For the cost-cutters: A history lesson (Guest commentary)

Reassure employees during recession

Six months ago, a client of mine would never have found herself questioning whether her employer would foot the bill for her to take her small team out for a holiday lunch in December. It had been a tradition for as long as anyone could remember.

But now, as the company responds to the economic downturn with a new regime of aggressive cost containment, my client was suddenly hesitant to ask about coughing up the $150 or so that it would cost.

As a 30-year-old professional, fairly new to the department, she doesn’t particularly care about the holiday event for herself. But she understands how important it is to her long-serving staff: At meetings, one of their first questions has been whether and where the luncheon will take place. She thought they would be crushed if it wasn’t held this time.

The kicker is the company might well have been willing to cover it. But she didn’t actually know and wouldn’t ask. Why? Because with so much rampant anxiety about containing costs, she feared if she asked her manager, she would look like she “doesn’t get the culture or is insensitive to financial issues.”

This story illustrates the kind of knee-jerk panic and confusion permeating the way people are behaving in organizations caught up in today’s worries about the economy. And her staff’s persistent lobbying for their celebratory lunch shows just how much small gestures can mean to workers.

Of course, the cutback anxiety goes well beyond expenditures for a holiday party. Workers are also worrying about cuts to year-end bonuses, taken-for-granted training programs, important new projects and promised staffing resources, not to mention their very jobs — basically, cuts to almost everything that makes them feel valued and enables them to do their jobs with a degree of satisfaction and a measure of accomplishment.

A friend, a long-time observer of corporate culture, calls this frantic, unthinking, must-cut-everything fear and the behaviour it leads to “brain-on-fire cost containment.” And it’s wreaking havoc on morale — just look around at the sea of unhappy faces in your department who don’t look like they have much to celebrate.

Yet so much of this cost-cutting is ill-thought-out. Take, for example, a dinner conversation I had recently with a friend, a vice-president of HR at a company that prides itself on employee-friendly programs. She said her company was doing well and wasn’t significantly affected by the economic downturn. Her focus for 2009, she added, was on “fostering employee engagement.”

However, in the next breath she said, “But we are aggressively cutting costs and looking for savings everywhere. We aren’t taking on any new HR initiatives and are dropping all development activities except the basics — supervisory training.”

When I asked her about the contradiction between such cutbacks and her focus on employee engagement, she responded robotically: “Well, we need to do this. Management wants to cut costs.”

I could have predicted her answer; I’ve had the same conversation with many HR professionals in recent months. It’s also eerily reminiscent of what I heard over and over again in the recessionary early ’90s and, again, in the downturn of the early part of this decade.

It’s not that managers take any pleasure in cost-cutting moves. They are suffering, too. But, too often, this thoughtless behaviour comes because they have anaesthetized themselves in order to deal with the pain. That leads to simplistic thinking and acting.

Staff have long memories. Bad treatment not only undermines existing morale but has fallout that will reverberate longer term. When the economy recovers, demoralized and cynical staff will vote with their feet and jump ship.

Skills shortages are not going to go away even if they aren’t a critical issue at this moment. Boomers are continuing to age, regardless of the economy. Their desire to work in a different way — whether to do work more in tune with their values or leave the working world altogether to pursue personal passions — is not going to fade.

Some older workers may rethink retirement as they look at dwindling retirement funds. But many of these workers, by virtue of their age and when they joined their employer, are on defined benefit plans, which means their pensions are not affected by the markets. The result is older workers will continue to retire, even if retirement plans are delayed. So the heat will be on for talent.

We know about the dumb things many companies did during previous economic downturns. Take some lessons from the past:

Fear mongering: You heighten stress and undermine performance when you tell people they are lucky to be employed, or make stentorian comments about bleeding revenue losses and other cataclysmic proclamations of how bad things are.

With so much anxiety about the economy and job loss in the zeitgeist, people need to be reassured, not scared. This doesn’t mean presenting an unrealistic view of the future. Obviously, no job is completely secure. But it does mean being open and honest about company fortunes. And it also means letting staff know what you are doing to maintain current payrolls or minimize job losses.

It also means sensitively wording staff communications. Ask yourself: “How would I feel if I were to read or hear this?”

Turning up the heat: People are overwhelmed by the “do more, do it better, do it faster, do it with less” mantra. They are maxed out in terms of time and energy. You can’t get blood from a stone. And if you treat people like disposable units of productivity, you will generate even more cynicism and erode any existing shred of loyalty.

Personal development: Wiping out career planning, work-life balance and other programs targeted at personal development is an easy way to free up funds. But on the stupid meter, this is about as stupid as you can get.

