The dark clouds initially sparked off by the credit crunch have now turned into an economic storm and in some parts of the world, a full blown hurricane. Economic slow-down, rising inflation, diminishing consumer and business confidence are having an impact on most of the industrialised world as well as right here at our door steps. We in the Caribbean and in particular in Guyana are not cushioned from these tectonic economic shock waves.
Few people are painting a rosy picture with the current economic climate. One thing is clear – management needs to have new and fresh perspectives to lead and manage their organisations and people strategically in this challenging time. For over the past decade, organisations have traversed through times of plenty. The time has come to head towards the road less travelled and beyond.
At times like these, shareholders and Boards of Directors may pressure management teams to consider which business units to close and what costs to cut by either paring operations costs, laying off staff, freezing wage increases, slashing training budgets or curtailing sales and marketing activities.
Although budget cuts make the balance sheets look good and soothe jittery nerves, the joys are more often short term. The quotation at the beginning of this article is extremely apt, “Given the current economic slumber it has never been more crucial for Caribbean organizations to be creative and innovative in what they do and how they do it.” – Prof Miguel Carrillo, Executive Director & Prof of Strategy, Arthur Lok Jack Graduate School of Business, UWI. Budget cuts alone will not allow for an organisation’s competitive advantage. Budget cuts may bring about adverse effects in retaining your key talented employees. In the current financial climate, the retention of skilled employees is regarded as the pivotal source of competitive advantage for businesses according to April 2008 poll of nearly 200 senior executives of UK firms, conducted by business services firm KPMG which found that 83% of respondents said human capital was the key to maintaining an edge over competitors. Organizations, therefore, need to be creative and innovative in what they do and how they do it especially when it comes to retaining their talent.
What strategies therefore can management adopt to retain talent in a downturn economic storm?
Strategy 1
Communicate!
Be clear when communicating the economic downturn and its challenges to your employees. Be mindful that your management is not sending a distress signal to the employees and communicating the message that the economy is to be blamed for the difficult times you and your employees are facing now and in the times ahead. You may well be showing your employees that the organization has no control over what is going to happen to the business and that the situation is out of hand and left to the fate of the economic conditions. This can increase anxiety in the workplace which can distract employees’ focus and dampen their motivation when they should be united and driven to help you turnaround the business. Top down clear and honest communications about the challenges and how the organization plans to move forward will help your employees understand how their roles connect to the big picture and prevent your talented employees from walking out the door when you need them most.
Strategy 2
Be Visible
Managers and senior staff must make themselves more visible during such traumatic periods. Face-to-face communication and the concept of management-by-walking-around (MBWA) become extremely important. It plays a very supportive role and can generate a sense of security even amidst the most traumatic situations. Locked away behind closed doors can send many negative messages to your staff – “Who are they plotting to dismiss next?” Visibility on the other hand communicates that you are willing to walk side by side your employees, listen to their concerns or even their ideas of how they can contribute in such troubled times. If employees feel isolated wondering if they are next to go – you better believe they will act on it.
Strategy 3
Rewards and Recognition
Some organizations are thinking in these bad times, their employees should be grateful to have jobs at all. The fact remains that layoffs, salary freeze and budget cuts are catalysts for well-trained, talented employees to look for better opportunities elsewhere. In difficult times, organizations need to work harder on retaining talents and rewarding good performers as it is the people who will deliver the sustainable advantage. Management should give good employees a reason to stay on by making room for them to keep advancing their careers and to gain in experience, responsibility, remuneration and in other tangible and intangible ways. Even when you are forced to freeze base pay, you could introduce variable rewards linked to overall business performance and personal achievements. You could move employees laterally across the formal structure and let them take on new challenges in other units or sections.
Strategy 4
Increase Learning & Development
Learning and development budgets are often the first to be slashed during a downturn. However, managers who manage downturns well often increase these budgets during hard times. The return the organizations will get from investing in their people far outweighs the training costs. When organizations create the right environments in their departments and increases training opportunities, they will see their employees giving more voluntary effort and commitment to their work. The logic is simple: employees who are engaged by the right kind of leadership, which is clear and motivating, will feel recognised for their efforts and will give more beyond that which their job demands. The effort spreads across all levels and flows through to the bottom line.
Just like real storms or hurricanes – economic storms and recessions are never permanent. Markets, like weather patterns, are cyclical. The priority during a real storm or hurricane is to minimise the damage, survive the storm and then re-build once the storm passes. That’s exactly what your business should be doing during the current economic storm – minimise damage, survive and then rebuild. But to do this, you need to have a strong team of people around you – in the same way you would in a real storm or hurricane. So as the uncertainty within the economy continues, stay focussed on retaining the right people – be creative and innovative in your strategies here. They are crucial to the survival and future success of your business.
Nirmala Harrylal
Director – Internationalisation Centre
Arthur Lok Jack Graduate School of Business
The University of the West Indies
St. Augustine
n.harrylal@gsb.tt
