How to Boost Employee Morale During the Recession

To put the current state of America into a term less anxiety-inducing than some others may quickly state, the country is in a strange place. A world-altering pandemic raged through the country for two years, causing lockdowns and wave-like spikes in spending. Now, as the country continues to rebuild structure after the unprecedented times, a potential recession has appeared on the horizon. From worse to worse, some may believe. And, as a staffing agency, we must note: a recession would be quick to alter the current employee market.

During the Great Recession of 2008, over 2.6 million citizens lost their jobs. It’s a simple cause-and-effect scenario. When economic activity is so low that the title of recession is monikered, businesses aren’t making as much profit. Less profit means less production. Less production and profit mean less need for labor. When a recession hits, an employee may begin to panic.

Therefore, if you have a team of workers, the upcoming recession (practically penciled in by economists at this point), may be causing a burning, raging anxiety, reducing productivity. Workers are worried, as they should be. No one wants to lose their jobs, and if a recession strikes, everyone is in danger (kind of).

As an employer, you want your workers to continue to be of high morale. If stress and fear overtake the workplace, productivity will falter, acting as a self-fulfilling prophecy of sorts. Less production caused by fear of labor cuts may lead to the need for labor cuts. Therefore, keeping your team in high spirits is a necessity during economic uncertainty.

While it may be impossible to calm all nerves, here are some tips for keeping employee morale high during the upcoming recession.

Current State of the Market

The onset of this article may appear significantly negative in nature. In a way, it is. At this point, we are expecting the economy to finally hit the low that has been threatened for months. The idea of the article isn’t necessarily reliant on the introduction of a recession, though. It’s the idea of a recession looming in employees’ minds that causes the decreased morale, not necessarily the recession itself.

At the end of the day, the current state of the economy doesn’t matter. It’s the idea of overarching employment cuts that causes distress.

Regardless, the current state of the economy does seem to be pushing toward a certain crash. And, as a result, employers are already making significant cuts to employment. Just over the past month, we have written about two corresponding events in the current market. At the beginning of January, the U.S. added over 223,000 new jobs to the market.

Then, a few weeks later, we reported that Google had laid off over 12,000 employees. This also included major layoffs at Amazon, Salesforce, and Microsoft, three other employment juggernauts.

Recently, we published an article regarding the possibility of a recession. We will quote it here:

Quote from ‘How to Prepare Your Career for the Possible Recession

Ultimately, economists have all but written the certainty of a recession in pen. They’ve currently penciled in the possibility, claiming it’s well on its way, something unheard of in prior situations of the same nature.

“Usually recessions sneak up on us,” Mark Zandi, chief economist at Moody’s Analytics, told CNBC. “CEOs never talk about recessions. Now it seems CEOs are falling over themselves to say we’re falling into a recession… Every person on TV says recession. Every economist says recession. I’ve never seen anything like it.”

The Federal Reserve has been hiking interest rates since March of last year to attempt to slow down the economy. Ironically, the economy had already been slowing on the heels of a return from the 2020 pandemic. Therefore, all analytics and theorists are predicting that a classic recession is going to happen, regardless of what actions come next.

When economic activity lowers, production is less needed and more expensive. Therefore, companies cut labor. It’s a simple cause-and-effect scenario.

While some predict that we can hold off a recession, it’s important to note that many believed the same before the Great Recession in 2008. Though a significant decline in GDP is the main sign of a recession, labor rates dropping often come first. This same scenario happened at the end of 2007 when then-President George W. Bush stated he wasn’t concerned.

Long story short: a recession is likely.

How This May Affect Your Team

As we stated, the stress of potential unemployment and financial disaster can cause your employees to become overwhelmed and anxious. Aren’t we all overstretched by the emotions a possible recession brings?

Naturally, stress causes a state of physical and mental unhealthiness. According to a study by ComPsych, 61% of employees said stress made them feel tired and out of control. 37% of people say they lose an hour or more a day in productivity due to stress. More than half say stress causes them to miss at least one day a year from work.

Consequently, the stress of economic trouble will cause your entire team to shift down gear (by no fault of their own). If everyone is riddled with anxiety, less work will be done.

Stress can also increase irritation and other negatively-charged emotions. Therefore, in times of high stress, altercations and issues between teammates are more likely.

Basically, the more stress, the more problems in the workplace. Therefore, it’s important, as an employer, to attempt to lower these triggers as much as possible.

