How to maintain employee morale during a recession

December 6, 2022


Recessions can be disastrous for employees. They often mean organizations have to reduce spending, and this is usually achieved through reduced salaries and suspended promotions or bonuses at best, and mass lay-offs at worst. Understandably, this can cause a lot of anxiety for employees, which results in lowered workplace morale.

Many economists predict that dismissals won’t be the solution during upcoming recessions. This is because there are currently hundreds of thousands of job vacancies, and unemployment rates are very low. So, rather than cutting filled jobs, employers will likely put a temporary halt on filling jobs.

However, the rising cost of living (such as increased groceries and fuel prices) that are typical of recessions will likely still result in decreased enthusiasm, employee engagement and team spirit. All of these components are essential for business productivity and, therefore, need to be maintained — especially during a recession.

How can you, as an employer, achieve this? Here are several strategies to consider:

Communication is key

As Textio explains, communicating openly and honestly with your team is essential during times of economic downturn. Leaving employees in the dark is a surefire way to foster mistrust, which is a one-way ticket to low employee morale. By contrast, being transparent about what’s happening in the business helps foster confidence and certainty — even if the news or updates aren’t necessarily positive.

Implement support programs

Although you should always offer your employees some kind of assistance, providing it is critical during financially tough times. According to Workplace, some ways you can give your workers aid include:

  • Individualized support: Hold regular one-on-one meetings with your team members to understand what they need and how you can best accommodate them.
  • Financial and legal advice: Some workers may encounter difficulties with paying rent, utility bills, loans and other debts during a recession. These can often result in legal issues. If this is the case, you can help them by offering financial and/or legal counsel at the workplace, according to the Society for Human Resource Management.
  • Child care: Many employees will need to work overtime if they take on additional roles and responsibilities. You can assist parents (and other people with dependents) by subsidizing family care.

Prioritize well-being

Burnout and psychological stress associated with severe economic downturns can result in poor mental and physical health. You can mitigate this by granting paid time off and sick leave to help employees recuperate and perform to the best of their abilities. Also, consider offering on-site psychological counseling and health insurance to make sure they receive the medical care they need to stay in top shape. Lastly, respect boundaries by keeping work to business hours and taking care not to disturb employees during their time off.

At the end of the day, demonstrating empathy is how you keep employees engaged, optimistic and invested in their organization’s success beyond just earning a paycheck.