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This week we’re in conversation with Susan Kutar, Principal Talent Business Partner, GoTo Financial. We talk about the Impact of Recession on Benefits and Strategies for Communicating changes
The interview is edited for length and clarity.
Q- How do you think the current economic downturn has affected organizations' approach to employees' perks and benefits?
Hiring remote workers aggressively earlier during the pandemic, its after-effects have resulted in major layoffs in the tech industry. With the recession coming in, salaries are no longer as high, and companies are becoming more employer-centric in their hiring. The company's focus is on saving every penny to remain profitable, especially for new IPOs or those seeking investor funding. The VC funding is also becoming reserved, affecting the company's dispensable amount for benefits, perks, and salaries.
Q- So have you seen pay cuts or reductions of perks and benefits around you?
I have not seen pay cuts yet, but the pandemic has caused a reduction in benefits and perks offered by companies, especially related to travel, events, conferences, and professional development courses. Budgets for new tools and remote office setups are also being scrutinized. Even little things like perks for remote employees and onboarding at headquarters have been taken away. Examples include Slack's onboarding process, which previously required all new hires to go to the San Francisco headquarters, or upfront money or reimbursements for remote employees' office setup costs. These changes have been made to save costs during the recession.
Q- How are we communicating these changes? And how are we taking care that the employee morale and engagement is not affected when you're introducing this?
I believe that communication regarding finances and cuts is always difficult and that it's important to remind employees that they are partners and stakeholders in the company. Being a shareholder means that one must be willing to give up certain things when the market is not doing well, and it's important to communicate that the company and employees are in it together as partners. Communication style can be effective in getting employees to understand the situation and work together to improve the company.
Communication is the key, and we should always remember that our employees are smart and intelligent people. We don't need to protect or hide things from them. Instead, being transparent and honest about the reasons behind a decision is crucial. Many companies just add new policies or changes without explaining the reasoning behind them. When you explain the "why," people are more likely to understand and be receptive to the decision, making it their own instead of feeling like it's being forced upon them.
Q- What perks can go and what needs to stay?
In the tech space, investing in technology is natural, but also crucial because it provides essential project management and communication tools for employees. However, it is important to consider the ROI of these tools and whether they are being fully utilized. For example, if only a small percentage of employees are using a certain project management tool, it may not be worth paying for its license for the whole year. Instead, we could explore using tools that are already included in the G Suite or Microsoft Office offerings.
When it comes to cost-cutting, I suggest looking at expenses that don't significantly impact employees, such as vending machines, cafeterias, and in-office perks like free meals. Referral bonuses should also be reevaluated, as they only make sense when the company is hiring, and many companies are currently hiring less. However, I think it is important to maintain some employee benefits, such as work-from-home options and swag, but we can reevaluate what is truly essential and give those items to employees.
Ultimately, when the company is in a better financial position, it is important to give back to employees and reinstate some of the benefits that were cut during difficult times.
Q- How do you think this session is affecting organizational culture and employee engagement moving forward and what steps can we adapt to tackle these challenges?
Despite the slow start, I feel that the market will start looking better in the second quarter. Hiring will begin to pick up, and things will look slightly better. And by the third quarter, the market should be significantly better with more hiring and economic activity taking place.
Impact on Company Culture
In my opinion, the current economic climate has created a lot of fear among employees who worry they could be next to lose their job. As HR professionals and leaders of the organization, it's our responsibility to address this fear and provide reassurance to our team members. While simply throwing money at the problem is not the solution, maintaining open lines of communication with employees is crucial.
Transparency and Communication
One way to maintain open communication is by providing employees with as much information as possible about the financial stability of the company. Although companies are not required to disclose their financial health, sharing information about clients, recent accomplishments, and plans for the future can help employees gain a better understanding of the company's financial situation. This information can help employees feel more secure in their jobs and less worried about the company's stability.
Building a Culture of Trust
Transparency and communication can help build a culture of trust, which is essential for maintaining a positive work environment. Employees who trust their leaders are more likely to feel engaged, motivated, and committed to their work. To foster this trust, leaders should be transparent about their decisions and the reasoning behind them. They should also give employees credit for their understanding of the organization beyond their own roles.
Overall, maintaining a positive company culture during an economic downturn is challenging, but it is possible with the right approach. By keeping communication lines open, being transparent about the company's financial health, and building a culture of trust, we can help our employees feel more secure and motivated, even during difficult times.
At the end of the day, cutting down on perks and benefits may be a better alternative to laying off employees, and companies should explore all possible options before resorting to the latter. It's all about being empathetic and transparent with employees during uncertain times.
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