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Small Business Human Resources Workforce Development Your Questions Answered Success Stories

From CBIA News, February 2002


Maintaining a stable workforce in an unstable economy

By Chris Amorosino

Free-lance writer in Unionville

It’s tough to keep your employees focused on their jobs when everyone knows the numbers are bad and many fear a layoff. The uncertainty decreases productivity, lowers morale and can drive away talented staff. Here are some techniques for holding on to good employees, keeping them productive and avoiding layoffs.

Anticipate job-skill changes. The earlier you realize necessary job skills will change, the more likely you can teach employees those new skills. “Companies that anticipate where their skill needs will change and provide their existing workforce with as much opportunity to make that change — get workers to buy into the change — are companies that frequently have a lot of success,” says George Wentworth, director of program policy at the state Department of Labor.

Communicate early. David Whitehouse, national medical director for CIGNA Behavioral Health, advises practicing open and early communication. If sales in your entire business sector are significantly down, the essence of your first message to employees might be: “The decrease in market demand for xyz means our production needs will be lower for the next x months. We must make adjustments and are now considering a variety of possible solutions.”

Be with your people. When the financial picture is not good, it’s not enough to be accessible. Business owners and managers should spend time every day with the rank and file. Daily interaction motivates people, increases comfort, builds rapport and boosts morale. Roberta Hublard, vice president of human resources at Doran Manufacturing in Shelton, walks through the production area two or three times a day to chat with people and answer questions.

Consider less drastic alternatives first. Last year sales slipped about 40% in the third quarter at Doran. Instead of layoffs, the company furloughed about a third of its workers each week. People worked two weeks, then had a week off. Doran continued to pay all employee benefits. Hublard says employee reaction was very positive.

Eliminate the layoff mind-set. David Bohy, a senior consultant and practice leader in human resources at The Essex Group, says some companies have virtually eliminated the need for layoffs. It’s not easy. The first step is making workforce stability a core value. Other necessary steps include workforce planning, workforce tracking (tracking value-added per employee, controlling workforce size, etc.), building in workforce flexibility, and creating and communicating an equitable employment security policy. Bohy tells clients they’re often best off staffing for a worst-case business scenario and using temporary, contract or part-time employees to handle any additional workload.

Create an equitable workforce reduction policy. You should never promise there will be no layoffs, but you can still build trust by spelling out how layoffs would be handled and making sure employees know and understand the policy. Think about including a commitment to severance pay in the policy. “If you face the horrible situation of eliminating jobs, people will know there will be a buffer, and they will be more loyal and less panic stricken,” Bohy says.

Manage job performance well. Effective performance management helps tie high performers more closely to your company, and if reductions must be made, makes it easier for you to identify and keep “A” and “B” performers while eliminating marginal or “C” performers.

Prepare the message givers. If tough news must be delivered, fully prepare the message bearers. Whitehouse says people promoted into management don’t always have the needed management skills. Before you make them the bearers of bad tidings, deal with their own questions, emotions and concerns.

Ask for worker input. The best ideas for improving a business often come from its workers. Listen to your employees. Let them provide input on major decisions directly affecting them. Before Doran chose furloughs, management discussed the decision and the alternatives with several senior employees.

Show the company at its best. Whitehouse says you can’t make people feel positive about bad news, but you can move the needle more toward neutral. Be open, honest, fair and clear. Treat all employees equally well. The employee whose job you must downgrade or eliminate may be the employee whose skills you may desperately need six months from now. Last year Doran had to lay off four workers, then rehire two of them when a large order came in a few months later. Those workers might not have returned if they had felt the company had been unfair to them earlier.

Don’t give up gems. Smart companies try to avoid improving the ledger sheet by eliminating a popular program, benefit or feature. Don’t try to save money by casting off things that most attract good workers to your company.

Think about long-term ramifications. Before deciding on a layoff, think through all the potential ramifications. “There are increasing data that say layoffs are rarely successful, and they leave a wake of disruption, demotivation and damaged trust from which it may take years to recover,” Bohy says.

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