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Maintaining Employee Morale

How much of the cost of insurance do you spread to employees? Also, how do you keep morale up after cutting out overtime, freezing wages, stopping the 401(k) match and then asking employees to pick up more of the insurance cost?
                                       — Kelly Gunn, Human Resources Manager, Garrison Service Company (Nashville, TN)

Chuck Frank: We try to keep our team educated and aware of what is going on in the world. We provide highlights to what is going on within our own industry and what is going on within MHEDA. We share our fixed and variable expenses along with year-to-date financials, which helps them understand the importance of expense control. We meet every Monday from 8:00 to 8:30 a.m. to review our sales pipeline, what projects we anticipate closing during the month, what new projects we anticipate bringing in that require engineering assistance and any updates specific to our competitors, business partners and clients. I hope we are communicating often enough for all of our team to know that we are doing everything we can to push through these tough times.

Brad Baker: Most of our employees are aware of what is happening in our economy and are more understanding than we thought they would be. We pay an equal dollar amount for all employees who choose our insurance plan. We set employee deductions at rates that retain good employees but encourage spouses to take coverage from their employer. The idea is not to subsidize the health care burden of other employers. This is, of course, easier said than done. One thing we worked hard on was educating our employees on the advantages of high-deductible health plans. It is easier to convince someone to potentially pay more when they understand that they will really pay less unless they actually spend the money. Everyone will have a bad year sometimes, but the employee spends much less over time thanks to lower premiums and tax advantages.

Scott Hennie: It is imperative for ownership and management to continually communicate what is being done and why. While delivering these messages, it is very important not to make any promises that you can’t control. For example, do not give dates when things will “return to normal” or state that “these are the only cuts we’ll make.” Ownership and management need to be truthful, forthright and realistic in communicating the state of the business and the decisions that need to be made to keep the business strong. People appreciate knowing what is going on and appreciate being informed of the things that can affect their lives.

Relative to health insurance costs, Jamey Keys, our director of human resources, states, “There is no good answer to this question outside of busting your butt to get competitive quotes from multiple insurance carriers so that you can keep your premium increases at a reasonable level. You also have to be willing to change carriers if that’s what it takes. It’s a pain to go through, but, ultimately, employees are more concerned with keeping their premiums and out-of-pocket costs low than who the carrier is.”

The MHEDA Journal features a question-and-answer column in each issue. The Board of Directors share their knowledge and expertise by responding to questions posed by Distributor members. If you have a question for the Summer 2009 issue, please contact Rebecca Hein at MHEDA by phone at 847-680-3500, by fax at 847-362-6989 or by e-mail at rhein@mheda.org. Distributors who submit questions and the responding Board members have agreed to have their names published. If you would like to ask the Board a question and have the participating directors respond directly and confidentially to you, please indicate your preference for privacy when you submit your question.

Scott Lee: Keeping employee morale up during these challenging times is not easy. A cold-hearted manager tells employees to quit complaining because they’re lucky to still have jobs. A warm-hearted manager promises that everything will be OK and makes no adjustments to the staff, benefits or health insurance. Meanwhile, those same costs force him to close and everyone is out of a job. The best practice lies somewhere in the middle. It’s important to make sure everyone in the organization understands what’s happening in the global economy, here in the United States and in our industry, and how it all directly impacts your company. Only then will they understand that everyone is making a sacrifice to maintain a healthy organization. This information must be conveyed to everyone-often and consistently. Use the same metrics every time so they can see trends.

If they own a TV or radio, they likely already understand the cost impact that health care can have on a company. If you’re not comfortable sharing exact dollar amounts, plot the increase percentages on a graph over the last 10-15 years and share that during one of your meetings. It may help with the illustration to show the change in revenue over the same period of time.

Mark Milovich: Be very upfront and honest with your employees. Show them all the numbers. I have meetings at the end of every quarter and lay the P&L on the table. We go over the numbers, where the expenses are coming from, where the revenues have dropped, etc. We share where costs have been reduced or eliminated and other ideas we are considering to cut expenses and maintain margins. We discuss areas of opportunity and what the sales force is working on. If employees see that management is being proactive in trying to reduce costs and save jobs, they will feel a little better and have a better understanding of where the company stands.

Educate your people. There are many half-truths and outright lies regarding the state of the economy and what is being done to start a recovery. Do your own research on what the government is doing and share that information. The more your employees know, the more they will understand and appreciate what management is doing. Answer any questions posed as honestly as possible.

Be positive! Revenues may be down, but let optimism rule the day. A “we-will-prevail” attitude goes a long way. Control your emotions. Never let them see you sweat. Save worrying for someplace other than the office.

Today, most people are happy to still be employed and have accepted the fact that increased insurance costs and reduction of benefits are necessary evils. If they understand why these things are necessary, it will be easier for them to swallow.

Participating Board Members
Chuck Frank, AHS Inc.
Brad Baker. Cardinal Carryor
Scott Hennie, Hy-Tek Material Handling
Scott Lee, Conveyor Solutions
Mark Milovich, Lift Atlanta
Steve Strifler, Cisco-Eagle
Jerry Weidmann, Wisconsin Lift Truck

Steve Strifler: We tie such activities to financial benchmarks that trigger their execution and recovery. Long ago, we made our 401(k) match a quarterly performance decision. We have to produce X amount of quarterly net operating income for the 401(k) to be matched the following quarter. Everyone knows it.

This may not improve morale, but I believe it makes the actions more acceptable. We practice open book management, so all of our employees see all of our numbers twice a month. They know what actions will be taken, both negative and positive, as those benchmarks come into play. As an example, in April we hit a benchmark that triggered a ten percent pay cut for all of us. Everyone knew the consequences if we were to hit that mark. At the end of July, we hit the benchmark that restored their pay. Again, everyone knew what had to be achieved for that to occur.

Our insurance team made up of non-senior leadership personnel makes insurance decisions. They are given a budget at the beginning of each fiscal year and are then responsible for discussing potential options with their peers throughout the company and making a final decision on how the money will be spent. Through that process, our employee benefits and options have remained relatively constant, but we have all had to pick up more of the cost for our families.

Jerry Weidmann: We hold quarterly meetings with employees to review the economy and its impact on our industry and our company. We’ve explained that we will continue to make the necessary changes in staffing, wages and benefits required to respond to the recession. In the case of health insurance, we aim to control costs by encouraging healthy behavior. We have significantly lower premiums for individuals who work to maintain their health. Over the past four years, we have increased the difference in cost between those who work to maintain their health and those who do not. Our goal is to have employees pay 25 percent of health care costs and the company pay 75 percent. If our costs rise and cause a significant shift in this percentage, we make the necessary changes to the employee contribution.

It is our policy to be upfront with our employees about how this economy is affecting our company, to keep them informed of health care cost issues and to treat our workers fairly. Morale in these difficult times will always be a challenge, but we believe that keeping employees informed and being honest and fair in your methods will achieve the best morale attainable for these times.

Material Handling Equipment Distributors Association

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