Sales down, so firms boost morale

With real incomes declining, the US unemployment rate at a four-year high, and inflation running at its fastest clip in 17 years, managers across the country are running up against a pressing challenge – how to stoke workplace morale while addressing their organization's own economic needs.

Many managers are shying away from the conundrum, research suggests, but some are tackling it head-on. And the methods vary as widely as the types of leaders and organizations that employ them.

Take Frank Jacobs, who purchased 700 "Positive Power" CDs last month from motivational speaker Ed Blunt. Mr. Jacobs, vice president at pharmaceutical company Novo Nordisk in New Jersey, thinks the $54 two-disc sets will act as a catalyst for employee productivity after he distributes them to his sales team in September.

"If you bring a speaker in, people hear the message once," he says. "But if you have CDs, people can hear it again and again."

When funding dried up for the nonprofit West End Community Center in Providence, R.I., the center's leaders called a staff meeting to announce a temporary freeze on pay raises. But they also challenged employees to cut back on operating costs without jeopardizing quality of care for the center's day-care and extracurricular youth programs. Soon enough, employees organized a weekly car wash and bake sale to fund a much-anticipated field trip to a water park, and West End's art director began shopping at a recycled art supplies store.

"People generally understood the situation, nobody quit, and we said we hoped in the future that [the situation] will change," says Joe Gabriel, West End's acting director.

One approach: ban gossip

Sam Chapman, CEO of Empower Public Relations in Chicago, took a more direct approach. Last year, he banned gossip in the office and fired three employees for violating the policy. At a time of economic distress, he says, the ban ensures that rumors about salaries or layoffs are dispelled face to face. He believes the agency's ability to avoid the negative energy from gossip has helped it grow from nine to 17 employees in a year.

Managers must strike a delicate balance during periods of downsizing, according to Chad Rosen of the Burnham Rosen Group, a Boston-based consultancy. "If you just focus on the doom and gloom, everybody gets depressed. If you focus on an inspiring message, everybody thinks you're a Pollyanna," he says. "You need to sympathize with the pain people are having yet demand high performance."

Sympathy may be in short supply, however. Recent surveys by the consulting firm Watson Wyatt Worldwide indicate that while nearly half of US employers believe stress from long working hours and demands to produce more with less is influencing business performance, only 5 percent say they've taken strong action to remedy the situation.

And even though most US workers continue to be optimistic about aspects of their jobs – the percentage of Americans concerned about getting laid off or having their wages reduced has remained relatively static over the past decade, according to a Gallup poll released Monday – there's also mounting evidence that many people's attitudes at the office are souring. For example: Over one-third of American workers feel pressure to stay with a bad boss because of the economic downturn, Lake Research Partners in Washington announced in July.

Recognizing workers – even if it's just a pat on the back and a "thank you" for a specific accomplishment – doesn't cost much, and it's especially important when individual workloads are swelling because staff is slim, says Brad Beal, CEO of the Nevada Federal Credit Union in Las Vegas. "When [employees] see the results of their efforts ... they understand how that helps the company and how it helps other employees," he says.

The importance of trust

But communication proves ineffective if there's no trust, says Natalie Camper, president of a management consulting firm in Brookline, Mass. "If it's a toxic environment and you're my manager and you say, 'Good morning,' I'm thinking, 'What does he really mean by that?' " says Ms. Camper, who is developing a new workshop called, "Staying Hardy in Hard Times."

Initiatives to build trust often begin at the rumor mill. Mr. Rosen, the workplace consultant, points to one senior financial services executive he's advised whose office was beset by rumors. "You can't stop that from happening, but she's out there every day with folks asking, 'What are you hearing? Let me tell you what I know,' " Rosen says.

And while the productivity of US workers is growing as unemployment increases, managers should remember that employees who survive a spate of job cuts often feel guilty about keeping their positions and fear getting the ax next, neither of which contributes to productivity, according to Lynn Unsworth, regional manager at the North Carolina employers' association Capital Associated Industries.

Some companies are addressing this issue by softening the blow for those laid off, Ms. Unsworth says. Human-resources executives are sponsoring job fairs where they invite other employers in the community to interview workers whom they've had to let go.

It's not clear, however, how widespread these managerial methods are. On a recent weekday afternoon in downtown Boston, people reported varying levels of engagement with employers.

Andrew Perry, a cook at Emerson College in Boston, was excited about an upcoming meeting his boss had scheduled to discuss workplace issues related to the ailing economy – such as the need for longer work hours.

But Laura, who works at a Boston law firm and didn't want to give her last name, says she wishes her superiors were more upfront about the firm's financial situation. Instead, she says, employees must pick up on hints like the disappearance of free food left over from meetings, which had once been a perk for the staff.

"The key insight for most managers ought to be that they can improve the situation in their departments even if the company as a whole is doing nothing to improve the situation," says Kevin Coyne, a business professor at Emory University in Atlanta. "If you always insist that the whole company has to address it in unison, then you're saying only the CEO can fix this problem. And that's not true."