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Newsletter - February 2009

OI Partners

Managing Human Capital in Turbulent Times: A Case Study from an HR Survivor

February 12, 2009 - Karen Walker Beecher

Background
On May 20, 2005, a jury rendered a devastating verdict in a patent lawsuit that forced our company, Boston Communications Group, Inc. (bcgi) to face potential bankruptcy.  Employee faces—from the top down—were stunned, frightened and filled with uncertainty.  Today, companies facing severe economic challenges are in a very similar situation, but for different reasons.  Here’s a look into how we managed through a terribly turbulent time.

Five years prior, we went through some management changes and realized that we needed to mobilize our employees and improve our culture and our company.  Based on the results of an extensive employee satisfaction survey, we embarked on a plan to build a better workplace.  Three years after very deliberate and focused attention to meaningful changes, our employees voted us one of Boston’s “Best Companies to Work For.” 

The culture and trust we built was the foundation that enabled us to navigate through the May 20 blow.  Quickly, after the initial shock, the management team assembled and laid out a strategic plan to address our challenges.

Actions
We were tackling many different issues simultaneously, ranging from running our day-to day-operations, managing customer concerns, integrating two recent acquisitions, and dealing with a myriad of legal issues that ensued – including planning for, while trying to avoid Chapter 11, preparing for appeal, settlement discussions, etc.  Stabilizing the situation, reassuring customers and employees, and then executing our plan was critical.  Customers and employees wanted to know we had a plan, what it was and wanted frequent updates.  While we executed our plan, here are some things we found important to manage our talent through this difficult period:    

  • Company meetings were frequent and email updates were sent regularly, even when there was little to report.  During turmoil and uncertainty, it’s reassuring to know when there’s no new news!  This is especially important with global operations since those farthest from HQ require more frequent communication.
  • Optimism and confidence are important.  Everyone wants to be assured that everything will be okay. But, people also need a healthy level of realism and transparency; employees can see through the puffery. Trust is essential to managing through difficult times, especially when you are communicating difficult issues.
  • Be visible. The management team was extremely busy and stressed during this time, but we made a conscious effort to get out, walk around and be visible to employees.  A smile, a “hello” and a brief conversation were small, but important ways to reassure anxious employees.
  • Empower front line managers.  Our sudden financial situation required a Reduction in Force (RIF).  We involved front line managers in advance of a RIF so they understood the plans and the rationale and were better equipped to handle employee questions.  It also made them more aware of and responsible for their leadership roles.  We started to rely more heavily on our frontline managers, which had the benefit of putting some of them on a faster growth and maturity track.
  • Treat employees well and with respect.  Often companies cut back on outplacement during a RIF, but good outplacement and HR support are critical and one of the best bangs for your buck. Employees who stay on will look at how you treated those who are RIF’d.  If you don’t treat them respectfully, don’t expect too much loyalty from those you don’t RIF.  Additionally, we had long tenured employees who hadn’t needed to look for jobs in years.  They certainly needed the outplacement guidance and counsel. 
  • Retain key people. Top talent and people in critical roles are always in demand, and they are expensive and difficult to replace, especially when a company is facing difficulties.  We worked with senior managers to identify key employees (who aren’t necessarily always just your top talent) and established a retention bonus plan to help ensure their long-term commitment. This was a highly confidential program since we didn’t want it to negatively impact the remaining employees who were valued, but couldn’t be part of the program.
  • Because we were facing potential Chapter 11, employee concern about their pay and benefits abounded.  We worked with our attorneys to ensure as much protection for employees as possible, and we communicated our plans, issues and any risks.
  • Don’t forget to have some fun. Gathering employees for monthly BBQs and other events were part of our culture and fostered a family and fun environment.  As we faced cost constraints, we still gathered, even if it was just to eat cake!
  • Work hard. There’s no substitute.  This time period tested everyone.  Employees had more confidence because they could see we were working tirelessly to improve our circumstances.

There was hardly a day that passed when I wasn’t amazed and heartfelt at how our employees hung together and supported us.  This was evidenced by our attrition; voluntary attrition during this one year period remained at an all time low.  It also was evidenced by employees who frequently commented that they believed in the company, and because we had treated them well, were going to stick with us. They knew we were working hard to do the right thing.

If you already have laid a foundation of trust and have a healthy culture, you will be able to navigate through these turbulent times more easily, however it still won’t be simple. And whether you have laid the foundation or not, if you communicate, treat people with respect and work hard to do the right thing, the turbulence will be a bit less unsettling.

Karen Walker Beecher is the former vice president of Human Resource at bcgi.