Sound HR Practices for Good Times and Bad The fundamentals of managing your employees don't change just because the economy is sour.
By Burton Goldfield Edited by Dan Bova
Opinions expressed by Entrepreneur contributors are their own.
2009 was one of the most challenging years to run a small business. Facing financial strain and economic malaise, many entrepreneurs found themselves tempted to cut corners when it came to managing their people. Unfortunately, businesses that made those decisions will soon face another harsh reality: ignoring the best HR practices may result in a temporary bottom-line boost, but over the long term it will cause irrefutable [irreversible?] damage to their businesses. As small businesses pick themselves up from the lingering recession, savvy entrepreneurs will look back on 2009 and reaffirm these four fundamentals of smart HR.
Use midyear reviews to manage expectations
First up is feedback. Anxiety and assumptions fill a communications vacuum in down times. It's human nature to avoid tough conversations when the news is bad, and many employers avoided midyear reviews altogether when they couldn't deliver a raise. That's too bad. They missed the opportunity to reset goals and give themselves the greatest chance of a quicker recovery.
Midyear reviews were critical this year, and smart small-business owners used them to manage expectations and avoid surprises, especially if they realized a reduction in force was needed later. Midyear reviews are also opportunities for candid assessments of underperforming employees. It's a harsh reality, but while success in this environment might mean sacrificing some things, it shouldn't mean sacrificing top performance.
Recognize and reward good performance
It's a cliché, but it's a truth: People are the one asset a company absolutely and categorically can't do without. Even when times got tough this year, smart businesses continued to invest in their employees even when other expenses and cost structures were being slashed. Yes, it's true that in the darker days of the downturn employees probably don't have anywhere else to go. But captivity is a temporary approach to retention at best. As the recovery sets in, ignored employees will be among the first to move out. When a raise wasn't an option, smart entrepreneurs used nonfinancial rewards, title promotions and new assignments to reward and motivate their people.
Watch workplace morale
Good morale is tough to define explicitly, but it usually emerges at the intersection of a strong sense of purpose, a culture of respect, opportunities for fun, collaboration with team members, spontaneous appreciation and valued perks. In 2009, smart businesses didn't let up on nurturing their employment brand. They held on to the aspects of their company culture that made their employees happy to work there: free lunches, gym memberships, time off for volunteering, etc. But keep in mind that morale isn't only a matter of pricey perks. For example, this year savvy companies also looked for inexpensive team-building events. One of our clients shared with us that they hosted a movie night; they rented a DVD, and employees gathered in a conference room and enjoyed Ferris Bueller's Day Off together. (Never underestimate the power of laughing together.)
Regardless of which perks were kept, cut or made up on the spot, smart entrepreneurs kept the lines of communication open. Strong leaders know they can't afford to go quiet during bleak periods because they're afraid to communicate bad news or deal with the unknown. This is not only bad for morale, but also can cause employees to think things are worse than they actually are.
Protect your benefits
During a time when every penny counts, smart businesses didn't cut back on benefits with broad brush strokes. Owners turned toward trusted advisors within their vendor partnerships to look for line items to reduce--all while ensuring that they were adhering to the latest rules and regulations and still offering a competitive plan.
The bottom line for every company is don't let hints of a recovery--or the desire to avoid tough situations--weaken your resolve to make these four human resource cornerstones a part of your organization's DNA. These are not strategies you deploy when the going gets tough. Like many fundamentals of success, employing these strategies is always good advice.
