West Redding, CT  January 13, 2009  

As we enter 2009 we leave behind a year marked by increasingly dismal economic news across all sectors.  As we look to the future the horizon representing better times keeps moving further out, leaving most people in a collective crisis of confidence.  As early as April 2008 the NY Times reported that according to The Survey Research Center of the University of Michigan Americans are were more pessimistic about their situation than they had been for more than a quarter century.  Meanwhile, a recent Pew report found that the percentage of Americans saying that they’re better off than they were five years ago is at its lowest level in 44 years of polling.

In April ’08 Paul Krugman, the author of the Times report commented, “What’s striking about this bleak mood is that by the usual measures the economy isn’t doing that badly — at least not yet. In particular, the official unemployment rate of 5.1 percent, though rising, is still fairly low by historical standards. Yet economic attitudes are worse now than they were in 1992, when the average unemployment rate was 7.5 percent”. Fast forward to January 2009 and with 2.6 Million jobs lost in 2008 the employment rate is now 7.2% and some experts say is headed toward double digits! 

“Survivor” Morale, and Productivity

With most companies resorting to staff reductions to address the economic downturn, it would seem that a burning question for business leaders should be how are the employees I still have holding up?”   The simple fact that there are fewer of them having to carry the pre-layoff workload would suggest that they are stressed.   And while the quick math of the accountant would show that same work for less cost equals increased efficiency, the organizational scientist’s prediction more likely would be for over a more pessimistic outcome. The important, yet much more difficult calculation would be in determining the net productivity of a group of employees once the effects of increased workload, job insecurity and reduced economic stability are taken into consideration.  And with organizations as diverse as FedEx, IBM and the State of Nevada announcing salary cuts for 2009, it is unlikely that pay increases will offer a viable solution to this productivity conundrum.


Is “inplacement” a word yet?

I think its time has come. A key reason for layoffs is to better secure the jobs of those left behind, but it seems the primary focus after lay-offs is on outplacement for the displaced. While this is certainly a responsible and human endeavor, I argue that it cannot be at the expense of embracing the employees left behind.  “To truly benefit from layoffs and downsizing you need to invest even more energy in the people who remain after downsizing and layoffs. You will aid recovery; fuel productivity; boost morale, despite the loss; and minimize the damage to workplace trust”, says Susan Heathfield, a columnist for about.com and a human resources expert.  Ms. Heathfield gets right to the point, successful organizations will commit the resources necessary to embrace and support the employees left behind after a layoff.  We are moving through what looks to be an unprecedented period in modern economic history and now is the time act precipitously. Now is the time to focus on the teams you have to ensure that they are confident, motivated and productive. In the words of Stephen Covey, it’s time to “sharpen the saw” so that your organization is equipped and able to face the challenges in front of it.

What to do?

It’s fair to say that the sales boondoggle to Vegas and the holiday party on the Queen Mary will probably be out of style for a while.  In fact, spending on lavish events can lead to an employee backlash as they react to it in the context of colleagues having recently lost their jobs. I recommend focusing on initiatives and activities that offer professional and personal development to employees.  Show your team that you are in this together, that they are critical to the organization and that you are committed to their success. Your investment in will translate to trust, confidence, productivity and retention!

Be courageous!

A business environment like this one requires managers to be courageous.  I suggest taking it a step further by adopting courage as a key value of your organization and inculcating it into your culture.  The courage to listen, act, make mistakes, admit failure and most importantly stay the course is essential to survival in times like these and separates successful businesses from the pack in more economically stable times. 



Tim Hawkes is Managing Partner of Mentor Capital Partners and a member of the advisory board for Fusion Associates.  Mr Hawkes has over 25 years of business and management consulting experience.