Peer-to-Peer: Readers' best advice about softening the blow of recession-related pay cuts

Written by PROFIT-Xtra

PROFIT-Xtra readers offered suggestions for motivating your employees to work hard when money no longer does the talking — in response to this question from the president of a Coquitlam, B.C.-based manufacturing firm:

“As a result of the current downturn, I’m going to temporarily cut my employees’ wages by about 10% to avoid layoffs. I’ve always believed in leading by example, so I plan to take a 20% salary cut myself. How do I convince my staff that this cost-cutting measure is necessary to help keep my company afloat and still maintain morale?”

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Best reader response

Allan Shaw, NEXX Step Solutions:

The key to maintaining morale is to include your employees as part of the decision making process. No employee will buy into a decision that directly affects their livelihood if they feel that they had no input into the solution. And when morale suffers, so does employee satisfaction and productivity.

To avoid resentment from your staff, present the situation to them, your desire not to lay anyone off and the need to reduce costs in the short term. Put forth possible options and ask for input from your staff. There may be cost-cutting opportunities that they’d prefer that you are unaware of.

For instance, while a pay cut may not be a viable option for some employees, an unpaid half day off twice a month may be one. Shifting your business from a five-day work week to a four-day work week is another possibility, or closing your office at noon on Fridays.

Showing openness and good faith by including your employees as part of the decision-making process will demonstrate a level of respect and awareness that can pay dividends to your company in ways you can’t imagine.

For his answer, Allan Shaw will receive a copy of Branding Only Works on Cattle: The New Way to Get Known (and drive your competitors crazy), by Jonathan Salem Baskin.

Have a question for your fellow entrepreneurs? Send it to Peer-to-Peer.

Originally appeared on PROFITguide.com