How to Boost Employee Morale

Unfortunately, employers cannot calm qualms about economic disaster and labor loss.
You cannot simply tell your employees it’s going to be alright and reduce cortisol levels.

Henceforth, other methods of morale building and stress reduction are necessary to implement in the workplace. You cannot stop the recession, but you can attempt to make your workplace a more understanding and calming space for those involved.

Here are a few ways to boost employee morale during the butterfly-inducing period before a recession:

1. Labor and Payroll Is Key

The price of living has significantly increased over the last generation of workers. And, when a market crash is on the horizon, the majority of employee fear is based on finances. If they lose their job, how will they survive in a world too expensive for the average worker?

In our aforementioned article regarding what employees should do in the midst of a recession, we noted how important keeping a savings account was. How important it is to begin budgeting your money and finances in case the worst possible outcome happens.

Therefore, as employers, you must make sure your workers are able to do this. You must be able to maintain normal payroll and labor. If an employee is looking to make and save as much money as possible, now would not be the time for delayed checks or hour cuts due to mismanagement.

Make sure your team gets paid on time and gets all of the hours they are promised. This will work to maintain a constant level of morale, ensuring the employees that their jobs are currently safe.

2. Communicate Honestly — Don’t overlook the recession

We have stressed multiple times the necessity of open communication as a leader.

Linkedin survey in 2018 found that a boss having unclear expectations is the most common complaint made by employees. There are droves of examples proving this, and if you have ever talked to a disheveled friend or employee, they probably have said the same thing.

It does not take a communications major to be clear and upfront. Sure, it may take a bit of courage to be direct and confrontational (when applicable). As a leader, this is your responsibility. 

In regard to the stress of the recession, workers want to be able to trust their employers. They want to know when things are awry and when danger may be overhead. If worst cases ensue, the employee doesn’t want to be caught off guard by labor cuts.

Be upfront about the current state of your company (to a degree that’s necessary). Don’t act as if the fear and stress of potential labor cuts just don’t exist. Do not overlook the recession. Keep the conversation open and current. Overall, you want your employees to feel safe in that you will give them a heads-up when things are happening.

Smiling through gritted teeth and lying will not make the recession disappear. We all know what’s happening. Be honest.

3. Be Compassionate

In emotional times, there’s nothing more upsetting than a leader with callousness and a lack of empathy. We are all going through hard times. Therefore, to boost and maintain employee morale during a recession, leaders and higher-ups need to remain empathetic and, at times, sympathetic.

Ultimately, this is not to state that concepts of leadership (i.e. discipline and upholding standards) should be thrown out of the window because the team is stressed, but it’s important to remember the umbrella of bad news and frightening possibilities being held over everyone’s heads.

Your employee may drop in production because of stress, but this is not the time to reprimand them because of it. Instead, talk to them directly and find out how they are doing. Inform them that the level of productivity is dropping, but try to understand the emotional turmoil they may be facing.

This is the time to care for each other, and employees want to work for a company they know cares for them.

4. Keep Recognition High

Keeping recognition high works in two facets. One, it keeps productivity high by maintaining a positive workplace culture. Two, it helps employees feel as if their job is safe amidst the recession (at least for now), helping lower the stress of potentially becoming unemployed. Therefore, recognition should remain at the forefront of your supervisors.

In fact, employee recognition is crucial regardless of economic circumstances.

Everyone knows that there is a task that needs to be carried out. Sometimes that job will seem unrewarding. However, in any position of authority or leadership, it’s essential to take time to know you recognize the effort of your team. Tasks that get recognized and rewarded get repeated. And in a state where everyone is fearing for their jobs, recognition can help employees continue to feel safe.

No one wants to do thankless work. If you believe your high performers are, in fact, high performers, you should let them know. Thank them for their efforts on a regular basis.

Showing gratitude doesn’t have to only be significant things like financial bonuses and celebrations. Even a quick thank you or compliment on their work can go a long way. Setting up the atmosphere for a positive and rewarding workplace starts with showing that effort is noticed, even if just with a quick compliment.

5. Maintain Benefits That Are Possible Financially

Much like employee recognition, we pound the table for employee benefits all of the time. Not only do candidates look for benefits when choosing new workplaces, but the desire also remains constant throughout their time at the job.

