As companies have struggled to find strategies for making it through the economic downturn, the top measures taken by most companies involve cost cutting related to payroll or employee benefits. In a recent MRA survey, over 60% of companies reported they reduced work hours or required unpaid furloughs for all or some segments of their employees. Almost half the companies (47%) laid off employees. Between 30% and 44% of the companies reduced, eliminated, or suspended benefits such as profit sharing, bonuses, or 401(k) match. During the last year, only 40% of MRA member companies gave increases to all or some segments of their employees. The percentage of increase hit a record low this year; the lowest since 2003.
In the face of these necessary cost-cutting measures, several major studies have found that cost cutting has contributed to a sharp decline in employee engagement, morale, and commitment. Even more concerning is that the top performers are disproportionately affected, with a higher drop in engagement than the other employees. And of equal concern is that the percent of disengaged employees (who actively or passively work against the company by “poisoning the well”) has grown. Since higher engagement is linked with higher productivity, customer service, and profitability, this drop in engagement is occurring at the very time that companies need increased rather than decreased engagement.
Some companies, however, have found ways to maintain engagement even in the face of the recession. MRA has done extensive research to identify the top factors that correlate with employee engagement and a number of national studies have also identified strategies used by companies that have succeeded in maintaining high employee engagement.
- Set clear, compelling directions that empower each employee.
- Practice open and honest communication.
- Continue focus on career growth and development.
- Recognize and reward high performance.
- Implement employee benefits that demonstrate a strong commitment to employee well being.
- Improve managers’ focus and effectiveness at reengaging or managing out the disengaged.
- Transform your average employees into top employees.
At a recent MRA event, companies reported that implementing these strategies do not require huge budgets. They shared low-cost strategies that have been found to be effective in maintaining employee engagement.
- Small awards when an employee goes above and beyond. One company thought it was important to recognize small things employees do, not just major projects. They instituted a “break buck” that employees can use in the vending machine after being nominated by another employee. Another company has a stuffed carrot that is passed from employee to employee as a trophy for recognition. Another company has an “employee closet” with a selection of small gifts. And for recognition for a large project, another company gives the employee an additional paid day off as reward. And of course a verbal “thank you” or written note goes a long, long way.
- Small fun events. Several companies mentioned that in the effort to turn things around during the recession it is easy to forget to take a moment to relax and enjoy each other. Instead of large company-sponsored dinners or events, companies said some low-cost events they have used include a Halloween contest for the best costume, food sharing contests, potlucks, a chili cook-off, and handing out small candy treats. Each of these activities helps lighten morale by bringing a smile to the faces of employees.
- New hire referral bonus. One company reported they kept up this bonus even in a down economy because it saves their company money in the long run by finding employees who are a good fit with their company.
- In times of uncertainty, communicate, communicate, communicate with employees in an open and honest way. Several companies said they have stepped up communication. Of special note are activities that encourage open dialogue with upper management, quarterly CEO roundtables, team meetings, and focus groups. One company has revived the suggestion box because their president has taken responsibility for it and acts on the suggestions.
Where to start? MRA recommends that companies give top priority on what works for their highly engaged employees. Then focus on the partially engaged to see what steps can be taken to encourage them to become engaged. One successful low-cost method reported by one company is peer counseling or coaching. The more employees model engaged work behaviors and attitudes, the more other employees will want to replicate such behavior. Another tactic is to work with the disengaged employee. One company reported how they used corrective action plans for this group to address negative talk and poor nonverbal communication that was negatively affecting the employees around them.
Success breeds success! So focus on growing the number of engaged employees as these are the employees needed to reshape and remake the company to get ready for the rebound.
For information on MRA’s Employee Engagement Survey, with national norms contact Kristin Reed, at kristin.reed@mranet.org or 262.696.3488.
This article was also featured in the January 2010 MRA Institute of Management Journal, entitled Strategies for Overcoming the Toll that Cost Cutting has taken on Employee Engagement.
