Managing staff during tough times

As a small business owner, you will be faced with difficult choices during turbulent times, such as an economic downturn or a decrease in demand for your product or service. In order to stay competitive, you must streamline operations and offer creative responses to external threats. It is critical to encourage innovation and make the kinds of changes that are necessary to ensure that your business succeeds today and in the future.

When times are tough, business owners often resort to layoffs as a cost-saving measure. However, laying off employees can damage your business and impair its ability to succeed in the long term.

Layoffs incur direct costs, including severance pay, administration costs and legal fees, which immediately undermine your business' bottom line. There are also less tangible costs like the skills, knowledge and experience that are lost when an employee is let go.

In the face of layoffs, staff often experience lower morale and productivity, higher levels of absenteeism and job-related stress, and a loss of faith in the business. Your best employees may start looking for other opportunities. And, when business does improve, the costs of finding and training new employees are very high.

In the current economic climate, opportunities do exist, but small business owners must have clear strategies. Cutting back and hunkering down may get your business through the short-term crisis, but will not position you to be a leader in the future.

Innovative cost cutting and restructuring measures can help you reposition your business and define how business will be conducted in the future, without the need to let valuable employees go.

Think long term

• When possible, avoid layoffs. Recruiting new employees when your business rebounds is expensive, can damage relationships with customers and can put your reputation as an employer at risk.
• Reduce employee costs through work reorganization. Multi-tasking and learning new skills allow your staff to support your organization's needs now and in the future.

Use recognition and rewards

Rewarding employees can be a challenge in times of fiscal restraint. Here are some smart ways to recognize employees, while keeping costs low.

• Acknowledge employee contributions - employees want to feel that their efforts are recognized and appreciated.
• Use staff meetings as a forum to recognize outstanding achievements.
• Link incentives to the business' overall goals and objectives.
• Give low-cost, innovative perks, such as offering employees an afternoon off or giving them access to a coveted parking spot.
• Make recognition personal - allow employees to choose their rewards.

Maintain a positive work environment

• Ensure that employees have fulfilling work that is challenging and interesting.
• Give employees continuous feedback and ensure that they understand their role, the impact of their work on customers and how they bring value to your organization.
• Offer employees flexible scheduling to help them balance their work and personal lives.
• Offer job-sharing and reduced work weeks. These alternatives to layoffs can help your firm retain existing jobs and return employees to full-time work, when the recession is over.
• Have a strategy to deal with workplace stress and conflict.
• Set a clear sense of direction and leadership. Management should be "walking the talk" and setting a positive example for employees to follow.

Although avoiding layoffs during hard times can be a challenge, the benefits to your business in the long term are significant. Below are some resources you can consult to learn more about managing employees during difficult times.

• Employee Retention
  
  http://www.ic.gc.ca/eic/site/dir-ect.nsf/eng/h_uw00307.html
  Information and tools on employee retention.
• Wage Subsidies
  
  http://www.canadabusiness.ca/eng/guide/1137/
  Are high wage expectations making you reluctant to put up that Help Wanted sign? A wage subsidy program can put the perfect employee within your reach.