Thursday, August 24, 2006

Motivating Employees when business is down

Recently I read a message on Yahoo groups from a HR professional had posed the following question:

What is the role of HR professional if the organization is not doing well on marketing and sales front, not getting enough projects, work and top performers are not getting enough job satisfaction, challenging work & cant see their career growth? How to maintain the morale of the employees in above situation? How HR professional shall convey the management about this situation?

This question resonated with my earlier writings on retaining employee, branding to attract talent, how marketing can help avoid revenue roller coaster, creating a learning culture, sales funnel etc. Being a marketing professional with deep interests in HR, I decided to put my thoughts on paper right away.

Being an VLSI enginner working at Intel & IDT in Silicon Valley, I have seen a prolonged business downturn, I have worked through the bubble burst, the recession that followed and also worked at a startup where ups & downs in the sales cycle were to be expected. These experiences taught me several important management lessons. And these lessons are what I am writing down below.

Nature of Business

One has to understand that the nature of the business is such that there will be times when orders/sales will be very good and there will be down/slow times as well. The cyclical nature of business should also be accounted in the resource planning. If HR knows that the business will be cyclical, then one must avoid building excessive capacities to meet the peak work load. Instead, try and use contract labor to meet the increased demand. Retail stores (Wal-Mart, Target, Macy's Dillards etc) have long used temporary/part time workers to meet the Christmas rush. Technology companies can use contractors/consultants in the similar manner.

Startups also face this problem of revenue roller coaster and the associated lack of work - overwork cycles. But if this is cyclical in nature, the solution lies in having a better marketing plan to avoid such a roller coaster. (see: Avoid Revenue Roller Coaster Trap )
In addition to cyclical nature of business, startups also face a bigger problem of "Crossing the Chasm". A chasm is period when company suddenly sees a drop in business - and can be a very dangerous trap. Here again the solution has to come from marketing department. I recommend everyone to read the book "Crossing the chasm" By Geoffery A. Moore.

There can also be an industry wide recession. If there are lack or sales due to a recession, then the top management should get involved in the HR issues. I will talk it about later in this article.

What can HR do?

The first task is to understand the nature of the business. Everyone in HR department should have a clear understanding of the nature of business & the business cycles of the company is involved in.

During a down cycle, employee morale is bound to be affected. Therefore HR should take a lead and explain the business cycle to all employees. HR should also involve marketing when reaching out to employees. A part of this exercise has to do with internal marketing, internal brand positioning and a part to keep employees motivated.

First thing HR along with marketing is to explain their sales funnel. Sales funnel is a prediction of the future work. The more prospective customers in the funnel, the more likely that there will be more customers in the future. It is therefore important to see the activities in sales funnel to estimate future work. This implies that if the sales funnel is strong, then share those details with the engineering team. The engineers should see the kind of work and challenges they will see in future. This will motivate them.

A note of caution: Explain the sales funnel only if the funnel is strong. If the funnel is weak, exposing the sales funnel to employees will further demotivate them.

Build for the Future

If the current projects are not enough to keep the employees motivated, then it implies that they have some free time. The plan for HR is then to use that free time to do something useful - i.e., get the employees involved in PCMM/CMM activities to get a better level of PCMM/CMM certification etc. Alternatively, use the free time to train the engineers in new skills: These skills may be technical or managerial - depending on their rank/grade. Project leads/Project mangers may be encouraged to do PMI certification, or CSQA or Six Sigma etc., while engineers may be encouraged to take technical training.

Next thing to do is to use senior engineers & highly skilled engineers in Sales/Marketing activities. This will improve the strength of the sales funnel and will also motivate employees. Organize technical seminars or Webinars targeting potential customers, get people to write white papers, case studies etc. Use people's time to generate additional sales collateral.
The basic idea is that during such down times, use the spare time usefully to build for a better future.

What to do in a true recession?

Lastly, But most importantly HR should know what the top management intends to do in the future in view of the current slow period. If the management thinks that there is a true recession in the industry, then management has two options: Layoff people and operate the business in a smaller scale, or build for a better future. The final decision will be based on the confidence level of the top management.

If the top management has plans to layoff people, then the role of HR must be geared towards identifying the key talent and retaining them. If layoff are being planned, then the top performers must be intimated about the possibility - but given enough assurances that it will not affect their jobs etc. Take steps to prevent attrition of key people.

Another possible reason for employee demotivation may be that the projects they are getting to do may not be challenging enough. This implies that either the employees are being underemployed. In such circumstances, best thing to do is to change the marketing strategy and focus on getting more challenging & high paying challenges. For example, instead of getting application support work, aim to get application development work. In other words: Aim to move up in the value chain.

Note: I have written the above for an IT/ITES company in mind, but similar ideas can be applied to other firms as well.

I have written in detail about the things I mentioned here. If you have time please read the following:

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