“In a larger business, everything from the provision of lunchtime meals to other non-essential benefits, you have to weigh up.
“It’s a value decision between the monetary savings, and the loss of employees or the impact on staff morale.”
There are some cheap arrangements business can offer to stop their best talent leaving, says Margaret Harrison, the managing director of Our HR Company. For example, it doesn’t cost businesses much to offer flexible work arrangements.
“The trouble is it’s very difficult when people have expectations of their bonus. They’ve worked hard for it.”
Ultimately, employees will be the ones deciding whether or not to stick with a business in trouble, both Harrison and Condon say.
A big part of their decision isn’t about the business at all, but about the larger job market.
“If there’s no work around, people accept whatever their loss is, but if it’s an open and comfortable market, people will look around,” Condon says.
Market conditions apply to things like bonuses too, he adds. Employees will wear a bonus cut if they’re still making wages above those they would get elsewhere. Not that they’ll be happy about it.
“This has been the death of many a good business. In the good times, people get paid huge dollars. Then the expectation is that regardless of how the business, industry or economy is performing, employees have a right to exorbitant salaries.”
Condon says employees often make a judgement on how much to wear based on how likely they think a successful turnaround is. “If there’s an anticipation that things will get back to the good times, they’ll ride the wave. They trust they’ll have those things back. There’s a sense of commonality between the employee and the business.”
Harrison says this makes it crucial for leaders to tell their story well.
“Of course, people will be sceptical. But management has to come out and be honest with them. If they don’t do that, they’ve got no hope of keeping staff engaged and on board.”
It’s a morale-lowering spiral many leaders would no doubt rather avoid.
Myriam Robin is a journalist with LeadingCompany. You can follow her on Twitter at @myriamrobin This article first appeared on Leading Company.
Myriam Robin is a reporter for SmartCompany and its sister site LeadingCompany. She has degrees in economics, international studies and journalism. She likes writing about businesses taking risks and doing new things.
