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Highlights of: How to Manage Your Team in a Downturn
"Layoffs have truncated staff; cost-cutting measures are threatening projects, and morale is in the toilet. From the manager's perspective, getting the most out of employees in this kind of environment can seem like a Sisyphean task. In fact, it's a perfect opportunity to rejigger processes and fix what's broken — and managers are uniquely positioned to do just that. Here's how being candid with your employees, rewarding them in creative ways, and enlisting them to help make hard decisions can not only keep your team motivated but pull your company out of its slump.

"It's easy to blame the economy for all the reasons a company is suffering: Customers are cutting back on their expenses, advertisers are trimming their budgets, and stock prices are sliding. These problems may, in fact, be attributable in part to the downturn, but going with the "It's the economy, stupid" defense sends a subtle but potentially dangerous message to employees: It implies that the situation is totally out of the company's hands and left in large part to fate. This is exactly the kind of attitude that raises anxiety levels in the office and disrupts employees' focus on the problem at hand: turning business around. Have the confidence to not completely blame the economy. If employees believe that leadership can break things, they'll believe that leadership can fix things, too.

"An e-mail from the top explaining why the company is in the red can't tell employees much, which means mid-level managers need to be the interpreters. Speak to employees in small groups and be as candid as possible about where the company stands. This is also a good time to suss out any rumors. Organize quick events to ask what people have heard and to answer any questions they have.

"If you normally work within the confines of a walled office while your team toils away in the cube farm, grab your laptop and set up shop in a cubicle near them — even if it's only a couple of times a week. Start showing up to the smaller meetings that you usually skip, or rearrange your travel schedule to cut down how much time you spend out of the office. In short, don't wait for employees to take advantage of an open-door policy. Go to them first, and ask how their work is going. This isn't about micromanaging — it's about knowing firsthand what they need.

"Traditionally, the top execs decide the strategy and let it trickle down. The problem with this tactic is that it rarely makes the emotional case needed to mobilize employees around a common goal. This is about problem-solving and discipline, and that's where employees come in. Companies should be harnessing employees in the effort to identify where to cut costs and how. Here are four guidelines for involving staff in the process:

"Identify key influencers. If you're really going to mobilize people, you can't do it from the top. Find the key employees who hold sway in their departments and get them to embrace and spread the change effort. These are the people who know how things really work (not just the way they're supposed to work) and have a way of bringing together the right people to get things done.

"Let teams do the problem solving. Form groups around the influencers and motivate (rather than mandate) employees to identify what's slowing down business. Often the best place to start is to look for processes and bureaucracies that annoy the team. Set a basic timeframe to achieve cost savings, but let each group work at its own pace.

"Make it a conversation. Schedule brown-bag lunches or other informal venues to talk to employees about their findings and where they might be hitting roadblocks.

"Follow through. Many cost-savings programs fail because management implements the initiative only halfway or lets inefficiencies creep back after meeting short-term goals, which won't sit well with employees. Adopt the changes wholesale or not at all.

"When the economy's bad, it's easy to think that employees are grateful to have jobs at all. But layoffs and budget cuts may cause good workers to look for better opportunities. Give them a reason to stay by making room for them to keep advancing their careers. Keep critical talent moving — not necessarily up, but growing in experience, responsibility, money, or other tangible and intangible ways. If promotions or raises aren't possible, give good workers the chance to make a lateral move or to take on a struggling department.

"The problem with a downturn is that while cost cutting is absolutely necessary, it can make everyone gun-shy about pursuing new initiatives and opportunities for investment. However, if your department, and in turn the company, is going to emerge from the slump in a competitive position, there are a few key investments you can't afford not to fight for now: Customers, Research and Development, and Vendors/Partners.

"Employee bonuses and raises are among some of the first expenses that upper management cuts during a downturn. But even if extra compensation isn't in the budget, that doesn't excuse managers from rewarding employees. Lack of recognition — both financially and verbally — is one of the things that does the most damage.

"One easy, no-cost way of recognizing valuable employees is to improve their quality of life. The best reward you can give people is autonomy over how they spend their time. That means giving employees your trust and the flexibility to work at home (or wherever suits them) whenever they want to — without any judgments.

"Keeping your employees engaged doesn't mean rewarding them just for doing their jobs. The most effective rewards are significant but well deserved. Libby Sartain became head of Yahoo's human resources department in 2001, just as the company received a hard knock from the dot-com bust. She decided that instead of quietly giving large bonuses to overachievers, which wasn't providing much bang for the buck, Yahoo needed to regularly single out the top 15 to 20 stellar individuals and teams — not only to reward them, but to help the rest of the company understand what made these employees outstanding.

Bottom line: The keys to managing through a downturn are transparency, employee buy-in, constant attention and informal meetings.

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