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OB AND HUMAN RESOURCE MANAGEMENT:

Study of the Economic slowdown on Employee morale

Submitted by: Shezad Trunkwala

Submitted to: IIPM- Ahmadabad

Batch:-SS/10-12/IIPM.

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ACKNOWLEDGEMENT

I, Shezad Trunkwala student of IIPM Ahmadabad from batch IIPM/SS/10-12/-

take this opportunity with intellectual nourishment, professional help and

encouragement from many quarters. I would like to express my gratitude to

The pioneers in the field of marketing management who have shaped their

understanding through their rich and varied contributions.

Professors and seniors for providing the stimulus for making this Desk

project successful A number of academics and practitioners for sharing their insight and

experience with me.

I heartily thank our faculty Prof. Robin Thomas for his substantial input and

all IIPM faculties for guiding us with the best examples during lectures and

consistently encouraged us to execute theories taught in the class into

practical project report and we are obliged for his help to work on

gathering and analyzing the data for research for our project.

I would like to thank my institution, IIPM-Ahmadabad, for providing me this

great opportunity and attempting to inculcate the traits needed to succeed.

I am also thankful to various Industry experts and executives for sharing relevant

information and valuable thoughts with me and helping me in writing the Desk

project.

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Index

Introduction

Impact of sluggish economy on employees morale

Findings

1) SHRMs Survey

2) Practices of crisis management Conclusion

Recommendation

1) The three step approach to lift morale2) Maintaining morale

Bibliography

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Introduction

Many companies seek to shore up their bottom lines in a sagging economy by

cutting budgets, hiring fewer employees and laying off others. Businesses that

seek to protect finances during an economic slowdown may neglect employee

morale. Yet happy, productive employees also affect the bottom line because

they're making the products and providing the services that keep their employers

in business.

Job Security

An economic downturn often leads to higher unemployment rates, which

increase employees' concerns about losing their jobs. Employees also may be less

productive if company cutbacks brought on by the sagging economy prevented

them from getting pay raises or bonuses. An "Inc." magazine article titled

"Economy Hurting Employee Morale" notes a survey found that companies could

boost morale by offering incentives that help workers reduce their expenses. Such

incentives could include an occasional four-day work week to help employees

save money on gasoline and other transportation costs.

Communication

Employees' concerns about job security in a slow economy are only heightened by

a lack of communication at the workplace. Economic downturns affect industries

differently, and some industries are more resilient in downturns than others. The

National Underwriter P&C website covers the property and casualty insurance

industry and warns against neglecting employee morale in a sagging economy.

The site recommends informing all employees about the economic state of the

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company as well as workers' individual departments. Neglecting communication

with employees during an economic slowdown may not only hamper morale, but

it also may cause some of the best employees to look for jobs elsewhere.

Layoffs

Companies that lay off workers in a sagging economy usually have a strategy for

how the layoffs are conducted. A New York Times article titled "The Survival of

the Safest" says managers often seek to protect the crucial employees while

carrying out mass layoffs of others. Their intention is to remove less essential

employees from the workplace quickly so their complaints don't ruin morale. Yet

the workers who remain may be friends with former co-workers who were laid off

and are disgruntled. Therefore, those former employees' complaints could still

hamper the morale of some of the remaining workers.

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Impact of a Sluggish Economy on Employee Morale

One of the many struggles facing business leaders today is the fact that the

economic downturn has strongly impacted workplace morale. According to arecent survey by Accenture, 61 percent of managers surveyed said employee

morale was low in their organization, and more than 25 percent of those who

responded said they are taking steps to see what can be done to increase how

employees feel about their jobs. Unfortunately, many organizations have not

increased salaries in the past few years, or if they did give an increase, it was not a

whole lot of money. Further, the Society for Human Resources Management(SHRM) reports that the average salary increase is less than 3 percent and that is

projected to hold true for 2012.

The only good news in all of this is that the number of companies freezing salaries

was down for the second consecutive year in 2011and fortunately, this trend is

expected to continue into 2012. As organizations struggle with balancing limited

budgets and the need to hang on to critical talent, many are focusing their

rewards on their star performers and those who would be most difficult to

replace. This practice is focusing more attention on pay for performance since

top-performers are an employers secret weapon.

