How can I rein in unsustainable costs at my small company without hitting staff morale?
Q I own a small tech company and have a team of around 30 employees who are generally well-motivated and on board with the company's ambitions. However, costs have been running out of control and I will have to make some changes to the business to try and reduce outgoings. How can I do this without losing people? Some perks are no longer sustainable. The staff seem to think there is plenty of money available as we are doing well, but I need to re-invest massively into the business to make it work.
A This is a very topical matter, as we are now fast approaching a state of full employment across the country, Employee engagement and retention has never been so important. It is becoming increasing difficult for firms to attract and retain talented skilled workers and there will always be challenges for business owners to manage costs and ensure competitiveness. This is a delicate balance between employee morale and company performance and needs to be managed very carefully.
This example has a positive starting point in that employees are on board with the company direction and first and foremost this culture should continue to be cultivated. To do this, we would recommend the following:
1 Communication of all changes: It was mentioned "That staff seem to think there is plenty of money available". The first step to successfully managing this process is to have open communication with all employees. It should be highlighted that company culture is paramount to the business and staff engagement and benefits are crucial to this. The long-term plans for the business should be explained and the reasons behind any potential changes.
2 Active participation of employees in this process: The success of any change management process is often dependent on participation of the all parties. One way to do this is to start a 'Suggest a Business Competitiveness Initiative' competition and ask employees for their ideas. The winner, who comes up with an idea that saves the most money, is rewarded.
3 Changes to Employee Benefits: Anything that has been previously paid to/agreed with an employee in terms of employee benefits now forms part of their terms and conditions of employment and cannot be legally changed without the written consent of the employee and with appropriate notice being given.
4 Fact-find before you decide: Before you make decisions on changes to benefits we would recommend consultation. An employee's perception of value in relation to benefits will depend on a lot of factors such as their age, their family status, their interests, their career goals or their particular needs at that time.
Outside of these monetary benefits, there are a number of ways to get buy-in from your employees to remain with you long-term. Often, these are perceived as more valuable to employees than monetary benefits.
5 Performance Management:
If you don't already have a formal annual or bi-annual appraisal system in place, you should introduce one. In employee surveys across a multitude of sectors, two things that come up time and time again are communication and feedback. Employees want to get feedback on how they are performing. They want to be clear on what is expected of them. They want to hear when they are doing a good job.
6 Development: Some employers have a perception that providing development opportunities means spending big on training and making big financial commitments for college courses or external certification. This isn't always the case.
7 Learning: Having a culture of learning, development and promotion doesn't have to come with a heavy price tag. You do have to ensure that there are pathways for development within your organisation and room for growth in the company. If there are senior people in your organisation who have worked their way up in the company, make sure they share their story!
8 Staff Engagement: Try to engage with staff more. The more your staff are involved with your organisation, the more they feel part of it. This can be done in a number of ways and it's something that may need a few attempts.
Caroline McEnery, MD of The HR Suite, is a member of the Low Pay Commission and is an adjudicator in the Workplace Relations Commission
Sunday Indo Business