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Worried that a jittery market will lead to jittery employees, some chief executives are scrambling to ease workers' worries about a potential new recession.
From company memos to "town hall" meetings, corporate leaders are looking at how they can jack up morale in the work place. At the same time, many are dealing with employees already skeptical of management—given the rounds of layoffs in recent years—and must choose their strategies carefully.
A voice mail distributed to Citigroup Inc. employees by CEO Vikram Pandit last week after a huge hit to the company's share price acknowledged that the market drop was reminiscent of those during the financial crisis, but said that there is "little similarity between now and then."
Mr. Pandit's voice memo didn't calm nerves, according to one global markets analyst for Citigroup. "What else are you going to say when something like that happens?" he said, adding that some workers in his group, which is just completing an eight-week training program for new employees, are worried that jobs won't be available for them when they finish.
"We believe it is critical to communicate with our people and our clients during challenging times so they know how our CEO sees the situation," said a Citigroup spokeswoman in an email.
Manager communications can sometimes have the opposite effect than what they intended, said Florida State University management professor Wayne Hochwarter. "People think they only get things like this when either the company is really bad or the company thinks morale is really bad," he said.
"I don't want to change happy to glad or make sudden moves. We have to figure out if there's a 'new normal' once again."
Gary Burnison
CEO, Korn/Ferry International
"We want to reassure everybody that we're
doing fine but that doesn't mean we won't make tough decisions."
Jeff Joerres
CEO, ManpowerGroup
Managers are facing a work force already demoralized by the prolonged economic downturn. According to a recent Reuters/Ipsos survey, 47% of Americans think "the worst is yet to come" in the economy.
Meanwhile, a July survey of 1,200 senior executives by Corporate Executive Board, a research and advisory services firm, found that 32% of executives think headcount at their companies will shrink in the next 12 months. That was up from 19% in the first quarter and the highest it's been since the end of 2009, when 41% of executives thought it would shrink.
On a call last Tuesday morning with brand presidents, Furniture Brands International Inc. CEO Ralph Scozzafava said he cautioned against making any sudden shifts in strategy. The company's share price had dropped almost 7% the previous day, slightly more than the Dow Jones Industrial Average.
During the downturn, the St. Louis-based company—which includes furniture lines such as Broyhill and Thomasville—underwent a significant restructuring that resulted in a 25% reduction in its work force since 2007.
"[The poor economic news] definitely affects morale everywhere. If this were to go on longer, during town hall meetings I expect I'll be answering the same kinds of questions I was two or three years ago," Mr. Scozzafava said.
Mr. Scozzafava said he plans to hold a town hall meeting in the next two months to reassure employees the company will stick to its current readjustment plans. Furniture Brands is also in the midst of a voluntary retirement program, and executives don't plan on layoffs no matter how many employees subscribe, Mr. Scozzafava said.
ManpowerGroup CEO Jeff Joerres held a call with about 150 senior managers last week in part to discuss how they should respond to the recent malaise. They were told to put nonessential projects, like IT initiatives, on hold and to pause spending whenever possible, Mr. Joerres said.
"We want to reassure everybody that we're doing fine but that doesn't mean we won't make tough decisions," he said. During the recession, ManpowerGroup consolidated offices and laid off staff, ultimately cutting costs by about 18%, Mr. Joerres said.
Though he doesn't think recent economic news indicates a slowdown as severe as in 2008, Mr. Joerres said he plans to wait a few weeks before sending out emails or other communications about economic conditions to the company's 35,000 employees—in case things get worse.
Many are choosing the cautious route. At executive search firm Korn/Ferry International, CEO Gary Burnison two weeks ago called for all area managers to reassess the economic environment in their locales and come back in a month with new projections and growth plans.
Until now, Mr. Burnison said, Korn/Ferry had pushed for big expansions in Europe and Asia, both areas that he believes might be weaker than originally expected. After the reassessments, he plans to hold town hall meetings and email employees to let them know how the company's course will change.
Between 2008 and 2010, Korn/Ferry's work force contracted almost 15% to 2,200, but had grown again to 2,463 employees at the end of April. "I don't want to change happy to glad or make sudden moves. We have to figure out if there's a 'new normal' once again," he said.
Companies that rely on government spending have a bit of a headstart when it comes to boosting morale, since they've had to cope with employee jitters for the past six months as Congress debated budget matters that could impact them.
Last Monday, BAE Systems Inc. chief executive Linda Hudson wrote a message to the company's 46,000 employees asking them to "let those of us in Washington, D.C., deal with the worrying, the policy makers and the pundits."
A company spokesman said that during the debate over the debt-ceiling, Ms. Hudson regularly wrote to employees to update them on how BAE was affected and expected those regular communications would continue.
Write to Joe Light at Joe.Light@wsj.com
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