For one thing, it shows a complete lack of creativity. It also sends a message to staff about what you really mean when you say: “People are our most valued resource. We are committed to providing you with a meaningful career here.” It’s a message they won’t forget when things turn around.

It’s not only about talent retention, it’s also a practical issue, both immediately and longer term. If someone needs some kind of development to perform more effectively in a current job or in preparation for a bigger one in the future, that need doesn’t disappear because the economy is soft.

Eliminating older workers: Because of their relatively larger paycheques and age discrimination, these are the employees most vulnerable to job loss. But as organizations should have learned after the last downturn, if you eliminate older workers through wholesale firings or early retirement, you lose your best mentors and repositories of corporate intelligence. Younger staff taking over the leadership reins will have nobody to guide them in tackling management challenges.

Empty platitudes: I recently received a promotional e-mail from a consultant offering marketing strategies for recessionary times. One of his top tips for heads of marketing and sales teams was to give the team the “I have a dream” speech, showing them “how they can be victorious” in meeting revenue targets.

Sure, people can be rallied in a counter-recessionary business. But this message is insulting to workers who sell luxury commercial real estate. Be realistic in expectations of staff. Setting unattainable performance objectives increases feelings of helplessness and failure, which is not a recipe for high performance.

Trawling for cheap labour: Hiring young, qualified professionals to serve as lower-paid interns, rather than giving them fair entry-level jobs and salaries — and even worse, acting like you are doing them a favour because you “are giving them experience” — leaves a bad taste in the mouths of the very workers who you hope will ultimately join your organization.

Acting gloomy: Depression is contagious. I recently asked a client who is a vice-president of HR how things were faring in her company. “All the senior managers are walking around like the world as we know it will no longer exist. Staff see them and think, ‘They know more than I do. The company is going under. We’re all going to lose our jobs.’ And of course then they panic,” she said.

If you need to cut costs, do so with an eye to what’s most important to staff morale and whether short-term gains are worth the long-term price tag.

Think about how you would treat people if you were battling talent wars. Find creative solutions that allow you to continue to develop staff rather than going for the quick fix and eliminating all development or anything else that lets people feel good about themselves and their lives. Maybe you can’t allow staff to attend expensive out-of-town conferences but you can, for example, free up a day to attend in-house workshops. Think twice before you cancel all department festivities, even if you have to scale them down.

Recognize the diminishing returns of relentless work demands. People don’t have endless resources. And they also have a life outside the workplace that demands their time and attention.

It’s now more important to foster a sense of belonging and being appreciated. Now is the time to make sure history doesn’t repeat itself.

Barbara Moses is an international speaker, work-life expert, best-selling author of Dish: Midlife Women Tell the Truth About Work, Relationships and the Rest of Life and publisher of the online tool Career Advisor. For more information, visit

Employee Recognition

CEO takes case for recognition public

Editor’s note: The following is an edited excerpt from a full-page ad that Wells Fargo, a San Francisco-based financial services company, ran last month in the New York Times, USA Today, the Washington Post and the Wall Street Journal. The ad, a letter from CEO John Stumpf, lamented the fact the company was unable to properly reward and recognize its 281,000 employees.

Everyone agrees that in this economic environment, all employers should re-examine how much they spend on recognition events for their employees. Especially publicly traded companies owned by their shareholders. Especially institutions that received investments from U.S. taxpayers through the U.S. Treasury’s Capital Purchase Program.

The problem is many media stories on this subject have been deliberately misleading. These one-sided stories lead you to believe every employee recognition event is a junket, a boondoggle, a waste or that it’s for highly paid executives. Nonsense! Because of the misperceptions these stories have created, Wells Fargo has decided to cancel all its major annual recognition events for the rest of this year.

Annually for the past 20 years we’ve recognized our top team members from various businesses at several special four-day events. For many, it’s the only time in their lives they’re publicly recognized and thanked for a job well done. This recognition energizes them. It inspires them and their team members to want to create an even better experience for our customers. But not this year. Who loses besides our team members? The workers who depend on our business. The hospitality industry. Hotel housekeepers. Restaurant servers. The airlines.

The funds to pay for recognition events such as these do not come from the government. They come from our profits. We believe our profits actually increase by rewarding and recognizing our best performers. Competition to be recognized inspires everyone to work harder and smarter. We’re as frugal as any company in spending our shareholders’ money thoughtfully and responsibly. Events such as this are the heart of our culture because our product is service, delivered by caring, energized, talented, loyal team members who earn competitive, fair wages and benefits.

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