While pay for performance is an excellent way for an organization to maximize its

salary increase pool, it can create serious employee-relations issues and have a

negative impact on employee morale and engagement. Even average performers

need some encouragement that what they do on a daily basis matters to the

organization. The economy is putting a spotlight on what HR people have known

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for a long time. If organizations cant continue to increase salaries like they did in

the 1990s, the concept of total rewards takes on new meaning. Thinking about

pay, benefits, flexibility, rewards, and recognition programs as all part of an

employee engagement strategy begins to make sense.

Will a top performer (or anyone for that matter) ever be satisfied with a 3

percent salary increase?

Probably not, but it appears that for the next few years, we are stuck with limited

budgets for increases. This creates challenges for managers who need to balance

out smaller increases with other types of rewards and incentives. Some

organizations are using flexible work arrangements such as telecommuting,

compressed work weeks, and flextime as ways to boost sagging morale. Others

are subsidizing public transportation or providing free parking on site. No or low-

cost incentive programs can work in the short term to keep morale up, but it is

going to take more than an ice-cream social in the parking lot to get the attention

of workers who havent had a salary increase in a couple of years.

Keeping morale high and increasing employee engagement should be a focus for

all of us who manage people. Focus on keeping employees aware of where they

fit in your organization and rewarding them in any way you possibly can will make

a differenceeven if you cant give the kind of salary increases youd like to give,

or get yourself, for that matter!

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Findings

1) SHRMs Poll

The Society for Human Resource Management (SHRM) conducted a poll

in January 2009 to gauge workers perceptions of the job market and the impact

of the economic downturn on employer benefits and personal financial

behavior.

Although one-half of workers felt that their jobs were not currently at risk,

only about one-third felt that their jobs would not be at risk if the economy

continued to decline over the next six months.

Nearly one-third of workers are likely to begin a job search or intensify their

job search when the economy and job market improve.

The most frequently reported action employees have taken in response to

the downturn in the economy was decreasing the use of credit cards

and/or cancelling credit card accounts.

In light of widespread economic challenges, many organizations have trimmed

expenses by decreasing spending on HR products and services.7 Despite this, the

majority of workers feel that the response of the HR department in their

organizations during the economic downturn has helped preserve benefits and

staffing levels and promote communication. More than two-thirds of workers

(69%) reported that their organizations HR department had been helpful

(helpful or somewhat helpful) in preserving the overall benefits package for

employees. More than one-half of employees reported that their HR department

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had been helpful in reducing the likelihood of layoffs (59%), facilitating

communication between management and employees (57%) and fostering

confidence in the financial stability of the company (56%).

By contrast, less than one-half of workers (46%) felt that their organizations HR

department had been helpful in boosting employee morale.

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2) Practices of crisis managementUnfortunately, current economic downturn has taken by surprise to many

companies whose executives are paralyzed while they are assuming an

indolent attitude toward the employees who feel fear of being fired in a

recessive context where opportunities to find a new job are really scarce.

In such emotionally charged scenario, best practices in Talent

Management should be articulate to provide from the mechanisms to

alleviate uncertainty, create a strong sense of belonging to the

organization in the remaining employees and a feeling of cohesiveness to

face the vagaries of an evolving crisis.

In facing this dramatic perspective is convenient, relevant and necessary

develop with a sense of urgency, with the conviction from Senior

Management and decided support from CEO, practices of crisis

management. Lets see how this initiative could be done:

These are the 5 critical skills for managers working in a crisis team:

a) Boldness: managers belonging to a crisis team should have the courage

of recognizing the magnitude of managerial mistakes, misconceptions and

bad decisions taken in the past and must assume diligently the initiative of

taking opportunely the business decisions that should not be postponed,

and at the same time, make sure that is possible conciliating the best

concerns of the shareholders with the emotional integrity of the

workforce.

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b) Pro activity: To slow and mitigate the impact of a disruptive crisis over

the organizational climate, financial performance and operational

continuity, any manager who belongs to a crisis team should be a champion

in applying his/her skills, knowledge, influence and experience in deploying

of the relevant contingency plans to avoid harmful repercussions for the

company in a long term perspective.

c) Effective and pragmatic communicator: In times of systemic crisis

exaggerated and alarming media coverage may cause further damage,

increase shareholders fears, nurture employees demoralization and

create a negative opinion in the public opinion regarding the likelihood of a

troubled company of experiencing a quick and safe recovery. In facing such

a perspective is convenient, relevant and pertinent that a smart CEO take

the decisions of appointing and empowering to those managers who will

play the role of authorized spokesman to bring accurate, correct and

opportune information to media and so mitigate the harmful effects of a

crisis systemic, unexpected and/or disruptive.