In June of 2021, Indeed reported that searches for hiring incentives per million job searches on Indeed jumped 131% compared to January 1, 2021. People are looking for incentives. People want extra time off for mental health, sign-on bonuses, health benefits, and so on. They are not willing to settle for less.

If you are looking to keep morale at your company, there should be an expression of incentives. Unfortunately, the financial uncertainty of the times can make this difficult. Luckily, there are benefits to give to new and existing employees (i.e. extra time off for mental health days and flexible work schedules).

See what benefits your employees desire and see if you can implement them in a cost-effective way. It will quickly boost morale and help maintain productivity with a lower amount of stress pulsing through the workspace.

6. Allow PTO Control and Mental Health

Research shows that 93% of employees experience a spike in productivity after a vacation.
78% of employers believe that vacation boosts employees’ focus, and 81% believe it reduces burnout. 

Want to hear something ironic? Push your workers to take off work to help improve productivity.

No, really.

If you believe that a worker (or the entire workplace) is becoming stagnant, stressed, or jaded due to the oncoming recession, start pushing the idea of mental health days or vacations. Let employees know that they can take time off of work if they need to. It may seem counterintuitive, but it works.

Letting the employee know they are allowed to use PTO for mental health helps in two ways. One, it gives the employee time off, reducing stress and boosting productivity. Two, it lets the workforce know that your company is empathetic and is willing to work with star employees during these difficult times. It’s a moral and trust builder. Win-win.

7. Psychologically-Safe Workspace

Banking on the last point, create a space that is psychologically safe and accepting.

We are in unprecedented times. There are constantly new workplace trends and ideals generated through the employment market. We are working through kinks and creating new methods of employee satisfaction, acceptance, and forward-thinking policies. There are new ways to do things, ways you may have never expected. It’s important to be flexible and allow them to be tried.

Create a workplace that is safe for discussions and flexibility. Let your employees know they can come to you for anything. If an employee comes to you stating they need time off due to stress, be willing to work with them. Maybe implement remote work if possible. Making your employees know that any idea or emotion is viable and respected is the key to keeping morale.

Is the employee too stressed to complete something today, needing time to work elsewhere? Discuss it and come to a compromise. Give them an easier task, if possible. See what they think can help.

No one knows the mental health state of workers more than workers themselves. Give them a chance to share their ideas and emotions and try to compromise with them.

Obviously, don’t bend over backward for every idea or request, but be willing to listen and adapt.

8. Approve Individual Learning for Future Experiences

Our last tip involves employee work outside of your company. It may sound ridiculous, but hear us out.

If the biggest fear and stressor of the recession is being unemployed, the employee should be prepared for a scramble for a new job. Ultimately, if worse comes to worst and you have to cut labor, you don’t want your former employees to be left out in the cold. It may be out of your hands, though.

In our article regarding what employees should do before the recession, we noted that they should begin improving and building on their skills. They should begin building their resume to help them become more attractive to other positions (if unemployment occurs).

So, here’s a tip that can benefit you both: let your employees cross-train and learn other skills at your job. This allows you to build upon your workforce and create fantastic employees. On the other hand, it allows employees to bolster their resumes and feel safe in their job and future job search (if necessary). They help you and you help them.

It’s not an act of training your employees to find jobs elsewhere, but an act of bolstering your current workforce and helping them feel safe, boosting morale.

If an employee wants to cross-train, let them. For example, see if a star employee wants to train under a different department once a week to build skills. Train current employees on new abilities and give them side projects out of their normal realm, if applicable. Build your team from the inside, improving workplace morale and retaining the attention of great employees. After all, younger employees want the ability to work in multiple roles.

Excerpt from ‘Gen Z Hiring Tips – How to Attract Great Employees’

Gen Z employees want the ability to grow in their place of employment (as do all ages and generations), but they do not see the employment ladder as vertically as those before them. Moving up to a managerial role with the opportunity to lead, but still be led from above, is not as much of a win as it used to be. Younger workers want the opportunity to be creative, be a leader, and collaborate on something that matters.

Overall, younger workers want jobs that implement other skills. They want to constantly learn and adapt. An employee will be more excited about getting a promotional opportunity that brings in a new skill set than just becoming a senior in the position they are already in.

Worst case, you have to let go of employees and they have a better chance of finding a new job. Best case, you build a team that is multi-talented and wants to work with you for the long haul.