Recession is defined as an overall slowdown in the economics of a country, region or the world over a continual period of time. It is the time when companies as well as employees experience a low morale on the work and compensation front. Companies may also find it more challenging to appraise, motivate and empower their employees.
During times of slowdown, if employers stop communicating with the employees, it may generate doubt, fear and mistrust among employees. They may fear their stability in the organisation and reduction in remuneration. This could lead to loss of interest in their work and lack of understanding of what is expected of them, which ultimately will affect motivation and results.
During times of recession, it is very important to continue the process of performance appraisals. Yet with this process comes the risk that as a result of feelings of insecurity among the employees, performance appraisals may be seen with hostility. Employees expect the worst in terms of redundancies, increased working hours, reduced or zero incentives.
Listed below are some simple yet very valid reasons for maintaining the performance appraisal process during times of recession:
Open Communication
During recession, usually employees have doubts and fears about the health of the company and its consequences for their future. This affects their motivation and work and therefore their output. One way to deal with this problem is an effective performance appraisal. If a performance appraisal could be used to do more than take the stock of the employees' performances only, if it could also be used as a form of open communication about the situation of the company so that there are no rumors or complaints of information being held back, this could have the positive effect of promoting trust in the employee, which ultimately leads to greater commitment and performance.
Employees often feel insecure during such times, it is important for the company to be honest and transparent. This then gives the employees the knowledge and therefore the choice to realise that for the company to progress and be competitive during such times of crisis, it is important for all of them to work together. Therefore, this can only lead to a win-win scenario.
Division of the Smaller Pie
A company is responsible for finding ways to bring the employees awareness to the realisation that the profit pie is smaller during recession times and so the division of income will be reflected accordingly, without implying threats of job losses where this can be avoided. Where possible, alternatives such as non-cash incentives for senior employees, health benefits or education benefits for their children can be used to motivate them. Some companies also use the strategy of performance based pay to support their employees. This promotes learning, creativity, innovation and problem-solving in them. An atmosphere of encouragement and positive feedback is much more inspiration for the employees.
Remind Them of Good Times
This is a very old time tested method. When the employees are called for appraisal during slowdown, it is very inspiring to them to be reminded of the times when the company was at the peak of success. It generates a confidence which might have wavered during the slowdown. Reminding them of what they are capable of doing is something that will affect their way of working and the outcome. It will help the employees steer the company through the hard times.
Positive Aspects of Recession
During times of recession, employees expect major changes in the company in terms of working hours, payments, number of personnel, policies and strategies. On the other hand, this is a good time to implement innovative changes in the company due to such a state of mind of the employees. An appraisal can become a platform for the employees to discuss imaginative ideas about new policies, new strategies, new services and products to be applied in the company.
Reducing Appraisal Cost
Another way of performance appraisal is to keep it simple. Companies may cut down the budget on appraisals. Some companies go for online appraisal to reduce costs and save resources.
Use Appraisals for Improvements
Performance appraisals can become a platform for employers to take ideas from employees on how to stabilise the company during such crisis. It will generate great ideas as well as help involve employees to give them a sense of belonging.
Companies have better chances of surviving the recession when the employers and employees work towards its betterment. This can be done when employers and employees work towards a common goal of sustaining their company in the competition during recession. Effective appraisals should be able to guide a company through the tough times of recession.
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