When a company’s financial resources are depleted, the only way out of a crisis may be the loyalty and enthusiasm of its employees. Think about which is more important to save – the money or the business? Keep your employees, and when your company recovers, you will be one of the top names.
Labor Market Diary
In early October of this year, a number of large enterprises in Russia were forced to cut staff: the Magnit metallurgical complex, the Baikal paper complex, the Amtel garment factory. Automobile plants Kamaz, Vaz, Gaz switched to a four-day work week and gave some employees vacation. After October 10, information appeared on the labor market about layoffs at companies operating in the financial sector. Moscow Bank announced staff cuts. The possibility of staff cuts is not excluded at the Federal Bank. In the trade sector, according to Reuters, Paterson and ALLI cut about a third of their staff. The retailer Vester also made similar moves. According to experts' forecasts, in the retail network, companies can cut up to 40% of employees by the end of the year.
Russia’s major project developer Mirax Group has also fired four senior executives as it has had to suspend some investment projects. Eurocement, Russia’s largest cement producer, has cut salaries across most of its divisions amid concerns about falling prices.
On the brink of the abyss
According to forecasts by the management company AXES, by the end of 2008, about half of Russian companies may be laid off. In addition, those who have kept their jobs are being disappointed, because companies are planning to “cut” all social expenses and reduce the payroll by 30%.
The desire to cut costs on social programs and especially on wages seems natural. Why feed parasites when there are no resources to do business?
On the one hand, the above solution certainly helps businesses reduce costs. But on the other hand, incorrect cuts, concealment of information from employees, and people's lack of understanding of the company's action plan will lead to huge consequences.
What to do?
The first rule of crisis communication is: don't wait, act. There is one thing to do: don't let your employees get lost, they need to be part of your crisis plan. So I suggest taking some immediate steps on how to communicate with your employees. Moreover, your employees are waiting for you to have an open conversation.
Get the team together
1. Establish a “rapid response” team that includes the company’s top leaders: human resources director, public relations director, finance director, and possibly the business director.
2. Inform employees in advance that a “crisis team” has been established and will be formally announced in due course.
3. Prepare a statement and publish it on all company communication channels. In the first statement, you are expected to identify the elements of the crisis situation and announce the measures to be taken. This type of statement is called a “response” statement.
The “coping” announcement allows to reduce the heat of fear in the group – ignorance always breeds evil. It is also during this time that the time to implement the action plan and form the message to the staff must be given.
At the beginning of the financial crisis, when the “important” decisions on the support of major banks were still unclear, and the employees of most financial companies were in a state of panic, the internal communications department of VTB24 Bank took urgent steps. Immediately, the plan for working with employees was submitted to the Chairman of the Board of Directors of the Bank for approval. Despite the urgency of the situation, the Chairman himself rewrote the appeal, adding his own views on the development of the country's economic situation. On the same day, the appeal was posted on the front page of the Bank's website and sent to employees via email. The HR department opened a hotline, where employees could receive full information about the bank's situation.
Situation analysis
To mark the correct steps to resolve the problem, the company's leadership and the crisis team once again need to assess the situation in detail.
It is necessary to analyze the severity of the crisis in the market, the capabilities of partners and customers, the future development prospects of the crisis in your market segment and the direction of business adjustment.
The HR department needs to evaluate what costs should be spent on employees in the following aspects:
- Social programs;
- Group activities;
- Train;
- Salary fund.
It is important to understand which costs can be reduced immediately, which costs should be implemented after certain procedures are carried out, and which costs should not be implemented. Here coordination between the HR manager, the finance manager and the business manager is required. Certainly, the costs of collective activities, a variety of corporate social programs (gyms, parking, partner bonuses, etc.) can be ignored normally. Cutting costs for training is probably not the optimal solution because the decline in the level of expertise of employees in the market under conditions of increasing competition can lead to a loss of competitiveness.
Finally, layoffs or furloughs of a department should be carefully considered.
Talk to the workers
The third step is to issue a notice on measures to overcome the crisis situation and instructions for implementation to leading officials.
It is important to make the announcement directly from the top management of the company. The ideal solution in this situation is an audio or video recording. The message can be arranged on the main page of the website or via email. At the same time, the proposed solutions need to be conveyed to each employee at meetings by the direct department heads. Such meetings must be directed to the lowest department heads. Each department head needs to be familiar with the proposed solutions, and at the same time explain the logic and sequence of implementation. It is important to pay attention to what the problem is - that is, the answers to the questions posed. At this point, you need to know that the problems that arise in the management department and the employees can be completely different. After meeting with the management staff, the following issues need to be prepared not only to state the decision of the management, but also to answer the questions that arise from the employees.
Don't avoid answering a question because the solution is not favorable. It should be presented as it is, with a view to long-term positive results for the entire company.
In your messaging, try to reinforce to your employees that the crisis is a problem, but it is a solvable problem. And that solutions need to be found together.
For Euro Network, the current financial crisis was marked by the sale of the company to another owner. In the early days, employees did not know who to contact and what their future fate would be. As everyone knows, the decision to sell Euro Network was made on the night of Sunday to Monday. On Monday morning, simultaneously with the release of information to the media, information about the sale of the company was also announced to more than 30 thousand employees. The management did not limit itself to short announcements. Evgeny Trutrvarkin recorded a video message to employees, in which he explained the problems of work in the new conditions and confirmed that he would continue to hold the position of general director as long as he was required.
Along with this, Evgenhi Trutrvarkin also answers employees' questions on the company blog.
Be encouraging and helpful
Your next steps should be geared toward helping people develop a fighting spirit and motivating them to fight the crisis. This is not an easy task and is not subtle. Direct propaganda, such as the usual “self-deprecating” narrative of “our company is better than everyone else,” is unlikely to be effective.
The most appropriate form of information policy is a description of the crisis plan and monitoring of all stages of implementation of the proposed program.
Cutting costs? Discuss with relevant department heads.
Keep an old customer? Be sure to tell your colleagues about this victory.
Drafting a program to find new orders? Mark each person's merits.
Here, “winning” can be done not only by sales people but also by office workers. We all know that, in a crisis situation, it is important to hold on for a while – when it is no longer possible, do not despair, save every penny.
Encourage frugality. For example, you could hold a “a penny saved is a penny earned” competition in your company and ask employees to submit their ideas for saving resources.
Don’t forget to keep your employees fighting every day because success is essentially dependent on the belief and desire of your employees to work in the company. Everyone needs to know that your successes and failures are shared by all.
Epilogue
Communicating with employees during a crisis is not easy. It is not fun. However, if you are sincere and responsible enough as a manager, the results of an open dialogue will not disappoint you. Simply consider what people have prepared for their future! The main thing is to explain that they will have a future.
