When The Going Gets Tough…

(Published December 15, 2008)

 

Reprinted from MANAGER'S LEGAL BULLETIN, a widely read employment law newsletter that communicates legal guidelines to managers through scenarios based on real-life cases. Click here to view a sample issue, get more information, or sign up for a risk-free subscription. 

 

…Managers must communicate!  Due to the weakening economy, your company may be cutting raises, bonuses, or even staff.  This can be a scary time for both management and rank-and-file employees alike. But keeping employees in the dark about the effects on the business is the wrong way to go. 

IGNORING A TOUGH TOPIC…

"In conclusion, Andy, I want to reiterate that you’ve done a fine job this year and have once again exceeded all my expectations," said department manager Troy Yankow, trying to wrap up Andy Eckhart’s annual performance appraisal.

When Yankow rose from the conference table, Eckhart stopped him.

"Wait!  Didn’t you forget something?  What about my annual pay raise?" asked Eckhart with a smile.

"Well, Andy, you know that the economy has been bad…and we’ve been hurting…" began Yankow, looking at his feet.

"Right, but…Oh!  I guess I'm not getting the same three percent raise I usually get?"

"That’s right.  I’m sorry."  Yankow turned to leave.

"Troy, wait!  So how much am I getting?  Like, two percent?"  Silence.  "One percent?  Wow, that’s not much of a raise…"

Yankow interrupted, exasperated.  "You won’t be getting any raise this year, Andy.  Maybe next year."  Yankow quickly wheeled around and left the room, leaving Eckhart stunned and upset.

…WON’T MAKE IT GO AWAY

 When the news is not good, communicating with employees should be a process, not a bombshell.  Here are the steps Yankow should have taken in relaying to Eckhart that he wouldn’t be getting a raise this year.

• Give plenty of advance notice.  Waiting until employees are due for a raise to break the news is a sure way to invite employee anger and frustration.

• Provide a truthful explanation of what changes are being made and why.  Employees need to understand the context in which hard decisions are being made.  Also, provide a clear vision of where changes will lead, both for the company and for your department.

 

• Let employees vent their frustrations.  Acknowledge that you understand and can sympathize with them. 

• Remind employees of the positives.  (What big project is the employee working on?  What new client did the company just land?  What perks are still available to them?)

• Find other ways to let star employees know how much you value them.  Tip: Since what matters to one employee may mean nothing to another, brainstorm with top performers one-on-one to see which perks would mean the most, e.g., a few extra vacation days, flex hours, or a company cell phone or laptop.  (Of course, check with upper management and HR beforehand to determine what the parameters are beforehand.)

• Avoid making promises you might not be able to keep.  Don’t promise an employee, "You’ll get your raise when business picks up again," unless you’re 100% certain that you can deliver.  Convey optimism without committing yourself to anything specific, e.g., "It’s our sincere hope that these cutbacks will just be temporary.  We will reevaluate at the end of the next quarter."