The Working World

How to Keep Employees in the Downturnaround

The unemployment rate is still high and new layoffs are announced each day. In other words, we’re not in a recovery yet. But companies should start thinking now about what happens as the labor pool shallows out.

Right now there are countless people who have had to take unpaid leaves or were hired on the cheap; when the economic situation improves, don’t expect them to show much loyalty to their employers. They’ll be interviewing on company time, taking calls from recruiters and jumping ship like crazy.

I frequently receive calls from candidates tied to the automotive industry. A former director of human resources who had to take a job as the HR manager of a very small operation and a 25% pay cut asked me to find him a new position. He was willing to take a pay cut but in exchange for flexibility with vacation and a company car, but the Japanese company we were dealing with would not negotiate. Even though he has more than 20 years of experience, he won’t get any vacation time until year two. After, he gets one week. Do you think he’ll be sticking around that long if he has a choice?

Smart employers will be prepared to keep strong employees and add new (or old) ones to stay competitive. Ask these seven questions to get on track:

When the economy turns around, what incentives can I immediately put in place so that my workforce doesn’t feel exploited? The HR managers and executives I have been speaking with say that it will be a slow and gradual return to old wage and benefits standards. Company that act fast reward employees even in the smallest ways will be better able to retain them.

How quickly should we give pay raises, and to who? Many hard-hit industries are piling on promotions and more responsibility without an increase in compensation. Yesterday I spoke with a plant manager who within 90 days had streamlined multiple processes and saved the company well over $1 million. His employer, recognizing that he is valuable, wisely rewarded him with a $40,000 salary increase.

Which employees are most likely to leave because they have been saddled with the jobs of two or three people? If they’re able to manage that workload successfully, you probably want to make sure they stay on board.

What departments are going to need talent immediately because they were cut so deep?

Who among the laid-off would want to come back? If you had to let go of strong employees, see if you can re-hire them. You can save time and money on training, bring back institutional knowledge and keep them from going to the competition.

Should we bring people back as permanent employees or contractors? Many suppliers to Honda are going to avoid adding significant head count, instead using temporary agencies to staff general labor jobs. One HR executive told me that the trend within the suppliers was to have 15% temporary labor to save on benefits costs.

How quickly should bonus programs, company cars, 401k matches, medical benefits etc., go back to previous levels?

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Tags: advice, business, downturnaround, economy, recovery, The Working World