Tag Archives: Talent Management

Salary Freeze or RIF? Another View

8 Feb

I recently responded to a question from an executive in the insurance industry about whether a salary freeze or a reduction-in-force was the best way to reduce costs while maintaining employee morale and engagement. I’d like to offer the perspective of someone who looks at this question primarily through the lens of my research and consulting experiences, which leads me to conclude it may have less to do with which choice and everything to do with how leaders going about it.

I spent 12 years with a global consulting firm that assisted employers with force reductions. I’ve seen that done extremely well, where both departing employees and those remaining are treated professionally and with dignity. The communication was open and honest, senior leadership was front and center to answer questions and get feedback, and there was a specific plan that was well coordinated that helped remaining employees move forward in a productive way. For those terminated employees there were decent benefits offered–severance payments, benefits continuation, preference for re-hiring, outplacement services– which sent a message that the leadership of the company truly cared about these folks and wanted to help their transition go as smoothly as possible. (For more information about outplacement services you might find this New York Times article of interest.) In those cases I’ve talked to all parties involved and heard very positive things about the employer in spite of the RIF, feelings that often led to employees wanting to return and solid productivity for those on-the-job.

On the other hand, I’ve witnessed horrible “RIF train wrecks”, where communication was terrible, rumors were rampant, senior leadership was hiding, and there was no plan to move the company forward confidently– disaster for everyone.

I think the same can be said for salary freezes. I’ve worked with companies where that has worked well, and others where the results are less than positive. I’m familiar with one company that has been frequently awarded a slot on the “Great Places to Work” list that Fortune magazine publishes every year, and stayed on the list one year when their business hit hard times and they were forced into both a salary and hiring freeze.

The common denominator for successful outcomes? Great leadership, of course, leadership that has built over time a positive, engaging culture. It’s been my experience that how a company will go about this is just as important as what they do, and effective senior leaders can make a big difference in determining whether a freeze or RIF is successful. If that leadership has developed a culture of trust and confidence they can more easily deal with many challenges such as a difficult decision such as this.

Your take-away from this rant? I won’t presume to tell any company what the best choice is from a financial perspective. But I can tell you that how you act, how you lead, how you communicate, how to vision-cast– all these things will make all the difference in the world regarding this any many other important issues in these difficult economic times.

Business Advice From Those Who Have Survived Tough Times

3 Feb
In yesterday’s New York Times author Paul B. Brown presents advice from business owners who have survived past economic downturns. Here’s the counsel from one leader:

1. Continue marketing. “Being consistently visible demonstrates to both existing and potential customers that you are stable and in for the long haul.”

2. “Take advantage of the trickle-down effect in hiring great talent. Unfortunately, there are many people out of work right now. But the larger talent pool means opportunities for small businesses that do have the means to bring on new employees.”

3. Give back to the community. It is “a great way to keep employee morale strong during hard times, stay busy when business is slow, and get your name out by donating time. Aside from all that, it’s the right thing to do.”

In an earlier post about a potential Silver Lining I mentioned that from a talent perspective this could be a time when companies will be able to hire individuals who may not have been on the market a few months ago. I encourage any leader to consider the advice in this column– there will be opportunities out there for those who are willing to see them.

The Silver Lining, Part 1

19 Jan

I had lunch last week with an executive at a company that, not unlike the rest of us, is having some challenges conducting business in the current economic conditions. Although typical business indicators are running in the red, he did note one opportunity:

I’ve had a job posting running for a few weeks, and I’m getting more quality candidates that I could have ever imagined– certainly more than I would have had six months ago. I told my boss this may be the silver lining in this economic crisis– our ability to secure talent that we would not have otherwise.”

Indeed, you may have some opportunities like this.

  • Are you ready to take advantage of those opportunities to upgrade your talent?
  • Can you make a strong argument why that talent should join you?
  • If you’re not ready, what can you do in the next five business days to strengthen your brand so that those talented candidates choose you?