. News report, discount broker Charles Schwab paid laid-off workers generous severance amounts, provided scholarships and vested their stock options. Then, it offered rehiring bonuses to workers willing to come back within 18 months of the company’s financial recovery.

Keeping Morale Up
To ensure that your best employees are able to see through the bad times, it’s crucial to keep the lines of communication open. The officers from Tatum say, "Nothing is worse than keeping employees, customers, suppliers and investors guessing about the company’s plans and actions during a time of uncertainty." They add that managers should communicate all kinds of news — good news, bad news, successes and failures. "Deal with reality; don’t paint a rosy picture for your board and lenders. Credibility later will count for a lot."

In addition, it’s key to keep the pulse as steady as possible. Maintain employee benefits, schedule routine performance reviews, recognize professional and personal achievements, and extend as many educational opportunities as possible. As with the old adage, the current situation calls for creativity. Instead of going out to recognize an employee birthday, ask staff members to cater an in-house celebration. Find less expensive training options, such as seminars offered by vendors, on-line courses or classes at local community colleges.

Employees extending loyalty to the company are seeking as much normalcy and comfort as possible. As a manager, it’s your job to remember the "people" side of your business. According to the Tatum executives, "Recognize that a down economy takes a toll on the psyche, and make an effort to retain a positive attitude. No downturn lasts forever, and most fears are never realized. Help your employees recognize the same realities. Don’t hide in your office. Walk around and talk with your workers. Make them true members of your team, keep them informed, solicit their best ideas, and help them see the light at the end of the tunnel."

Also be sensitive to unnecessary "extras." Employees will doubt the intentions of upper management if they see money thrown at perks instead of at their cut paychecks.

Taking Action
The best remedy for economic pain is an immediate strategy for turning the business around, and this is the time to get everyone to contribute to increased marketing efforts. Third only to financial security and more time with family and friends, employees want interesting, challenging work. So use this time as an opportunity to give more authority to a deserving employee or to expose an employee to a new side of the business. The results may benefit both the company and the employee — and sweeten the deal for all!

Special Ops is a regular column featuring ideas and issues regarding business operations. Watch for it in future issues.