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GUEST COLUMN
Your Workforce And The Slowing Economy

By Don Phin

“Laid Off. How Safe Is Your Job?”
Newsweek, February 5, 2001

“Lousy Layoffs.”
Knight Rider News Service, March 19, 2001

Dealing With Low Morale

As the above headlines indicate, our fantastic economic run of the last eight years has come to an end. We are beginning to see articles about layoffs on a regular basis. Now that the joy ride is over, the issue of maintaining employee morale takes center stage. In a recent Chief Relationship Officer Forum meeting we discussed the challenge faced by senior human resource executives in this area. Here is some of what they had to say:

• It starts at the top — One member had a CEO unwilling to communicate to the employees because he was an introvert. Another had a CEO only willing to communicate a rosy picture to the employees, despite reality being something else. Others shared similar stories. Understand that silence, or the misrepresentation of a situation can only lead towards mistrust and lowered morale.
• Make yourself available — In times of great stress, we all need somebody to talk to. Make a point of encouraging managers to be more open and available during this time. When going through rough times we may hesitate to ask how people are doing because we don’t want to deal with a negative response. Understand that a great deal of pressure can be relieved simply by letting somebody speak his or her mind. All you need to do is be an active listener. You do not always have to resolve their issue for them.
• Be a cheerleader — Very simply, there is no substitute for a smile and an upbeat attitude. If it takes being a cheerleader to keep up the morale, then that’s what our group of professionals is willing to do.
• Focus on recognition and awards — Tough times are no time to abandon recognition and reward. The rewards don’t have to cost a whole bunch of money either. Most recognition is symbolic in nature. A thank you, a dinner certificate, a batch of cookies, anything that makes people feel that their efforts are acknowledged will do.
• Have a picnic — There is no substitute for doing something fun in a time of great stress. Whether it be a picnic, a company outing to the zoo, or some other type of event, breaking the monotony can always freshen the perspective. This would also be a good time for the CEO to address the entire workforce in an honest, straightforward and caring way.

Tough times are learning lessons — and that’s what we should be focusing on. The lessons we can learn together from meeting and conquering today’s challenges.

Disaffection With Corporate America

A recent Business Week cover story focused on the massive “disaffection” with big corporations. According to Business Week, three-fourths of Americans think corporations have gained too much power over many aspects of life. “Put simply, it’s becoming fashionable to be anti-corporate,” says Business Week. And guess what — many of these people have a job with one of these companies.

Let me note a few of the implications I see as a result of this disaffection.

First off, this disaffection coupled with a slow down in the economy will result in more claims filed against all employers. Only a year and a half ago I remember Newsweek having a cover story entitled “The Whine of ’99” which described how many felt they were being cheated out of the dot.com gold rush.

Now those dot.comers are busy holding on for their lives. The value of their still unfully vested stock options is probably half of what it was a year and a half ago, if that much. Fortunately for the engineers and programming types there remains a shortage in those positions nationwide. But what about all those other functions? Where will all those CEOs, Vice Presidents, Marketing Directors, Human Resource Executives and rank-and-file workers go? For many people who can’t find a job right away, the answer will be to the courtroom to file an employment lawsuit. You can expect to see even greater judgments being levied against Fortune 500 type companies for discrimination, class-action and other type of claims.

Workers will find it continually difficult to balance work and personal responsibilities and will feel they are being underpaid in the effort. According to Business Week, this could result in increased labor activity. “An astonishing 40 million employees say they would vote in a union today if given the chance.” This figure is double the number of a decade ago according to the pollsters.

While it might be important to remain global in scope when it comes to branding and marketing efforts, it could be a mistake to take that approach when it comes to managing the workforce. Again, “think globally, but act locally.” Give the divisions in your company some anonymity. Remember that according to everyone from anthropologists to Tom Peters — it is very difficult to have any business unit act functionally that exceeds 50 employees. The ideal configuration being 7 teams of 7 employees each. (The “Rule of Seven.”)

One of the ways U.S. multi-national corporations have been able to avoid unionization is by threatening to take work offshore. According to research performed by Cornell University, more than half of all employers made threats to close all or part of their plants during union organizing drives. According to the research, these threats reduced the “win rate” for union campaigns from 51% to 38%.

I believe that it is only a matter of time before we have a national wage revolt on our hands.

Are Your Employees Ready For Tough Times?

Seven years of record growth can have a major impact on how we look at our personal and corporate finances. Unfortunately, many employees are going to find themselves caught off-guard as things change for the worse. For example, I know of dozens of people who have bought either brand new cars or homes within the last three years, based solely on the appreciation in their retirement accounts.

But now for the first time in many years their retirement accounts have actually gone down. It seems to me far too many employees are focused on keeping up with the Jones’ and buying “doodah,” than building wealth for their financial freedom and retirement. Since it is a statistical fact that most workers would not be able to pay their bills if out of work for more than two months, many people have set themselves up for financial failure should there be the slightest downturn.

Going back to the age-old adage, “it’s better to teach a man to fish, than to give him a fish” I think today’s corporate paternalism should include teaching people how to manage their finances. For example, when I go into companies that have matching 401K plans and I see utilization rates of under 50%, I know that the workforce does not have a clue about financial planning.

What’s worse is that this cluelessness spills over into the corporate environment. If they’re willing to spend their money willy-nilly — how do you think they’re spending yours? Again, I would make sure that I had financial advisors helping my employees understand the distinction between being rich in the moment and building long-term wealth. I would also use open book management coupled with financial education to make sure that my employees are focused on building wealth as opposed to short-term profits. 

ABOUT THE AUTHOR

Don Phin is an attorney who for more than 16 years, has specialized in the litigation of employment and business cases. He has represented hundreds of employees, partners and companies in that time. Don has litigated wrongful termination, race and age discrimination, sexual harassment, whistle-blower, trade-secret theft, fraud, partnership dissolution and many other cases to a successful conclusion. In 1995, Don obtained the status of a Certified Professional Consultant to Management (CPCM). Since then, he spends a large part of his time consulting, writing, speaking and coaching.

Don’s seminars, workshops and reports have been delivered to such groups as the International Risk Management Institute, Insurance Marketing and Management Services, The Executive Committee, The CEO Club, The Society for Human Resource Management, Foundation of Enterprise Development, The National Human Resource Association and The National Association of Professional Consultants to Management.

Risk management is about possibilities and probabilities. It’s about assessing the 80/20 of exposure and then committing the strategies and tools needed to protect yourself. I hope these insights will help those of you battling on the front lines. If you have any questions regarding the trials and tribulations of managing in today’s high-risk environment, e-mail or give me a call at 800-234-3304.

riskVue | The webzine for risk management professionals
April 2001