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1209 PD: Good human resource management for bad times

Bernard L. Erven Published on 05 August 2009

Editor’s note: The following is the first of two articles.

Bad times happen. The bad times often come from changes and calamities over which the business had no control.

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Better times follow bad times for most businesses as surely as bad times follow good times. This article focuses on the human resource challenges associated with working through the bad times. The human resource goal is clear – come out the other end with a group of employees at least as committed to the business as when the bad times started.

A theme that will run through this entire article is that the top managers of the business set the tone and model the optimism necessary to weather the storm. Good human resource management in bad times clearly starts at the top. It is simply naive for the top managers to believe that they have the option to be pessimistic, unresponsive to the bad times and impatient with employees’ doubts without affecting their employees.

The challenges
The top managers of a farm or ranch facing bad times have four key challenges:

• their attitudes toward the bad times, employees and the future

• developing a plan for working through the bad times

• adjusting human resource practices

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• communication with all employees

The managers’ positive attitudes point the way to the future when times will be better. Brooding, pessimism, glumness and withdrawal from employees send a clear negative message to employees. It is the managers’ way of saying we see the future, we don’t like it and we have decided there is nothing we can do to make things better. In contrast, managers’ enthusiastic confidence that together we can work through this and come out better for it, sends a completely different message.

A dairy farmer commented in the middle of a severe drought and a period of low milk prices, “I don’t yet know how we are going to get through this, but we will. And we will be better for it.” That suggests a positive attitude that everyone else in the business can rally around. It also models the attitude that others are expected to have about what is possible.

Planning is the foundation for working through bad times. It is helpful to have widespread discussion in the business about possible alternatives for improving cash flow, reducing costs, finding new opportunities, gaining understanding and support from lenders, improving morale, how to celebrate even little successes, nonmonetary ways to reward employees, maintaining confidence of landlords and postponing major purchases. These are examples of positive discussions that have value regardless of the decisions and plans that result. It is top management’s way of saying we aren’t giving up; instead, we are adjusting our plans to a situation we didn’t expect.

Human resource practices may also need adjusting. The challenge is to make the adjustments without losing the confidence and commitment of employees. A later section of this article includes a discussion of specific adjustments for managers to consider.

Communication with employees will be a challenge throughout the bad times. This article will conclude with some guidelines for effective communication within the business.

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The fears
Fear can paralyze. A great leader once said that the greatest thing we have to fear is fear itself. The same can be said for the top managers. Managers understandably fear that they will not be able to find a way through the bad times. They are likely to have doubts about what was or was not done in the past to prevent the current crisis.

Top managers fear that they will lose their employees if they know the truth about the current status of the business or industry. They can easily see how much easier it is to keep the employees in the dark rather than risking “telling all.” Even if employees stay through the bad times, top managers fear they will have serious problems dealing with the inevitable morale problems.

After top managers accept the responsibility of communication with everyone in the business, there are resulting fears to be confronted. For example, it would not be surprising for top managers to fear that the communication will be misunderstood, be only one-way without meaningful interaction with employees or become the source of numerous unanswerable questions.

Employees too have fears. They will easily sense that times are not what they were. They too read newspapers, listen to news, observe the weather, know something about markets and talk with each other. They pay attention to managers’ nonverbal communications that say times are bad, perhaps really bad.

Employees feed on each other’s fears. The very nature of the rumor mill suggests that the worse the news, the more likely it is to be believed by those lacking credible information.

Human resource practices for bad times
The “right” human resource practices for bad times depend on the specifics faced by managers and employees. The practices cannot be easily selected from some prescribed magical recipe. A practice that is highly appropriate for one farm may be ineffective for a neighboring farm. The following list is a cafeteria of practices for managers to consider and adopt, modify or reject. The relative importance of the suggestions is unrelated to their ordering in the list.

• Be honest about the bad times in hiring new employees. New employees already have sufficient challenges in dealing with the realities of a new job compared to their expectations. There is no need to add misinformation about the challenges being faced by the business. New employees will appreciate an interviewer’s accurate description of the situation and what is being done to work through the bad times. Nothing is gained by leaving the “reality check” to bits and pieces of information and misinformation from co-workers.

• Be fair about work loads. A common practice in bad times is to expect other employees to pick up the work that had been done by an employee who has quit, been dismissed or retired. Extra work with no explanation or adjustments in compensation leaves an impression of unfairness. It is easy for employees in this situation to jump to the conclusion that the employer is better off as a result of there being one less person in the work force. The employee perspective is that the work is still getting done and the employer has one less person on the payroll.

Fairness may require spreading the work of the departed worker over as many people as possible rather than just two or three people. Fairness may also require postponing some low-priority work so that the work of the departed employee can be covered. Temporary adjustments in compensation may also be justified, including overtime pay and bonuses. Sometimes employers go so far as temporarily dividing the pay that the departed worker would have earned among the people now doing his or her work.

Fairness to family members is also important. When faced with a shortage of labor and resources to hire another employee, managers sometimes assume that family members have unlimited dedication to the business and the capacity for more and more work with less and less sleep. Such an erroneous assumption can have devastating effects on longer-run relationships among family members. Marriages and quality of family life are also at stake. PD

—Excerpts from Ohio State University Agricultural, Environmental and Development Economics website

Bernard L. Erven
Professor Emeritus
Ohio State University

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