d) Outstanding abilities of team working: When an unexpected crisis

arises in such a way that the future viability of a company may be

threatened is advisable that the managers who belong to a crisis team

being commanded by their CEO, consider the pertinence and convenience

of hiring immediately to expert consultants in PR and facilitators in Change

management from a long term perspective to preserve the public image of

this company and recover at the same time, employees morale to face

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constructively to the different stages of this crisis and achieve so a positive

organizational learning that ensures the profitability and competitiveness

of this company for the years to come. In such pessimistic perspective

Board of Directors and the Advisory Board must operate in tandem with

Top managers with the aim to articulate the strategic framework to be

applied systematically for the relevant plans of mitigation and contingency.

e) Strategic focus and leadership: The members of a crisis team should be

influential managers, with a thorough knowledge in their functional

disciplines, a strategic mindset strongly developed and the willingness of

assuming the role of coaches to support to their coworkers in a initiative of

recovery of their company, that will require from them a sense of purpose,

full motivation, hard-work and adaptability to new and uncertain business

perspectives.

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Conclusion

The recession continues to impact many industries, with restructurings and

layoffs creating concern among employees. When profits are threatened,

companies often view layoffs as a direct way to reduce costs, however, when

efforts are focused solely on managing job cuts, remaining workers are left in

limbo. Managers are also likely to become more directive, communicating

decisions rather than involving their teams in decision-making processes.

Organizations dont always recognize the impact this behavior has on remaining

employees or anticipate the long-term negative effects. This creates a potential

time bomb. Disenchanted employees will be the first to go when the economy

starts to improve leaving the organization without the workers it was most keen

to retain.

Rarely does a company allocate sufficient budget to deal with employee morale

issues. Yet there are tangible, cost-effective steps for organizations to take in

moving employees away from feeling like victims or suffering survivor

syndrome. These steps help employees feel more in control of their

environment, so they are better able to understand why things have changed and

how they can positively impact outcomes.

The following three-stage approach will keep an organization on track, improve

morale and promote productivity following workplace change. The steps help

move employees up from the bottom of the change curve, where they feel

disappointment and anger to feeling optimistic and happy. The important

principle here is to maintain momentum, moving quickly to create a sense of

urgency and progress.

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Recommendations

The following three-stage approach will keep an organization on track, improve

morale and promote productivity following workplace change. The steps help

move employees up from the bottom of the change curve, where they feel

disappointment and anger to feeling optimistic and happy. The important

principle here is to maintain momentum, moving quickly to create a sense of

urgency and progress.

1) The three stage approach to lift morale Stage 1 - Listen Get feedback and ideas.

Stage 2 - Communicate with solutions to business issues and employee

concerns.

Stage 3 - Recognize business and employee accomplishments and

successes.

Stage 1: Listen to employeesRelationships between the organization and employees are fractured following a

period of upheaval. And this situation wont improve on its own. Companies must

take a proactive approach, beginning with listening to employees and getting

their concerns out into the open. Leaders must acknowledge employee issues and

be motivated to make improvements. Of vital importance is publicizing that

employee feedback is encouraged and necessary and that the organization valuestheir ideas. Decide the messages behind the listening activities deployed, and use

them consistently, for example:

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We know staff morale is low and want your help.

We need to save money and are looking for ideas on how to best achieve

that.

We want to add to our top line and need your feedback on opportunities to

look at.

Who does what in stage 1?

Leaders should be visible, approachable and well-briefed, so that they can field

employee questions. Interaction should be face-to-face whenever possible. Key

messages should also be developed and be used as part of regular, ongoing

communication activities.

Managers need to believe in and support all listening activities. They should be

briefed on the rationale and approach for these activities before they meet with

employees, and asked for their ideas on how listening activities should be

implemented.

Listening activities

Employee survey - This can encompass routinely scheduled company

surveys or those designed expressly to communicate change.

Employee discussion/focus groups - Include as many employees as

possible. Managers with the right people skills (listening, questioning, for

example) can be trained to run these groups.

Management discussion groups - Led by a facilitator, these sessions are

designed specifically as management briefings. Managers are guided

through a process that will enable them to run employee discussion groups

and to get feedback on specific topics. (This approach works best with cost

saving or similar topics, rather than morale and trust issues.

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Stage 2: Communicate your solutions to business issues and employee concerns

The next stage is communication. The listening activities should have created lots

of ideas and feedback. In this stage, it's important to build a shared understanding

of your companys future, including substantive solutions to business issues and

progress being made.

