Explain why
Administaff is in pretty good financial shape, even during this financial crisis. There is still money in the bank, working capital and no debt.
Bu
t the economy still affected the company, and Sarvadi had to make changes.
“Our customers are affected, therefore we’re affected,” he says. “We’ll still make money. We just won’t make as much money. But in this environment, even though we have that type of financial standing and capacity, it still made sense for us to take a conservative view of the next couple of years.”
Sarvadi gathered with his executive team and they walked through what a conservative approach would look like, and then communicated with the next level of management the new approach.
Making cutbacks when a company is doing well can send a wrong message and leave employees disgruntled.
“We made a bunch of decisions that are not popular,” he says. “We froze wages; we decided to not replace folks and allow attrition to take place. We cutback on the 401(k) match. We did a number of things that a lot of companies are doing these days just to be conservative and to make sure the company stays in good financial shape through the downturn.”
Decisions, especially unpopular ones, need to be explained if you want a positive culture where people are empowered. You can’t expect people to hear what you say, be happy and then just go back to work.
Instead of just sending out a memo explaining the changes, Sarvadi and his team took a whole company meeting to explain why they were scaling back.
“A lot of times leaders don’t take the time to explain why,” he says. “When people understand why, then they help figure out how more effectively than they would if they don’t understand the why.”
Not everyone is going to love the decision or even the reasons why, but that doesn’t mean you keep it a secret.
“But at least people say, ‘Hey, you know what. They have the guts to just tell us like it is, and we just have to live with it.’ But that’s better than people wondering what’s going on behind the curtain,” he says.
You shouldn’t wait for bad news to start communicating. Keep the lines of communication open at all times to engage employees and find out what’s on their minds by giving them the opportunity to ask questions.
Every month, Sarvadi has a meeting with the entire staff, and they broadcast it throughout the country. Employees can ask whatever questions they want anonymously. They submit them in advance and Sarvadi reviews them and answers as many questions as he can in the time allotted.
“What happens is many of these questions give an opportunity to answer the question in a way that supports and reinforces our leadership philosophy,” he says.
Aside from unpopular decisions, there may be other topics people want to know about. The more questions you see about a specific topic will give you a better idea of when you need to explain the reasons behind a decision.
“Part of it would be just when you are making a decision that impacts a broad number of people or when it’s a change to the strategy or direction or a change to a major objective,” he says. “Then, beyond that, it would just be things that kind of bubble up. You can have more of the same kind of questions bubbling up from two or three different parts in the organization.”
Using examples will also help in getting your point across. In Sarvadi’s case, when he announced some of the changes, he also told everyone that the off-site training sessions he normally has for his management team would no longer be off-site to save some money. It shows that management was serious about its decision but that it also wants to meet the company’s goals and objectives for the year.
“Really, it was amazing how people were able to apply that thinking in their own part of the business and have tremendous results and control of the expenses,” he says.
It also shows management leading by example. That, coupled with explaining yourself, will go a long way in creating a trusting corporate culture.
“I don’t think you can have a V.P. of corporate culture because everyone has to be the V.P. of corporate culture because anyone of us can create an environment that’s counter to the culture,” he says. “So, it’s a matter of everybody owning it. But, they can’t own it if they don’t know what it’s about. If you’ve never described it fully, if you’ve never explained why it’s important to you and the business, then why would anyone care?”
How to reach: Administaff Inc., (800) 465-3800 or www.administaff.com
