Slowdown... Downturn... Deceleration... The shell
shock following the meteoric rise of the technology
industry is all you've been reading about. Well, your
employees are reading the same articles, and their
productivity is being impacted by the same sense of
paralysis. With the economy experiencing a downward
spiral, start-ups squirming for VC funding, and IPOs
being pulled, many start-up employees that once dreamed
of inflated stock options are having a harder time
motivating to put in long hours at the office. If the
parking lot at your start-up is empty before 9am and
deserted by 5:30pm, this article is for you.
Keeping employees motivated to maintain the
relentless hours required at a start-up when stock
options don't result in instantaneous gratification
requires a more savvy manager than it did in the late
nineties when the "get rich quick" mantra became king.
The dream of millions of dollars resulting from a
short-term investment of 80 hours a week for one to two
years with a hot start up company is faltering as a new
reality emerges. Market analysts are returning to
age-old business fundamentals as the metric for
corporate success -- changing the return on investment
for employees with stock options into a three to five
year investment. Without millions of dollars in quick
money, some employees are rethinking their work ethic.
How do companies manage their employees' expectations
in the changing environment? And how do they keep them
motivated to put in the extended hours that have made
the start-up culture in the U.S. so successful --
creating "fleet-of-foot" companies able to beat large
companies by moving faster, and providing innovative
technology quicker.
While each start-up culture is different, keeping
employees motivated during a slowing market is a
universal challenge. Following are several suggestions
to keep your employees putting in the hours while the
market weathers the storm.
IF YOU'RE COST CUTTING, START FROM THE TOP
Fiscal responsibility dictates that cutting costs is a
critical component of weathering an economic downturn.
Travel budgets are often the first to see the effect of
more conservative spending at a start-up. Employees
often take these types of cost cutting measures in
stride, understanding the need to save corporate
resources, after all the employees are investors in the
company too. The backfire happens when company
management appears to be immune from the cost cutting
measures. Employees will catch on to the fact that they
are flying Po Dunk airlines and sharing rooms at the
Cheap Inn, while their leadership is flying first class
and taking limos to their five star hotels. Employees
that are conscientiously trying to save the company
money while their management is living high on the hog
will stop working endless hours for said company.
Let's face it, the rank and file were never the
source of many of the large expenses being modified, so
if the management team isn't following the new cost
cutting measures, it is likely that the bottom line isn't
changing all that much. Cost cutting has to start from
the top in order to ensure that it does not impact
employee morale and ultimately productivity. If
employees are expected to travel cheaper, evaluate costs
when making business decisions, freeze hiring, receive
special approvals, etc., the same rules and expectations
must be enforced across the organization, all the way to
the CEO. An executive management team that practices
what they preach will gain the loyalty and respect of
their employees -- basic requirements to keep them
motivated.
DON'T CUT THE BUDGET FOR EMPLOYEE COMMUNICATIONS
Revisiting the budget is a common sense measure for
companies facing tougher economic times and slowing
growth. Often, the first thing to go is the budget for
programs that in an accounting person's mind appear to
be "fluff." These programs, which often include company
meetings, retreats, training, orientation, newsletters,
and intranet development, are slashed from the budget
without a second thought.
However, it is these programs that were designed to
encourage various departments to get to know each other,
develop a team culture, make the employees aware of
corporate objectives, and ensure the company employees
are all working towards the same goals. E-mail as a
corporate communications tool is not sufficient to
ensure that the management team is able to identify
morale issues, communicate goals, and measure progress
toward corporate objectives.
Two things happen with the employee communications
budget gets cut. First, employees are no longer linked
to each other or the executive management team, which
leaves them feeling out of the loop and disconnected
from the company. Second, the management team is no
longer able to gauge the pulse of the company, offer
accessible face-to-face interaction with the larger
employee base, or influence the employees' drive towards
corporate objectives. The end result is an employee base
that feels they have no connection with the company they
are working long hours for.
YOUR EMPLOYEES AREN'T STUPID
If you think your employees haven't calculated what
their options are worth after the latest round of
funding, if you think they don't read industry news, and
if you think they aren't talking to each other about
whether working this hard is worth it, you are seriously
underestimating your employees.
