Managing employees during tough times
As a small business owner, you will be faced with difficult choices during difficult times like an economic downturn or a decrease in demand for your product or service. In order to stay competitive, you must streamline operations and offer creative responses to external threats. It is critical to encourage innovation and make the kinds of changes that are necessary to ensure that your business succeeds today and in the future.
When times are tough, business owners often resort to layoffs as a cost-saving measure. However, laying off employees can damage your business and impair its ability to succeed in the long term. Layoffs incur direct costs, including severance pay, administration fees and legal fees, which immediately affect your bottom line. There are also less tangible costs like the skills, knowledge and experience that are lost when an employee is let go.
In the face of layoffs, employees often experience lower morale and productivity, higher levels of absenteeism and job-related stress, and a loss of faith in the business. Your best employees may start looking for other opportunities. And, when business does improve, the costs of finding and training new employees can be very high.
Innovative cost-cutting and restructuring measures can help you reposition your business and define how business will be conducted in the future, without the need to let valuable employees go.
Think long term
- Where possible, avoid layoffs. Recruiting new employees when your business rebounds can be expensive, and can put your reputation as an employer at risk.
- Reduce employee costs through work reorganization. Multi-tasking and learning new skills allow your staff to support the needs of your organization now, and in the future.
Use recognition and rewards
Rewarding employees can be a challenge in times of fiscal restraint. Here are some smart ways to recognize employees, while keeping costs low:
- Acknowledge employee contributions — employees want to feel that their efforts are recognized and appreciated.
- Use staff meetings as a forum to recognize outstanding achievements.
- Link incentives to the overall goals and objectives of your business.
- Offer low-cost, innovative perks, such as giving employees an afternoon off or access to a coveted parking spot.
- Make recognition personal — allow employees to choose their rewards.
Maintain a positive work environment
- Ensure that employees have work that is challenging, interesting, and fulfilling.
- Give employees continuous feedback and ensure that they understand their roles, the impact their work has on customers, and how they bring value to your organization.
- Offer employees flexible scheduling to help them balance their work and personal lives.
- Offer job-sharing and reduced work weeks. These alternatives to layoffs can help your firm retain existing jobs and return employees to full-time work when the period of recession is over.
- Have a strategy to deal with workplace stress and conflict.
- Set a clear sense of direction and leadership. Management should set a positive example for employees to follow.
Although avoiding layoffs during hard times can be a challenge, the benefits to your business in the long term are significant.