Frayed nerves in the workplace

Companies find ways to ease employees' economic fears

Senior executives offer advice to help employees weather a weak economy.


    1. Above all, focus on the work. Having government contracts is the best way to persevere in bad economic times.

    2. Recognize that even if your workers are fully employed, they might have friends and relatives who have lost their jobs or homes, and that affects their morale and could affect how they perform their jobs.

    3. Meet with your managers and be open to adopting new human resources programs.

    4. Monitor the increasing cost of living in your area and try to adjust salary scales accordingly.

    5. Consider several cost-savings programs for employees such as subsidized parking,
    participating in discount transportation fares programs and pre-tax commuting payroll savings accounts.

    6. Encourage carpooling and flexible work schedules, including telecommuting.

    7. Recognize exceptional work with on-the-spot bonuses and planned, companywide awards. Also use bonuses to encourage employees to recruit qualified workers.

    8. Show personal concern for your employees by announcing the steps the company is taking to help them.

Although the information technology needs of federal agencies "continue to grow rapidly, the funding and policy environment is increasingly unstable." So says a Grant Thornton LLP report on the state of the government contractor industry in 2008.

Nevertheless, government contractors remain bullish on the future of the federal market. "Right now, the U.S. federal budget is still growing," said Paul Cofoni, president of U.S. operations at CACI International Inc. He foresees continued strong growth in the next three to 10 years, especially in the areas of counterterrorism, security services and intelligence.

Or as Jim Regan, chairman, president and chief executive officer at Dynamics Research Corp. (DRC), put it, "The work's there. The impact of the economy occurs on your employees."

If the general weak economy were to last long enough, Cofoni said, the government would be pressured to do something, such as trim spending even in the areas he cited. "That could have an effect on us."

Companies that focus on solving their clients' big problems will survive and persevere even in bad economic times. That's good for employees, too, he said, "because the No. 1 thing a company can provide is some sense of job security."

"One of the things that I always tell my folks is we're fortunate that we're in areas such as health care [and the] federal government that tend to weather recession well," said Lee Carrick, president of Perot Systems Government Services. The government always needs outsourcing services, he added.

Negative effect on morale

Nevertheless, CEOs recognize that record-high fuel and food prices, declining home values, a weak dollar, and rising unemployment rates hurt employee morale.

In fact, the number of newly laid off workers signing up for unemployment benefits rose to 455,000 in August, the highest level since late March 2002, the Labor Department reported. In addition, the number of people continuing to collect unemployment benefits increased by 31,000 to 3.3 million at the end of July, the highest number since December 2003, according to Labor statistics.

Regan said that although DRC employees have good jobs, there has been a noticeable increase in the anxiety level, perhaps because of spouses losing their employment or elderly parents' retirement nest eggs declining in value. "From the human capital management perspective, we're in a watch phase right now," he said. "But it's certainly on our minds how [the economy] affects our people."

Regan cited the recent departure of a DRC employee whose long and expensive commute to and from the company's Andover, Mass., headquarters forced her to look for work closer to home.

"We have to be open perhaps to considering some things we didn't consider before," Regan said, including telecommuting, flexible work schedules, four-day workweeks or nine extended workdays rather than the customary 10-day, two-week pay period.

"We are pushing some of these thoughts around," he added. "But we haven't taken any action."

"Transportation is the biggest issue we have come across," said Shiv Krishnan, chairman and CEO of Indus Corp.

Meeting rising commuting fees

Krishnan said the company is helping employees with parking allowances and by participating in the Metro discount fare program. Indus is also monitoring employees' commuting costs more closely.

"We periodically look at how we can improve on the parking allowance that we give them for parking near their worksite," he said. "That is one small way in which we can help."

Recently, Indus increased its contribution "just to make sure [workers] have enough to cover their travel back and forth from the worksite," Krishnan said. "Metro allowances are something we constantly look at and increase and encourage employees to take advantage of."

Perot Systems has a companywide telecommuting policy. "We work to make sure they have the IT access they need, the phone, whatever they need to [log] in," Carrick said. "Obviously, besides helping to save money on gas, it does help a little bit on the work/life balance as well. Why not work from home for a day or two a week if you can?"

Perot Systems has purchased subscription rights to iCarpool, a Web-based program that helps workers find colleagues who live in the same neighborhood and form carpools. "We're not only encouraging people to carpool but we're giving them a tool that they can actually do that through," he said. "We pay for that, and it's free for the associates here."

In addition, carpool members adjust their schedule so they work the same hours, he said. And to help defray commuting costs, Perot Systems offers employees a pre-tax payroll savings account they can use for transportation.

CACI is also helping employees reduce commuting costs, Cofoni said. "We allow our people to connect to NuRide, which is a public Web site for commuting and finding people who have the same commuting patterns, helping them find ways to carpool."

He said CACI closely monitors how the cost of living affects employees and adjusts its pay scale to reflect the demands of the economy. "We are paying a little bit more in terms of salary increases than we were maybe a year or two ago."

Communication is the key

"Communication is important," Carrick said. He suggested that chief executives should personally announce what the company is doing to help its employees. "One of the things that I need to do is help the associates realize that I know what their economic impact concerns are," Carrick said. "I need to make sure they know we've got things we can help them with."

Cofoni said companies can help keep employees' morale high by recognizing outstanding work, which could also include a financial bonus.

"In times like this, it's even more important to recognize employee achievements," he said. "Once a quarter, we go to an interesting Washington venue and host a dinner for about 40 to 50 awardees and their spouses or significant others. This has a lasting impact on these people."

Krishnan agreed. "In difficult economic times, I constantly think about how I can better reward our employees," he said. Krishnan pays on-the-spot bonuses of $100 to $500 for exceptional work and confers regularly with his management team to find ways to improve employee benefits.

Recruiting bonuses are another way to reward employees, he said. "We're increasing the award. Recently, we had a reward program of up to $5,000 for certain positions which are very hard to fill."

Asked whether he believes the overall economy will get worse before it gets better, Carrick offered a sanguine assessment. The former Air Force officer advises company executives to keep an even keel and not act precipitously. "Part of that is my belief that we, the federal government, that is we the taxpayers, are not going to allow this to get too far out of hand so that it wrecks the economy," he said. Let's "just see how it goes. We have an election coming up. I think things are going to change."

Although CEOs express empathy for employees who are struggling and want to assist them, executives say they are limited in what they can do, particularly if they lead public companies. "Lending folks money or helping people in financial situations isn't part of the [business] model," Regan said, adding that such assistance to senior executives of public companies "is very frowned on. You can't do that."

David Hubler is associate editor at Washington Technology.

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