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Managing Employees on a Minimal Budget

Managing Employees on a Minimal Budget


June 18, 2009

Today’s managers are charged with getting the most out of workers no matter what. But the reality is that many managers must coax top performances from their employees while working with a minimal budget that may require salary freezes; cuts in benefits, bonuses or perks; reductions in hours; or even layoffs.

If you’re faced with a less-than-optimal budget situation, follow these tips to minimize the damage and keep your team motivated.

Don’t Let Budget Dictate Management Strategy

“A manager’s job is to make his or her employees look good [and] make their life easy by providing everything possible to help them do their jobs,” says Brian Dema, who manages both people and budgets as part of his job as a senior consultant and director of sales and marketing at Walker Sands Communications. “This doesn’t always take a lot of money to do — just a bit of extra attention and thought to ironing out the kinks in how your business runs.”

Steve Kass, Robert Half International district director, says budgets shouldn’t dictate how much a manager should work on motivating the team — motivation must be a constant priority. He says it’s important for managers to show that success depends on a collective effort. If employees know their supervisors are working hard for them, they’ll work hard for their supervisors, regardless of a bare-bones budget or other factors.

If a company starts to show signs of budget trouble, such as by taking extra time to fix office equipment or changing that once-large holiday bonus to a Starbucks gift card, morale can drop, and employees may begin to lose faith in the company. This is the biggest issue managers face when budgets are slashed, says Kathy Gillen, president of executive coaching company The Gillen Group.

However, a manager can play a key role in employees’ attitudes, Gillen says. “If the manager’s internal dialogue is negative, the entire team is affected,” she explains. “You’ll hear things like, ‘I can’t believe this! Why can’t they pay a living wage? I have to work twice as hard now.’” But when the manager comes across with a positive attitude — for example, by saying, “OK, how are we going to make this work without long hours?” or “How can we make this fun?” — the results can be amazing, she adds.

How to Handle Budget Cuts

Robert Mortimer, a media communications manager with, a UK-based business and finance resource for individuals and small businesses, recommends that managers consider these tips when dealing with budget cuts and the resulting morale issues:

  • Talk to senior management about budget cuts. You may be able to escape your share if you put forward a convincing argument.
  • Try to avoid wholesale changes. Ask senior management for structured reductions over time.
  • Take some time to reassure remaining staff that their jobs are safe; explain the market issues that forced the cuts. Mutual understanding and a desire to get back to normal will rub off on your employees.
  • Assign your top staff members to the most important tasks; redeploy staff to new tasks if doing so would benefit the team.
  • If the changes are not truly destructive, remember that good staff will adapt.
  • Be consistently positive as you manage and lead.

  • Even if you can’t provide monetary rewards, you can still reward, honor and motivate employees by doing little things. Thanking your workers in front of the group, sending a thank-you email, giving workers the afternoon off or buying your staff lunch can go a long way toward keeping workers happy.

    Kass says Robert Half research has found that saying thank you is one of the most popular forms of recognition for employees. “Showing you appreciate their efforts can go a long way toward inspiring them,” Kass says.

    Dema agrees. “With less money to throw around, you have to be an even better manager and find any way you can to reward your employees, to show them how their efforts are helping the company as a whole,” he says. “Go beyond pep talks and speeches, and show them evidence of how what you are doing is making a difference.”