Articles > For the cost cutters: A history lesson

For the cost cutters: A history lesson
Globe & Mail, December 10, 2008

Barbara Moses, Ph.D, is an international speaker, work/life expert, and best-selling author of Dish: Midlife Women Tell the Truth About Work, Relationships, and the Rest of Life.

Six months ago, a client of mine would never have found herself questioning whether her employer would foot the bill for her to take her small team out for a holiday lunch. It had been a December tradition for as long as anyone could remember.

But now, as the company responds to the economic downturn with a new regime of aggressive cost containment, my client is suddenly hesitant to ask about coughing up the $150 or so that it would cost.

As a 30-year-old professional, fairly new to the department, she doesn't particularly care about the holiday event for herself. But she understands how important it is to her long-serving staff: At meetings, one of their first questions has been whether and where the luncheon will take place. She thinks they'll be crushed if it isn't held this year.

The kicker is that the company might well be willing to cover it. But she doesn't actually know and won't ask anyone.

Why? Because with so much rampant anxiety about containing costs, she fears that if she asks her manager, she will look like she "doesn't get the culture, or is insensitive to financial issues."

This story illustrates the kind of knee-jerk panic and confusion that is permeating the way people are behaving in organizations caught up in today's worries about the economy. And her staff's persistent lobbying for their celebratory lunch shows just how much small gestures can mean to workers.

Of course, the cutback anxiety we are seeing goes well beyond expenditures for the holiday party. Workers are also worrying about cuts to year-end bonuses, taken-for-granted training programs, important new projects and promised staffing resources, not to mention their very jobs - basically, cuts to almost everything that makes them feel valued and enables them to do their jobs with a degree of satisfaction and a measure of accomplishment.

A friend, a long-time observer of corporate culture, calls this frantic, unthinking must-cut-everything fear and the behaviour it leads to "brain-on-fire cost containment."

And it's wreaking havoc on morale: Just look around at the sea of unhappy faces in your department who don't look like they have much to celebrate this season.

Yet so much of this cost-cutting is ill-thought-out.

Take, for example, a dinner conversation I had recently with a friend, a vice-president of human resources for a company that prides itself on employee-friendly programs. She said her company was doing well and wasn't significantly affected by the economic downturn. Her focus for next year, she added, was on "fostering employee engagement."

Then, however, in the next breath, she said, "but we are aggressively cutting costs and looking for savings everywhere. We aren't taking on any new HR initiatives and are dropping all development activities except the basics - supervisory training."

When I asked her about the contradiction between such cutbacks and her focus on employee engagement, she responded robotically. "Well, we need to do this. Management wants to cut costs." I could have predicted her answer; I've had the same conversation with many HR professionals in recent months. It's also eerily reminiscent of what I heard over and over again in the recessionary early nineties and, again, in the downturn of the early part of this decade.

It's not that managers take any pleasure in cost-cutting moves. They are suffering, too. But too often, this thoughtless behaviour comes because they have anaesthetized themselves in order to deal with the pain. That leads to simplistic thinking and acting.

Such mass hysteria clouds everyone's judgment in tough economic times. The result is that management behaves without any thought to what they are cutting, and what the long-term effects of these cuts will be. Sure, companies have to make cuts but they have to make them with sensitivity and thought about not only the short-term but also the long-term consequences.

Staff have long memories. Bad treatment not only undermines existing morale but has fallout that will reverberate longer term: When the economy recovers, demoralized and cynical staff will vote with their feet and jump ship.

Skills shortages are not going to go away even if they aren't a critical issue at this moment. Boomers are continuing to age, regardless of the economy. Their desires to work in a different way - whether to do work more in tune with their values, or leave the working world altogether to pursue personal passions - are not going to fade.

Some employed workers may rethink retirement as they look at dwindling retirement funds. But many of these workers, by virtue of their age and when they joined their employer, are on defined benefits plans, which means their pensions are not affected by the markets. The result is that older workers will continue to retire, even if retirement plans are delayed. So the heat will be on for talent.

