Employees Taking Salary Cuts Look for Loyalty from the Boss

By | August 3, 2009

Many employees of small businesses are grateful to have a job, even as salaries are frozen or cut and they’re asked to take on more responsibility. Company owners shouldn’t take those good attitudes for granted — they need to show workers some loyalty so staffers don’t jump ship when the economy gets stronger.

“This is a crucial time,” said Leigh Branham, owner of Keeping The People Inc., an Overland Park, Kan., human resources consulting firm. “Employees are testing you to see how loyal you are to them, to decide if they’re going to stay.”

Beverly Kaye, an employee retention consultant in Sherman Oaks, Calif., warned that owners who don’t show loyalty to their workers could see talented staffers leave even before the recovery.

“In this economy, it’s a gigantic non-truth that no one’s hiring,” Kaye said. “Good people have options.”

Showing workers you’re loyal is critical when they’re making sacrifices to help your business weather the recession. HR professionals say that means implementing painful staff and salary cuts in a sensitive way. Imposing such changes without any discussion will create resentment, not loyalty.

“Don’t make the decisions from on high,” Branham said.

Branham suggests, for example, asking employees if they’re willing to take pay cuts to save jobs. That way, “there’s a sense of ownership in what needs to be done,” he said.

Many HR consultants also advocate letting workers know how the company is doing. Staffers may not need to know the smallest details of the firm’s finances, but the boss should let everyone know what challenges it faces. That not only makes for a more open atmosphere, it will put employees in a better position to help the company.

Many companies are holding meetings or forums in which the boss fields questions from workers, Branham said. “You win so much respect when you do that.”

Kaye has held group meetings when she had to break bad news to her own employees.

“We downsized from 30 full-time people to 21 full-time, and we cut people’s salaries by 10 percent,” she said. “Every time we had to lay someone off, we had an all-hands meeting and an all-hands (conference) call. I told everyone what was happening.”

Kaye suggested owners not wait until there’s a layoff or salary reduction to meet with staffers. And she recommends individual as well as group meetings.

“It’s about reassuring the people on your team that you need them, that you care, that you’re concerned about them,” she said.

Another way a boss can foster loyalty is to acknowledge and show appreciation for how hard staffers are working, especially when there have been layoffs or attrition and the remaining employees have had to take on additional responsibilities. Also, be sure that no one is getting burned out.

“It comes back to asking, ‘how are you doing with all this?”‘ Branham said.

There are times when the pressure is going to be more intense, when a lot of work just has to be done in a short amount of time. In such cases, Kaye, suggested owners tell their staffs, “these are tough times. I know you’re working harder than ever for less money than ever. I want you to know I notice, I appreciate it, I want you to stick with me. We’ll get through this.”

Branham also suggested what he called spontaneous acts of caring. For example, go to a staffer who’s had a tough day and say, “it’s 3 p.m., you’ve worked hard today, go on home.” Or, give a staffer an extra day off.

Be proactive in such flexibility, Kaye said. “Ask people, ‘what do you want. … I don’t have dollars to offer you, but boy, would I love to offer you whatever I can.”

Some owners might worry that such gestures will hurt business. If they give extra time off, less work will get done. Branham’s response: “You have to make a decision — maybe I take a little less profit, maybe I go into the red a little as an investment in keeping my best people.”

Kaye said owners should also show some sympathy when employees’ lives are being affected by the sacrifices they’re making at work.

“My own secretary just said to me that because I had to reduce her salary, she had to put her kid in a community college” rather than a more prestigious school, she said. “I need to commiserate with that.”

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