Riding Out the Storm with Clear Explanations

By Steve Taylor May 23, 2008

When the economy turns soft, companies often lay off employees or shorten their work hours. Morale plummets as workers who keep their jobs feel frightened and resentful, if not angry. But the company still needs their best efforts—needs them more than ever, in fact. And it often falls to employee relations professionals to keep everyone working together.

A hard trick to pull off? “You just don’t know!” declares Nachelle Rantin, PHR, whose employer, Ashley Furniture, a manufacturer, wholesaler and retailer headquartered in Arcadia, Wis., has been rocked by the sinking housing and mortgage industries. “No one is buying homes. Therefore, they do not need furniture,” Rantin explains. “We have had to reduce staffing between 20 and 30 percent over the last 90 days,” at the Ashley warehouse center in Fairburn, Ga., where Rantin is area HR manager. “We’ve had to go to reduced work schedules, obviously with no overtime at all.”

Also in Fairburn, near Atlanta, LaRhonda Edwards, PHR, DDI, is a division HR manager for U.S. Foodservice. “Most of our employees are used to 40-hour, full-time jobs,” she says. “We tell our associates that our new expectation is to get them at least 36 hours.” When they object, Edwards says, she gives workers examples of worse economic troubles elsewhere, such as layoffs and shutdowns, and asks, “Would you rather have fewer hours or no jobs at all?”

Edwards, who is a member of SHRM’s Employee Relations Special Expertise Panel, is an advocate of giving workers clear explanations of the reasons behind the cuts. “We have town hall meetings,” she reports, “where everybody, all employees gather together to hear business updates…We talk very directly about what’s going on.”

“This is a food service business,” she continues. “We deliver to restaurants, and eating out is a luxury that people can do without. That means less orders coming in, less production. We talk honestly about this being a soft economy.” She claims that when employees hear the whole story, they generally understand and accept. “It’s one of those ‘Aha!’ moments. They say, ‘You’re right, we would rather lose four hours than lose them all.’ ”

The newspaper business has suffered from an economy-driven slump in advertising on top of years of declining readership. In Stuart, Fla., HR Director Janice Green says her employer, Scripps Treasure Coast Newspapers, is doing better than some other companies. “We’ve really had only a handful of individual layoffs, twelve over six months. Through attrition we’ve eliminated some more positions.” Even so, she says, department directors have had regular meetings with workers to explain the situation and talk it through. “To allow people to be scared” is how Green characterizes it. “[The fear] has to come out. It’s not good to suppress it.” She says publisher Tom Weber “has been very honest with employees. To sugarcoat at this point would not be very wise.”

At Ashley Furniture, “We did a state-of-the-business meeting in all of our stores,” reports Nashelle Rantin. Managers gathered all employees together, “trying to keep everyone feeling they have some type of security in that we just have to weather the storm, remain positive, stay a team.”

Consultant Jodi Starkman, COO, Global Consulting for ORC Worldwide, talks about “improving business literacy” among workers: “Sharing information about the cost of employment, so employees understand total compensation cost. What it costs for you to be here. This makes people more sensitive.”

In addition to face-to-face meetings, Starkman says, virtual town halls are becoming more common. “A lot of companies have employee [web] portals where leaders share information. Not just e-mails, but video presentations.” One purpose, she adds, is “so that everyone receives the information at the same time and in the same way.”

Starkman says savvy employee relations professionals tailor these top-down communications for specific audiences so that workers “have the information they need without details that could be overwhelming or potentially misconstrued…Employees on an assembly line don’t necessarily need the same information as managers. But they need information,” she stresses, because when an uninformed employee draws his or her own conclusion about a company’s financial condition, “it’s invariably worse” than the truth.

Bottom Up

As companies tighten their belts, surviving workers often must take on more responsibility and work. And they may be called upon to send critical information upward to management. U.S. Foodservice is using “round-table meetings,” says Edwards, with “one designated person from each department to offer suggestions.” She said that during that process, employees came up with one idea that managers had feared might be resisted. “They said, ‘Oh, can we work a four-day week?’ They were already on board with it. They’d bought in to it.”

Jeffrey Fina of New York’s Michael C. Fina Co., which provides corporations with employee recognition programs, says the classic suggestion-box approach still works well in “getting the employees engaged, really developing the team atmosphere.”

ORC’s Starkman says, “Historically, the focus has always been on what to do to control costs.” In addition, she says, there is “an opportunity that HR has been missing out on” at many companies: “Moving away from [only] reducing costs to revenue enhancement, value creation activities.”

Fina advises that HR challenge employees to make clear and practical suggestions for specific areas of company need. “It has to be an operating efficiency suggestion,” he says. “Why do you think this would create increased efficiency in our operations? How do you propose to implement it and what will the results be? Not just blurting out suggestions.”


And when the suggestions are good? Janice Green of Scripps Treasure Coast Newspapers says three employees have received company awards recently. Ashley Furniture’s Nachelle Rantin says, “We have a recognition and reward program in place, but we’ve had to cut that back as well.”

“Companies need to hunker down and watch every penny,” acknowledges Fina, “but they also need to realize that their employees are their most valuable asset. You can’t stop investing in that asset.”

Jodi Starkman of ORC says, “Somewhere along the way there has to be recognition that new ideas lead to new revenue.” She suggests that employees who contribute to that process should be compensated with bonuses and made into role models for other workers. “Those are the kinds of people we reward, the leaders we want.”

Employee Handbooks

Steve Taylor is a freelance writer based in Arlington, Va.

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