Dear HR Executive:
I have a friend who worked for a company that had an enviable relationship with its workforce. Employee retention was high. People worked hard and liked their jobs. The company and its employees prospered.
Then came a recession (not the current one). The company fell on hard times. It imposed 10% pay cuts across the board. Top managers told workers they were working hard to turn things around, and that the company’s #1 priority was to restore salaries as soon as possible.
Nobody was happy with the cuts, of course, but employees understood why they were necessary. They took their medicine and pitched in to get the company moving.
The company never did restore the pay cuts. It had its reasons – business was up and down over the years.
Understandably, employees were disgruntled about not getting their money. But something else made them even angrier: Top management just stopped talking about it.
Maybe the execs didn’t have the information they needed to give definitive answers. Maybe they just didn’t know what to do.
But employees saw it differently. They assumed the company had either (1) forgotten its commitment to try to restore salaries, or (2) had decided to go back on that commitment and not tell anyone.
Eventually, employees got tired of asking about the money. But they never stopped thinking about it. And what hurt even more than the lost pay, my friend says, was the loss of trust. The silent treatment from management signaled a lack of respect. People lost faith in the company – and the company never recovered.
Change management starts with the truth
In this recession, the same fate could happen to lots of organizations. Employees have seen their wages and hours cut. They may not like it, but they get it. Times are tough.
The problem is, lots of them are expecting those cuts to be restored once business picks up. And for many of them, that’s not going to happen.
Watson Wyatt has released a survey of 179 HR execs that shows:
- 40% of companies that made salary cuts either don’t plan to restore pay levels or don’t know when they will.
- 33% that reduced employees’ hours don’t plan to return to full hours or don’t know when they will.
- 25% that shut down a facility don't know when or if they'll reopen it
Of course, with the economy still limping, nobody’s crystal ball is working very well these days. So it’s hard for companies to say when, or if, pay cuts might be restored.
But there’s a difference between not knowing what will happen and not saying what might happen. If there’s even a chance that cuts won’t be restored, now’s the time to level with employees.
The truth is that the economy is undergoing huge – and probably permanent – shifts. Businesses will have to adapt. Whatever happens, the old days aren’t coming back. It’s worthwhile for employers to communicate that message to their workers. Employees can handle the truth – and in the long run, straight talk builds trust and loyalty in the workforce.
Michael Boyette
Editor
HR Café Training Center
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