Who does what in stage 2?

Company leaders focus on addressing concerns expressed by employees in the

listening stage and briefing managers on issues. The purpose is to create a shared

understanding of the challenges and solutions facing the organization.

Managers undertake specific efforts to communicate these outputs. They must

create opportunities for dialogue and discussion, which leads to higher levels of

employee engagement. Managers should also assure employees that they can

expect honest and timely information. They should show their willingness to

discuss anything on employees minds and help employees feel comfortable

asking questions and sharing solutions.

Employee advisory work groups should be set up to address a number of

challenges most critical to the organization. Because this program thrives on

momentum, these groups should have clear objectives and a limited shelf life.

Potential activities must be honed down to focus only on their most important

issues. A kick-off meeting can define the teams scope, role and timescales. Work

groups should also encourage leaders to communicate progress through all

communication channels.

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Communication activities

Public forums - Communication should take place in person through Town

Hall and team meetings, site visits and brown bag lunches. Gossip is

curtailed if managers become more transparent with performance data,

such as sales figures and customer information. A highly visible and

approachable leadership team shows that senior management cares about

its workers. This alone serves to foster a more positive employee work

environment.

One-on-One dialogues - Discussions between managers and direct reports

enhance personal communication and increase trust.

Electronic media - Emails, web casts and other means of rapidly reaching

out across boundaries should be employed to reinforce messages and

speed the flow of information.

Stage 3: Recognize business and employee accomplishments and successes

Focusing on quick wins and success stories and recognizing employee

accomplishments will help keep morale as high as possible. No one is immune

from becoming despondent and unproductive when they work in a doom and

gloom environment. Negativity is often exacerbated outside the workplace by

personal issues and a constant onslaught of negative news stories.

Who does what in Stage 3?

Leaders and managers seek out successes and recognize and thank employees for

their contributions to the company and/or team initiatives. Every effort should be

made to point out quick wins, for example, a project deadline met, a new order

placed, or success in a key objective.

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Recognition activities

Formal initiatives - include established companywide recognition programs

as well as rewards such as small bonuses and plaques.

Informal gestures - include such things as a warm "thank you" for a job well

done, or a congratulatory email or hand-written note.

Public recognition - includes acknowledging an employee or work groups

contributions in a meeting with their peers, or in company publications.

Being recognized publicly often has the added bonus of encouraging and

motivating peers to strive for similar successes.

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2) Maintaining morale

This three-stage approach can lift employees out of the bottom of the change

curve, however ongoing adjustments are needed. Managers should be trained to

enable a more empowered workplace, particularly when they no longer have easy

access to traditional motivational tools such as promotions, bonuses and pay

raises.

Following are a series of useful, cost-effective tools to deploy in todays economic

environment; managers should review the following activities:

Autonomy - The freedom, independence and discretion employees have in

carrying out their jobs.

Skill and task variety - Employees activities to ensure that they are making best

use of their different skills and abilities. Also to check that the extent to which

their job involves whole and meaningful work so they have ownership over a

whole process rather than small parts.

Decision making - How the managers are making decisions. If they are very

directive, ask them to look for opportunities where employees are can be

consulted. Promote more self management, where employees have autonomy to

make their own decisions.

Career development - Team members have up-to-date career development plans

which recognize the limited resources available but draw on cost effective

activities such as job rotation, mentoring and coaching.

Objectives - Individual objectives to check that employees are clear on their

priorities and contribution to the organization.

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Keeping employees motivated and engaged after restructurings and layoffs isnt

easy. But the steps outlined here are simple, cost-effective ways to stay on the

right road - and to retain the people you need once the job market picks up again.

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Bibliography

1) http://articles.economictimes.indiatimes.com2) SHRM online: www.shrm.org3) SHRM Research: www.shrm.org/research4) SHRM Survey findings: www.shrm.org/findings5) Source: The Employee Point of View: The Economic Downturn (SHRM,

2009)

http://articles.economictimes.indiatimes.com/http://articles.economictimes.indiatimes.com/http://www.shrm.org/http://www.shrm.org/http://www.shrm.org/researchhttp://www.shrm.org/researchhttp://www.shrm.org/findingshttp://www.shrm.org/findingshttp://www.shrm.org/findingshttp://www.shrm.org/researchhttp://www.shrm.org/http://articles.economictimes.indiatimes.com/

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The Society for Human Resource Management (SHRM) is the worlds largest association