7 ways to keep employees engaged during a recession

As some countries enter a recession and global GDP levels off, people and businesses face uncertain times. So what can you do to prevent a contracting economy from damaging your employee engagement? We take a look

Will there be a recession in 2022?

Will there be a recession in 2022 (and beyond)?

An increasing number of pundits are predicting a global recession during 2022 - and some countries like the UK are already close to entering one. In July, the International Monetary Fund released predictions of a shrinking world GDP – titled ‘Gloomy and Uncertain’ – with GDP figures dropping from 6.1% in 2021 to 3.2% in 2022.

Their prediction for 2023 is even lower at 2.9%. The traditional definition of a recession is two financial quarters of shrinking GDP in succession, so these projections suggest that a recession is imminent.

What prompted the decline? Several factors, many of them headline news. Fuel price rises, supply chain issues, the war in Ukraine and the impact of COVID have all combined to increase cost of living and costs of doing business.

The OECD’s Consumer Price Index shows high levels of inflation in the US, Japan and the Euro area between 2021 and 2022, reflecting the sharpest price increases since the 1980s, with inflation rates in double digits for multiple countries.

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How recession affects employees

How recession affects employees

A recession brings uncertainty and stress for many. There are the everyday pressures of higher costs of living and ‘credit crunch’ restrictions on personal borrowing. Higher rates of inflation and interest rates mean worries about paying the mortgage, heating the house and putting food on the table.

And these pressures follow people into their working lives, too. Employees can find themselves contending with freezes on pay or annual bonuses as businesses tighten their belts. Hiring restrictions can result in higher workloads. There’s a risk of learning and development gaps as bosses expect more people to take on additional roles and responsibilities. A recession might also force businesses to shelve plans and projects that employees are personally invested in because of cost concerns, making it harder to feel a sense of purpose and confidence about the future.

In short, it can have a negative effect on your employee engagement.

But just how negative? The 2008 recession had a significant impact on employees’ outlook and attitude towards work, according to a retrospective report from UPenn’s Wharton Business School in 2018. Employee morale suffered thanks to a lack of long-term job prospects and the rise of insecure temporary contract work, as well as the diminishing chances of owning a home or raising a family.

As some countries like the UK enter a recession, and as others get ever closer, there’s no doubt it makes sense to scale up your employee engagement measures as protection against the kinds of outcomes seen between 2007 and 2009.

It’s even better to maintain high standards of employee experience management whatever the economic conditions. After all, change comes in many forms, from political and social shifts to climate events to new and disruptive technologies. Making sure your employees are happy at work helps you build resilience into your organization so that whatever’s around the corner, you’ll be ready to face it.

How to motivate employees during recession

How to motivate employees during recession

Here are some strategies you can use to combat some of the damage to employee engagement recession can cause.

  1. Be transparent in your communications

    When there’s radio silence, it’s human nature to fill it with all kinds of worst-case scenarios and pessimistic speculations. Don’t be tempted to shield employees from the reality of what’s going on. Instead, communicate with them regularly about your plans and ask for their feedback about potential cost-saving changes you’re thinking of making within the business.

    Leaders have an essential role in communicating the headline news about company strategy, but manager relationships are even more vital in maintaining morale. In fact, they can be make-or-break. Gallup research shows that managers account for 70% of variance in employee engagement levels. Through employee-manager relationships, workers can connect with the business on a personal level to discuss any concerns and feed them up the management chain.

  2. Be available to support employees

    Acknowledge when times are tough and provide your employees with emotional and practical support when they need it.

    Individualized support and adjustments can help employees get their work done as personal circumstances change. In a study reported in Harvard Business Review, 21% of employees mentioned individualized support being helpful during the first months of the pandemic in 2020 when caring responsibilities, childcare availability and remote working needs changed rapidly and work needed to flex in order to accommodate.

    An Employee Assistance Program (EAP) can help you offer support while giving employees the option to stay anonymous. Studies show that businesses with EAPs have lower levels of employee work stress, and higher levels of organizational commitment, job satisfaction, and social support.

  3. Show empathy

    Whatever their job role, everyone has a personal life that’s likely to be affected in some way by recession. Showing empathy for employees over issues like career uncertainty and financial stress can help them feel seen and heard at work.

    The Society for Human Resource Management emphasizes finding the right balance between empathy and accountability when leading employees through tough times. They recommend setting ‘micro-expectations’ that move the focus to the here and now as a way of easing anxiety without removing workload altogether. An example would be setting daily goals rather than monthly or weekly ones.

  4. Keep rewarding employees

    Few things are more likely to create frustration and resentment than rescinding benefits that employees have come to expect. A pay cut or a withdrawal of bonus payments may ease your balance sheet in the short-term, but you may pay for it later in lost productivity or a dent in your workplace culture.

    If you need to make cuts to things that directly affect the employee experience, consider giving employees a stake in the decision-making. Be transparent about the fact that cuts need to be made and present the options for their feedback. If you’re using a survey to do this, consider a conjoint analysis which allows employees to make trade-offs between options to find the things that matter most to them.

  5. Offer training

    Employee development and training can be a great way to empower employees who are feeling uncertain about the future or doubt whether their skills are still valuable. Upskilling and reskilling has become an important topic recently as employers look to equip their workforce for fast-changing market demands, especially in the tech sector.

    Adding new skills to your business also has the benefit of boosting employee engagement. Gallup research in 2021 showed that 76% of employees who experienced upskilling training enjoyed their work, compared to 62% of those who didn’t. The upskilled employees were also more likely to have a sense of purpose (78% vs 65%) and to say they had promotion opportunities (72% vs 41%).

  6. Prioritize wellness

    Employers collectively realized the value of employee wellness during the pandemic, when wellbeing became a watchword for HR leaders who wanted to make life easier for workers. As a result, employee expectations have changed, and employers are now expected to take a share of responsibility for their people’s mental and physical health, especially in an adverse global event such as a recession.

    Fortunately, taking care of employee wellbeing can also be good news for your bottom line. A study by BITC Workwell showed that FTSE 100 companies with robust arrangements for reporting on employee engagement and wellbeing performed 10% better than others on the FTSE 100 list.

  7. Recognize and reward employees

    Recognizing the individual contributions of your employees is a powerful way to keep them engaged and could also contribute to employee engagement during recession. Figures reported by Forbes showed a remarkable uplift in the number of employees intending to stay in their roles – 31% more – when personalized recognition was more frequent.

    Cementing this kind of affirmation with a benefit or perk is always welcome. But according to Forbes’ Steve Sonnenberg, it needn’t cost you financially to keep the recognition coming. He confirms that “...symbolic recognition – such as congratulatory cards, certificates or public shoutouts – is often just as effective as monetary rewards.”

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