Managing During a Downturn

Keeping Morale up When the Economy Is Down

Managing During a Downturn - Keeping Morale Up When the Economy is Down

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Keep your people feeling positive even when facing a downturn.

During times when the economy reaches a low point, many businesses may have to rationalize and downsize their operations to survive.

The impact of these changes is likely to affect you as a manager.

People may be uncertain about what might happen, and managing the mood and morale of your team – and perhaps the ups and downs in people's productivity – may sometimes feel like a rollercoaster ride.

You're probably expected to keep your team members motivated, just when you have little to motivate them with – and keep morale up, when there's little good news to spread around.

So, what do you do in these situations?

Fortunately, there are some strategies you can use to handle the tricky task of managing your team in a down economy. In this article, we cover key areas like communication, morale, and focus, and offer up some ways you can keep your team going in the midst of this chilly economic climate. And, of course, these strategies for motivating your team can also be used when the economy is more buoyant.


One of the first things to happen when economic conditions are difficult is that the rumor mill starts turning. When things are so uncertain, fears and rumors can ignite with a spark, and, if not contained and dealt with, can spread through an organization quickly.

While you may need to talk with your bosses about how to manage the situation, try to keep any 'closed-door sessions' and private conference calls to a minimum during this time. Why? Well, because all the cloak-and-dagger secrecy is likely to incite fear, spark rumors, and lower morale. Your team may assume the worst if they suspect something's up. It's therefore often a wiser strategy, where possible, to keep them in the loop.

Here are some tips to help you keep the lines of communication open:

  • When talking with your team, speak honestly. By attempting to make things sound better than they really are, or by sugarcoating some of the details, you could run the risk of building distrust among your team. Keep things as transparent as you can; people deserve to know the truth – or as much as you're able to tell them.
  • If you do have some bad news from an organizational perspective, then tell it to your team all at once. Withholding information, or letting it 'trickle out,' can make it look as though you've got more to hide. This may increase your team's stress and frustration, as they wonder how much more bad news they'll have to take. They will therefore appreciate you keeping them informed.
  • If there is bad news for particular individuals – for example, if you have to make redundancies – then make sure you handle this situation sensitively. For more advice on delivering bad news, read our article on how to handle a redundancy situation with honesty, respect, and dignity.
  • Make sure you, and other managers, are well informed enough to answer questions from your teams. Communicating information in a clear, concise way will help avoid misinformation and half-truths, both of which can fuel the rumor mill.
  • Negativity and complaining is unproductive. If you allow it take place in meetings, this can imply that you approve of it. If some of your people do persist with negative talk, attempt to change the mood by focusing the conversation on something positive, or on something that's in their power to change.

If you'd like more information about communicating during difficult times, read our article Communicating in a Crisis.


During a recession, morale can be a problem. Your team might see their friends or colleagues lose their jobs, and they might feel stressed at the prospect of losing their own. How can you keep their spirits up without taking a 'Pollyanna' approach (where you put a positive spin on everything), or glossing over the situation?

Well, let's start with this question: How do you know your team members are stressed? Do you know the typical signs and symptoms to look for?

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Here are some common signs that your team might be experiencing stress and/or low morale:

  • Productivity from your top performers is down.
  • Your team members have more health complaints like headaches, muscle aches, fatigue, weight loss or gain, or acid reflux.
  • Emotional extremes like depression, being overly defensive, and easily angered are showing up in people who don't normally exhibit those swings of behavior or mood.
  • Some team members are isolating themselves from the group.

If you notice any of these signs in your team, then you know it's time to take action. You may need to involve your human resources department at this stage, to make sure you deal with stress in the most appropriate way. For more on stress and how it affects you, see the Mind Tools Stress Site.

When it comes to your team as a whole, however, the challenge may be bigger. After all, the days of outlandish parties and group trips may be restricted – at least for a while. If that's the case in your organization, what can you do to boost people's motivation levels? Here are some suggestions:

  • Get creative in your compensation. Many surveys suggest that people would be willing to take a pay cut in exchange for more time off. If you do need to trim budgets, ask your staff if they'd be willing to consider this course of action.
  • You could also consider offering team members the opportunity to work at home some days. This can be a great way to show that you trust people, and would like to reward them for all their hard work. Another cost-effective perk is to offer your team a longer lunch break, to give them time to get some exercise, eat, and relax.
  • Remind people that they matter. If it's the case that there are now fewer of them, it means that their ideas and suggestions may have even more power and impact than before. They may have a greater opportunity to make a difference in the company – and now's their chance to get started.
  • As a manager, don't forget that you have an enormous role here. When someone on your team does a good job, sincerely thank them for their efforts. When someone solves a difficult problem, or completes a tricky project, praise them in front of the group. You have the power to make your team feel great about what they're doing. Don't forget the simple power of 'thank you.'

If you'd like to learn more about low-cost ways to reward your team, read our article Rewarding Your Team.


It might be challenging to keep your team focused in the midst of any upheaval going on, especially if your company is restructuring, or making people redundant.

With all these distractions going on, how can you make sure that people concentrate on their projects and objectives? Here are some tips for you to try:

  • If you want to keep your team focused, then you must start with yourself, and lead by example. Your team looks to you for guidance. Staying focused and in control shows them what you expect, and gives them an example to aspire to.
  • Keep setting goals. If your team has something real to work towards, it will help keep their attention on what needs to get done.
  • Remind everyone that this, too, shall pass. It may seem cliché, but it's true. Busts are generally followed by booms, which tend to be followed again at some point, and on some level, by busts. This is just another business cycle, and it will be over eventually.

Key Points

During a downturn – especially when your organization is considering restructuring or redundancies – it's vital to prioritize communication. Your team needs to be kept informed, and it's therefore better to tell them what you can, when you can.

If you do have bad news to share, then communicate it appropriately, to the people that really need to know. Encourage your team to talk about issues they're having, and be aware of signs of stress.

When it comes to boosting morale, get creative. Offer perks like longer lunches and tele-commuting to reward good performance – and don't forget the power of 'thank you' for a job well done.

However, don't allow attention – or standards – to slip. Processes and procedures may need to adapt to new economic conditions, but that doesn't mean they can be any less robust. You may even make some constructive changes during the downturn that will leave you in excellent shape when the economy is once again booming.