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Employers deal with “Occupy Wall Street” and other new challenges to maintaining employee morale

November 1st, 2011  |  Lorene Park

Employers have it tough right now. They must deal with the economic downturn, preserve resources, strengthen the company’s financial position, and at the same time try to keep employees happy. High morale is essential to retaining a talented workforce and to maintaining high productivity. Raising employee morale has always been a challenge; but let’s face it, American workers are not happy right now. They are worried. Unemployment is high and the federal court system  reports  that employment litigation is rising. Moreover, the public is responding positively to the Occupy Wall Street movement, which expanded from protesting corporate greed in the financial sector to also protesting economic inequality between the wealthy and the rest of the population. It is unclear what ultimate impact the Occupy movement will have; but it has already exceeded expectations. Protests have reportedly been held in over 600 U.S. communities and 900 cities worldwide.  An October  Time Magazine survey  found that 54% of Americans have a favorable impression of the protests, while 23% have a negative impression. An October CBS News poll had similar results. With this momentum, the Occupy movement will likely impact employee opinions, and employers should consider what steps can be taken to maintain high employee morale.

One way to reduce employees’ anxiety and uncertainty is simply to communicate with them, emphasizing the steps that the company is taking to remain strong. Avoid dwelling on the negative effects of the steps taken and emphasize the benefits of ensuring the strength of the company and thus job security.  It is important to maintain a strong image with employees in order to keep morale (and thus productivity) high. Employers should also be aware of external, individual influences on employee morale due to poor economic conditions. For example, if an employee’s spouse loses his or her job, the employee may be facing a personal financial crisis. Employers should consider providing such employees with information on resources that might be available to them, such as temporary loan deferrals or early hardship withdrawals from 401(k) plans. In addition, employers may want to educate employees about any employee assistance program offered by the employer. By providing general information on resources available to employees facing economic hardships, employers are helping to increase morale and improve productivity.

If the company is in fact considering taking drastic steps in order to cut costs, then consider alternatives to layoffs, such as using a work-sharing or short-time compensation (STC) program. As explained in a 2011 report by the Congressional Research Service, STC is a program within the federal-state unemployment compensation system. In the 20 states that operate STC programs, workers whose hours are reduced under a work sharing plan may be compensated with STC, which is an unemployment benefit that has been pro-rated for the partial work reduction. Basically, a company faced with the need to downsize chooses to reduce work hours across the board for all workers instead of laying workers off. According to the CRS report, employers use STC and work-sharing to reduce labor costs, sustain morale compared to layoffs, and retain highly skilled workers. Work sharing can also reduce recruitment and training costs by eliminating the need to recruit new employees when business improves. Other alternatives to layoffs include job transfers within a corporation; salary reductions; retraining employees to work in other jobs requiring a similar skill set; hiring freezes and attrition; mandatory time off or furloughs; and telecommuting to reduce overhead.

Whatever steps an employer takes to ensure the health of the company, the employer is well advised to always consider the impact on employee morale. Not only will higher morale mean higher productivity, but high employee morale translates into a strong positive image with customers, suppliers, and the community.