We know about the dumb things many companies did during previous economic downturns. Take some lessons from the past.

FEAR MONGERING

You heighten stress and undermine performance when you tell people they are lucky to be employed, or make stentorian comments about bleeding revenue losses and other cataclysmic proclamations of how bad things are.
With so much anxiety about the economy and job loss in the zeitgeist, people need to be reassured, not scared.

This doesn't mean presenting an unrealistic view of the future. Obviously, no job is completely secure. But it does mean being open and honest about company fortunes. And it also means letting staff know what you are doing to maintain current payrolls or minimize job losses.

It also means sensitively wording staff communications. Ask yourself: How would I feel if I were to read or hear this?"

TURNING UP THE HEAT

People are overwhelmed by the "do more, do it better, do it faster, do it with less" mantra. They are maxed out in terms of time and energy.

You can't get blood from a stone. And if you treat people like disposable units of productivity, you will generate even more cynicism and erode any existing shred of loyalty.

PERSONAL DEVELOPMENT

Wiping out career-planning, work-life balance and other programs targeted to personal development are an easy way to free up funds. But on the stupid meter, this is about as stupid as you can get.

For one thing, it shows a complete lack of creativity. It also sends a message to staff about what you really mean when you say: "People are our most valued resource. We are committed to providing you a meaningful career here." It's a message they won't forget when things turn around.

It's not only about talent retention. It's also a practical issue, both immediately and longer term: If someone needs some kind of development to perform more effectively in a current job or in preparation for a bigger one in the future, that need doesn't disappear because the economy is soft.

RIDDING OLDER WORKERS

Because of their relatively larger paycheques and age discrimination, these are the employees most vulnerable to job loss. But as organizations should have learned after the last downturn, if you eliminate older workers through wholesale firings or forcing them into early retirement, you lose your best mentors and repositories of corporate intelligence.
If you get rid of these workers, younger staff taking over the leadership reins will have nobody to guide them in tackling management challenges.

EMPTY PLATITUDES

I recently received a promotional e-mail from a consultant offering marketing strategies for recessionary times. One of his top tips for heads of marketing and sales teams was to give the team the "I have a dream" speech, showing them "how they can be victorious" in meeting revenue targets.

Sure, people can be rallied in a counter-recessionary business. But it's insulting to workers who sell luxury commercial real estate.

Be realistic in expectations of staff. Setting unattainable performance objectives increases feelings of helplessness and failure, which is not a recipe for high performance.

TRAWLING FOR CHEAP LABOUR

Hiring young, qualified professionals to serve as lower-paid interns, rather than giving them fair entry-level jobs and salaries - and even worse, acting like you are doing them a favour because you "are giving them experience" - leaves a bad taste in the mouths of the very workers who you hope will ultimately join your organization.

ACTING GLOOMY

Depression is contagious. I recently asked a client who is a vice-president of human resources how things were faring in her company.
She said, "All the senior managers are walking around like the world as we know it will no longer exist. Staff sees them, and thinks, 'They know more than I do. The company is going under. We're all going to lose our jobs.' And of course then they panic."

Understand worker psychology. In tough times, people want to be comforted, not terrified. They also want to feel part of something bigger than themselves.

If you need to cut costs, do so with an eye to what's most important to staff morale and whether short-term gains are worth the long-term price tag.

Think about how you would treat people if you were battling talent wars. Find creative solutions that allow you to continue to develop staff rather than going for the quick fix, and eliminating all development or anything else that lets people feel good about themselves and their lives. Maybe you can't allow staff to attend expensive out-of-town conferences, but you can, for example, free up a day to attend in-house workshops. Think twice before you cancel all department festivities, even if you have to scale them down.

Recognize the diminishing returns of relentless work demands. People don't have endless resources. And they also have a life outside the workplace which demands their time and attention.

It's now more important to foster a sense of belonging and being appreciated. Now is the time to make sure history doesn't repeat itself.