In times of trouble, employees rely on each other as
a metric for how well the company is doing. One bad
apple can poison an entire bunch when times are bad.
Employees that do not have executive direction in times
of uncertainty spend much more time talking about exit
strategies, gossiping about corporate wellness, and
surfing the Internet than they do working.
Keeping employees insulated from negative forces
outside of the company is impossible. Talk to your
employees like adults and you'll find they are much more
willing to rise to the occasion and support the company
in good and bad times. While it is unnecessary and often
counter productive to share every business detail with
the employees, it is necessary for the executive team to
share changes in the market environment, new factors in
customer accounts, and other related information that
will influence or change corporate goals and necessarily
corporate behavior.
Employee buy-in is critical to ensure that the
company can move forward strongly despite economic
pressure external to the organization. Employees that
understand why they are doing something, or why the
environment has changed, are able to move forward to
execute on the modified strategy rather than wondering
what the point is. Employees lost in "Why am I doing
this, if I wait long enough the directive will change
anyway" are a direct result of management teams that
aren't communicating honestly or consistently with their
employees.
HANDLE ATTRITION -- DON'T HIDE IT
Disgruntled, tired, and disillusioned employees will
quit. When the market is good, this type of attrition
causes a minimal blip for employees, who are often glad
to see the grumpy guy go. However, in a down market,
anyone's departure rates a crisis, turning from water
cooler gossip to possible corporate melt down. The
executives fly in, damn the leaving individual, and then
pretend the person never existed.
Attrition happens in good and bad times, hiding it,
lying about it, or ignoring it will just magnify its
effect when the market is bad. Employees looking
desperately for signs of the company's stability will
take employee attrition to mean things are crumbling if
their management team doesn't quickly address the issue.
Often a simple e-mail that acknowledges the departure to
the employees affected and offers an open door policy to
those that want to discuss it is enough to diffuse the
situation.
Lay-offs have also become common phenomena when the
market slows. Business 101 dictates that during a market
slow down, there is an opportunity to determine who your
star players are, and who is destined for the bench.
Companies often use "lay-offs" to eliminate employees
with consistent performance issues, however the term
alone can wreak havoc among the employee base. Lay-offs
often connote an arbitrary effort to get rid of people
to save money. The announcement or even rumor of
potential lay-offs will have every one of your employees
spending their day sending out their resumes rather than
working.
Instead, if there are impending performance related
employee cuts, let people know that you are enforcing
the performance review process. Employees not meeting
the expectations set for them by their managers, and not
pulling their weight, will be let go. This will scare
the bejeezus out of some employees, the ones that have
been slacking, but it will also act as a motivator.
Those employees that are consistent performers know who
they are, and are not threatened by this type of action.
ARE YOU AN "A" MANAGER OR A
"C" MANAGER IN HIDING?
Managers are being put to the test. The ability of the
management team to keep the company moving forward while
the market is stalled will separate the A players, from
the C players. The management team is solely responsible
for ensuring the productivity of their people during a
market slow down, an effort much more difficult than
when the economy is booming. In order to fight the
natural reaction to hibernate during the storm rather
than keep on moving forward, the management team must
constantly and consistently communicate market changes
to their employees, explain the impact these changes
have on the company, provide solutions and explain
shifts in strategy, reset expectations realistically,
and be examples. An executive cannot expect the
employees to work twelve-hour days and not notice that
the management team is spending their time on the golf
course bemoaning their stock portfolios.
The market turmoil high-tech start-ups face today is
certainly not permanent. However, the days of "getting
rich and getting out" are gone, and management teams
need to alter their approach to motivating their
employees. Ensure that the employee investment in the
company remains secure, and has the potential for
considerable long term pay off, but also make it clear
that the value of that investment is directly tied to
their on-going contribution to the company's success.
The key is to make certain that every employee
understands that the success of the whole endeavor
relies on each individual's dedicated participation.
Shannon Pleasant is director of Corporate
Communications at General
Bandwidth. General Bandwidth is focused exclusively
on developing solutions that meet or exceed the exacting
requirements of the largest service providers. Their
flagship G6 platform gives service providers a logical
migration path to a unified, packet-based network that
enables them to deliver differentiated services while
reducing capital and operational expenses.
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