It is a difficult balance to try and achieve, but if you:
- use your Company values as a decision making lens;
- view all reductions as temporary;
- communicate honestly, respectfully and openly;
- check decisions are lawful
then you are well positioned to continue to cultivate your culture and exceed your competition when the market improves.
1. Company Values
Unfortunately these can often be words on a wall, but if you have Company Values now is their time to shine. Your values should be the lens through which you are making any tough people decisions.
Let’s use an example of Company XYZ who has values of respect, innovation and openness and I need to reduce my team from 5 to 3 employees. I would need to consider how that decision may impact on our businesses ability to innovate, and also to make sure the process and communication I am undertaking is respectful and open.
If you are ignoring your company values in these times, and not considering them when making decisions, then they are not your values!
2. Temporary Mindset
It is important to consider how any changes may impact your business in 6 months, and 12 months time. The economy and the employment market will not always be like this and it is important to be ready to be effective and growing when the time is right again. So although your staff may agree to a pay reduction now, you need to continue to communicate to staff about the financial position of the organisation and when you may be able to increase salaries again.
Similarly, if you hiring new staff now and taking advantage of paying a lower salary because the candidate will accept it… you need to consider the cost of needing to rehire and retrain in 6 months if they leave for a higher salary when it is offered by someone else.
The key with communication is that you need to communicate. Then Communicate, communicate, and communicate again.
Your team members have a lot going on right now. Potential anxiety about their job, homeschooling kids, and concerns for their health are all distracting attention and they just may not be hearing you. So have a communication plan in place to be as honest, respectful and open as you can about the business and invite your team members to share their questions and ideas.
4. Act lawfully – don’t just follow what someone else is doing
Unfortunately the media has been full of “Company ABC has slashed salaries!” where the reality is that you can’t arbitrarily do that. I have also had clients saying “I’ve heard other organisations are…..”, but every organisation is different and you may not know the whole story about their employment agreements or consultation they undertook. In general, the lawful employment based cost reducing strategies available to you include:
- Reduction of hours (on agreement / refer to Modern Award )
- Reduction of salary (on agreement / refer to Modern Award )
- Purchased leave scheme (on agreement, needs a policy)
- Temporary shut down / stand down of employees (refer to Modern Award)
- Encourage taking of annual leave / Long Service Leave (direction can be given but only as per Award / Fair Work Act / relevant State LSL Act)
- Calling for voluntary redundancies
- Freezing salaries (not paying increases) ; no payment of bonuses (check your policies first)
And above all, the Fair Work Act has an obligation for consultation which in most cases means you need to undertake a structured consultation process as soon as you make a decision around major workplace change. The Fair Work Coronvirus web page is a great place to start to understand your options and obligations.
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