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Eight Ways to Keep Your People Focused and Fired Up in an Uncertain Economy

April 21, 2008
It’s hard to find a more cyclical beast than the global economy. Throughout modern history, seasons of expansion and growth have been inevitably displaced by relatively shorter periods of contraction and recession. How well organizations survive these weaker times has much to do with how they react—from a people perspective—to the ups and downs of the economic environment. Survival depends on maximizing competitive advantage, and the first step is to look at your human assets. Here are eight ways to do that:

    1. First and foremost, remember that the best way to weather turbulent times is with the willing engagement of a focused, fired-up, capably led workforce. Avoid the moronic tactics so often invoked during a slowdown, guaranteed to make workers power back a notch or two. Things like knee-jerk layoffs (unless survival is truly at stake), poorly thought out pay cuts (especially incentive pay) and petty cutbacks. When you do make necessary cuts, remember: Officers bleed first.

    Nucor, a Charlotte, North Carolina-based steel manufacturer and recycler, has managed to impress Wall Street (which it says in a 2006 national ad campaign "isn’t usually that impressed with employee retention") with its financial performance, while maintaining a consistent no-layoff practice, even if it doesn’t have an official no-layoff policy. Through good times and bad, Nucor, largely inspired by former CEO F. Kenneth Iverson, has hired, paid and hung on to its workers differently from most of its domestic competitors and has, in the process, seen net income growth of nearly 500 percent over the up-and-down years of 1997 to 2006.

    2. Don’t let fear cause your workforce to disengage. Asking people to be judicious about expenses is one thing—injecting unnecessary doses of fear into the workplace is another. The degree to which employees are concerned about losing their jobs varies inversely with the degree to which they are concerned with doing their jobs, and taking care of customers. And they’ll be looking at the owners and CEO for telltale signs of fear, and of hope.

    Hypertherm, a global metal cutting manufacturer based in Hanover, New Hampshire, hasn’t laid off a single employee in its 40-year history. Instead, when business is in a slow part of the cycle, Hypertherm pays employees for cost-cutting, reduces overtime and brings outsourced work in-house. CEO Dick Couch sees his role as an ambassador of optimism, and believes that a realistic but upbeat demeanor, even during slowdowns, is critical to weathering the storms of the business cycle.

    3. Don’t try to work your way out of a short-term earnings problem by "dumbing down" the organization. One of the first shoes to fall in a questionable economy usually lands squarely on top of the organization’s training budget. If you’re doing training that doesn’t need to be done, then you should stop it anyway, but the notion that we can somehow help the business by deferring necessary training is intellectually bankrupt. Think about that the next time you fly or have surgery.

    A deep commitment to training is one of the hallmarks of San Antonio-based USAA, an insurance carrier that serves principally those in the U.S. military. Perhaps due, in part, to training that educates member service reps on things like what it’s like to be on deployment, the firm was ranked by JD Power and BusinessWeek as the nation’s No. 1 "Customer Service Champ" in 2007.

    When Starbucks began to see slower sales growth last year, it responded in lots of different ways, but not by scaling back on its legendary training, which centers largely on presenting a consistent product and customer experience worldwide. You still don’t get to call yourself "barista" at Starbucks and serve a latte or caramel macchiato without the requisite 24 hours of training in the art, and science, of making the perfect coffee drink.

    4. Don’t (repeat, don’t) stop recruiting. If anything, redouble your recruiting efforts and encourage your hiring managers to do the same. In a move that surprised some, Warren Buffett, one of the savviest investors of all time, closed deals to buy two businesses in the last two weeks of 2007, when economic forecasts were already taking on a gloomy tone. He’s been on a buying spree because, with a shaky economy, things are getting cheaper, including good businesses that he’d like to add to his Berkshire Hathaway portfolio. The same principle applies to rounding up talented people. They’re out there. Go find them, and start a conversation with them now. As in now.

    Day and Zimmerman, a Philadelphia-based provider of skilled-trades workers to the power industry, proactively targets those coming off assignment with the military with its "Helmets to Hardhats" recruiting initiative, and focuses its "Crayons to CAD" program at a much younger generation, to get them to consider computer-aided design as a career choice.

    The Milwaukee Police Department has taken to recruiting from among hockey fans. Setting up staffed information kiosks at Milwaukee Admirals home games has proved to be one of the department’s more effective recruiting tools.

    Smart leaders, at every level, recruit talented employees with as much fervor as they recruit customers. Every day—in social settings, standing in line at the supermarket, at their kids’ soccer games—savvy businesspeople keep their eyes and ears open in order to find people with the values and attitudes they need in their organizations.

    We know the general manager at a high-end restaurant in a major U.S. city who, from time to time, dines at the tables of her competitors. If she receives exceptional service, she leaves an exceptional tip—and her business card. All’s fair in love, war and employee recruiting.

    5. Encourage the CEO to talk candidly with the organization about how the business is doing. CEOs shouldn’t delegate this. It’s their discussion to have. The one thing that distracts people more than anything else is not knowing what’s going on. As psychologist Karl Jung observed, "When facts are few, opinions loom large." Every minute your folks spend wondering or worrying is a minute your customers are being ignored.
"Open-book management," pioneered by SRC Holdings CEO Jack Stack, has been embraced for years by leaders with the courage to share practically everything—the good, the bad and the ugly—with the very people who do the work of the business. By sharing targets, goals and results with everyone on the payroll, Jerry Kathman, CEO of international design agency LPK, has guided his company of 400 employees to annual revenue of $50 million.
6. Crank up your "high touch." Going through a difficult economic period isn’t just about business. It’s personal, too. This is an excellent time to show that you care by spending a bit more quality time with the people on your team, listening to them and making sure they have what they need. Especially those on the front line. Don’t pry, but sharpen your awareness of special circumstances. Has a spouse been downsized? A mortgage foreclosed on? Watch for signs of added stress. Don’t play psychologist, but make sure your employee assistance program is ready to respond and help where needed.

    East Alabama Medical Center, in the town of Opelika, has long had a reputation as one of the best hospitals to work for in the United States. With nurse turnover rates at a small fraction of the national average, they must be doing something right. For most of his 20-plus-year tenure, CEO Terry Andrus has made it a daily practice to go on his "rounds," as a doctor would. He’s not seeing patients, though; he’s talking to employees, to get to know them and to keep his finger on the pulse of what they need to keep providing the best care possible.

    A few years ago, the hospital’s employees formed a charitable foundation, funded 100 percent by voluntary employee contributions, to provide financial assistance to fellow workers who, through no fault of their own, fell on hard times. Since the foundation’s inception, hundreds of thousands of dollars have been made available to employees who have suffered personal tragedies, illnesses and property damage.

    Dan Cathy, president of the rapidly growing Atlanta-based fast service restaurant Chick-fil-A, told an audience of his stores’ managers recently, "When you see an employee enduring a personal hardship, we want you to go above and beyond for that person. And when you do, you will have their full attention when you talk about going above and beyond for our customers."

    7. Pay extra attention to the customers you’ve got. Translate the meaning of that for all your employees. Too many businesses hunker down and go below the radar when economic growth slows. This is an ideal time to show customers that you care about them. If you do, chances are you’ll exit the current rough patch with better customer relations, and maybe more customers.

    8. Smile. That’s right, smile—and do it more often. The fact that things are getting a little shaky and people are scared (including maybe you) doesn’t overturn the principle that people prefer to be around those who are positive and optimistic. Your smile will lighten the folks around you up just a little, they’ll get more done, and feel better about it, too.