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Categories
| Employee support a must in cost-cutting |
| Management | |||
| Written by Emily Tan | |||
| Monday, 06 July 2009 11:15 | |||
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A 2008 study of Fortune 500 companies by Deloitte Consulting has found that organisations often underestimated the effort required to change employee culture and behaviour. Based on this study, Deloitte released a paper early this year on Reducing the pains of cost-cutting aimed at tackling the “people challenges” involved in cost reduction. According to Richard Kleinert, head of Deloitte’s Human Capital practice in the Asia-Pacific region, companies could implement all the cost-saving measures they wanted, but if their employees were not on board, the campaign would not be effective. “Culture has a huge impact on the organisation. If people are paralysed by fear of losing their jobs, productivity will drop. And if employees are not turning off lights and finding ways to save costs, memos aren’t going to help,” he said in an interview last month. The first step in communicating cost-saving agendas is for the senior management to be fully supportive. “If seniors merely give lip service — saying the staff must reduce costs and then jetting off on a private jet — the attitude filters down,” he said. The cost-cutting initiative then becomes a temporary “phase” the organisation is passing through, and employees feel if they just wait it out, things will return to normal, he added. Secondly, organisations need to link desired behaviours to business or employee value. One way to do this is to align corporate priorities with cost-conscious behaviours. “What gets measured, gets managed. Ensure that cost-saving becomes a key performance indicator (KPI) for managers and install other metrics,” Kleinert explained. Communication is another key factor. “It’s not enough to issue a memo. You need to communicate early and often. Basically, you need to tell them what you’re going to do, tell them when you’re doing it, and tell them what you told them!” said Kleinert with a laugh. The consequences of poor communication, said the report, include lack of trust, high attrition of top talent, as well as decline in employee morale and productivity. To communicate changes effectively, companies should create a communications network to deal with their employees’ many queries. “The network should be equipped with FAQs (frequently asked questions) and skills needed to deal with employee anxiety,” said Kleinert. He added that vendors and shareholders should also be included in this process. Of all cost-cutting measures, the most disruptive to employees is the process of reducing the workforce. “You need to deal with those who are displaced and those who remain,” Kleinert noted. It is essential to treat those who leave with respect and clarity, he said. “Do it quick and clean, don’t drag it out. But treat them with dignity and support them as much as you can afterwards.” How you treat the employees who are leaving has a great impact on those who stay, he asserted. “Poor treatment would result in ‘survivor syndrome’, where the remaining workers are so paralysed and depressed with anxiety that they cannot function.” In the midst of retrenchment, it is crucial for organisations to retain their key talents. Kleinert advised managers to talk to their best employees and take them into their confidence. “Let them know that they are special; don’t promise anything, but if you don’t tell them, you will lose those you most highly prized,” he warned. The report also recommended that the now “leaner” organisation implement an apprenticeship model to ensure new career opportunities for employees who remain. “The nature of work has changed. Low-skilled labour has been overtaken by machines and automated processes. Jobs therefore need highly skilled talent,” said Kleinert. “So while in the past, organisations could hire, fire, and implement any measure they wanted without significant negative impact, now they must take into account their most-prized asset — people.” This articel appeared on the Management page, The Edge Financial Daily, July 6, 2009.
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