Employee morale critical during downturns… and rebounds

When business starts hurting, employee morale suffers immediately. Employees who are laid off can become disgruntled, and the ones remaining start wondering if they’re next out the door, which often degenerates into an awful work environment if things don’t start turning around quickly. They often don’t, and Ed Friedrichs, ZweigWhite chairman, said during a session of The Zweig Letter 2010 Hot Firm Conference in late October, that during recessions the upswing is often more difficult than the downturn. A lot of that struggle has to do with how firms handle staff reductions during downswings, he said, offering several suggestions on how to ease the pain during the difficult times. Most of Friedrichs’ suggestions boil to real concern for people, constant communication, and the idea that hardship is sometimes unavoidable. When a company lays somebody off “you have created somebody out there who is talking about your firm,” Friedrichs said. “It has an enormous potential impact on your upswing.” Turning a negative into a positive When Friederichs was the CEO of Gensler (San Francisco, CA), a 2,300-person architecture firm, the company went as far as finding jobs for the staff it needed to let go. Instead of creating disgruntled former employees, the firm created employees who wanted to come back. “When people left we made an absolute policy of keeping in touch,” Friedrichs said. “These are devices that we used to address morale.” A visitor to Gensler’s office today will notice boomerangs at some workstations. Many employees have several boomerangs on their desks, which measure the instances employees left and came back to the firm. “I can’t overemphasize the importance of how you deal with people and their morale,” Friedrichs said. Everybody wants to succeed During difficult times team members want to be part of the solution and help with the turnaround, even if that often means letting some staff go. But it is how a company chooses to articulate its difficulties that makes the biggest difference— that includes keeping the staff informed. “We share every piece of information with every employee,” said Raj Sheth, president and CEO of Mead and Hunt (Madison, WI), a 430-person engineering and architecture firm. Sheth sat in a panel discussion on the topic of morale with Friedrichs and two other industry leaders during the event. “If everybody knows, there’s no surprises,” he said. Friedrichs said that if communication is effective, employees usually understand the need for reductions and changes. “We have to stay viable as a business… we can’t pay for people whom we have nothing to do,” he said. Don’t eliminate Stephen Smith, president and managing director of WSP Sells (New York, NY), a subsidiary of WSP Group plc (London, United Kingdom), a 10,000-person design, engineering, and management consultancy service firm, said during the session that one of the worst things a firm can do during downturns is to cut out social activities. “What you’re really doing is putting more fear into your staff,” he said. “Don’t eliminate the cultural things that tie everyone together.” For 12 weekly pages of content like this, subscribe to The Zweig Letter here