How to manage your staff in a rough economy.

It’s no surprise that in tough economic times, many businesses’ knee-jerk reaction is to lay off workers. Salaries and benefits are a huge part of any enterprise’s bottom line so in many ways, it makes sense.

Unfortunately, job cuts bring with them other costs: severance pay, administration costs and legal fees, not to mention the knowledge and skills costs a company loses when employees are terminated. And there’s another set of factors even more difficult to measure:


“In the face of layoffs, remaining staff 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 seeking other opportunities. And, when business does improve, the costs of finding and training new employees are very high.”

Canada Business Services for Entrepreneurs makes these three practical suggestions:

1. Think long-term: Recruiting new employees is expensive and can damage relationships with customers, so try to avoid layoffs if you can. Instead, reduce employee costs through work reorganization, multi-tasking and learning new skills.

2. Recognize and reward: Acknowledge employee contributions one-on-one and in staff meetings. Offer incentives tied to your business reaching its goals. Give low-cost perks like days off or access to a coveted parking spot.

3. Keep it positive: Despair and negativity can spread like wildfire. Give your staff continual feedback. Offer flexible scheduling, job sharing and reduced workweeks. Have a strategy to deal with stress and conflict.

If you do have to cut staff, Whole Foods founder John Mackey suggests you use the ‘pull the Band-Aid off quickly’ philosophy:

“It’s important to make the cuts deep enough so you won’t have to do it again soon. Your employees will forgive you one round of layoffs. But if you do it a second time, you will lose their trust as people start thinking, My God, when am I going to lose my job?”

That’s just one of the 8 useful tips offers here.

What has worked for you?
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By Adam

July 27, 2010