Management | Philosophy | Self Actualisation | Competitiveness

Maintaining Employee Morale During The Recession

~ This is a guest post by author Barry Shore, Ph.D from Global Project Strategy.

Companies caught in the grip of this severe recession face many difficult challenges: one of which being how to avoid deteriorating employee morale.

While on the surface one would expect that employees who remain would be grateful that their jobs have been spared, evidence from this and other recessions suggests that they feel overworked, threatened, and vulnerable. In most cases morale really does begin to suffer.

Morale affects performance, and during a recession organizations are threatened with a double-edged sword. At the same time that their business is contracting, employee morale threatens to make matters even worse.

Lower morale can translate into “recession fatigue.” This is a situation where the company experiences a series of problems that include a decline in productivity, deteriorating customer service, increased sick days, falling sales, higher costs, and lower profits.

Indeed, the only way to escape these problems is to stop doing what most companies do. Instead, companies must be proactive in addressing employee morale. Without a proactive strategy “recession fatigue” will take its toll.

How does morale deteriorate?

In most companies morale starts to deteriorate when management becomes aware that the financial crises has become their crisis as well. They instinctively pare down the workforce while at the same time reducing as many other costs as possible.

Unfortunately, these are the very changes that are almost sure to send shock waves through any organization.

But, as is often true during an organizational crisis, communication between management and the workforce suffers. Rather than hearing about the crisis firsthand from management, the informal grapevine takes over, often raising anxiety to new and exaggerated heights. Employees become angry, detached and eventually resigned to the possibility that they my lose their job.

In many cases, the less information that management provides to the workforce … those terminated as well as those left behind … the greater is the shock wave.

Managing Those Who are Left Behind

These downsizing’s are tragic enough for those who lose their jobs, but those who stay also suffer as management expects them to pick up the slack, do more with fewer resources, and work longer hours.

Restructuring the organization and paring down the workforce, should not be the first and last step as the organization hunkers down to survive the recession. The second step, which is equally as important, is to manage the transition for those left behind. Unless properly managed, morale is almost certain to suffer. And unless management is proactive in addressing this issue, the organization will be in a weaker competitive position once markets turn around.

Four Leadership Principles

There are four leadership principles that, if followed, may help managers navigate through the transition in an honest and ethical way. They may help to minimize “recession fatigue” and to establish a healthier organizational environment for those left behind.

1. When tough steps need to be taken, management should openly discuss the challenges they face with employees. It will be uncomfortable, especially for those who are conflict avoidant, but employees will respect the honesty.

2. The frequency of communication with the workforce must increase. Communication reduces anxiety and can stabilize, if not improve, morale. Don’t delegate this responsibility to lower levels. Top management must do it.

3. Maintaining the morale of those who remain must become a top priority. It is important to recognize that they are suffering from a “Post Downsizing Stress Syndrome.”

4. Resist the temptation to take a hard line on those employees who remain. In his book, “Good to Great,” Collins identifies the five characteristics of effective leadership. They include: personal humility, professional will, diligence, and ambition for the company not themselves. Professional will and diligence is not enough to get through this crises. Equally important are personal humility and ethical behavior. They are not only essential in dealing with people who are caught in the middle, but can ensure a more motivated, productive, and committed workforce once the recession is over and jobs become more available.

Depending on the culture of the organization, some of these principles may be very difficult to execute, but ignoring the plight of those who are still employed may be an inappropriate response that could jeopardize the long run prospects of the organization.

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4 Responses to “Maintaining Employee Morale During The Recession”
  1. Celina says:

    Maintaining employee engagement when communicating difficult issues: an IABC survey shows that companies that take a strong position and answer questions as forthrightly as possible reap the benefits.what you say?

  2. Mormon Secrets says:

    I’ve read recently that a number of large companies are now reversing some of the things they did during the recession that helped the bottom line temporarily, but hurt employee morale. For example, most companies that lowered or eliminated the company 401(k) match are now bringing that back.

  3. Lucy says:

    Employee is the great asset the company has. So that, management should be smart for maintaining employee loyality with interesting rewards.

  4. Ramesh says:

    Employee morale and economic environment have a direct, positive and strong correlation. The management has a role to play to reverse this correlation during the economic downturn. Companies have to be financially strong enough to support employees during recession to maintain employee motivation and look for ways to improve employee productivity.

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