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Budget Cuts for Company Culture is Risky Business

By June 26, 2020July 20th, 2020No Comments

Has your company cut the budget for training, communications and employee engagement due to the pandemic?

You might want to reconsider. Cutting these items may seem like a good way to tighten the purse strings during a business contraction, but you may be doing long-term damage to your company culture.

Your employees are your lifeblood, and cutting the very tools you need to maintain and improve productivity, stability and profitability is counterproductive. If anything, you need to increase spending on these aspects of your business.

Uncertainty creates enormous stress and morale issues among your employees, and your team needs more hands-on attention to reduce anxiety and confusion. And the lack of face-to-face communication while employees are working from home exacerbates underlying problems that may have previously existed.

If you’ve already made these budget cuts, here are some yellow-light caution signals that you should watch for among team members. If you detect these signals – or if existing problems get worse – it’s time to take action.

Yellow Indicators

  • Complaints about communication: These can take many forms – that there is too little communication or that messages come too often and are worthless. There may be lower participation on phone or video calls. You may hear complaints that management says one thing and does another. There may be strained interactions between managers and team members, or team members turn into “yes” followers instead of sharing ideas and feedback as they had before.
  • Gossiping: You may hear that employees are complaining among themselves because they have confusion, stress and anxiety about what is going on, or that they feel burned out. Different employees receiving different information compare notes. There is more passive-aggressive communication verbally and in email. Employees may complain about work-life balance.
  • Business growth slows even though your competition is still growing.
  • Rapid employee turnover: Positions become harder to fill. Managers may address employee concerns with unhelpful comments such as, “They’re lucky to have jobs.”
  • Negative reviews on the website Glass Door increase.
  • You have a “gut feeling” that things are changing for the worse.
  • Management pushes unrealistic deadlines and workloads.
  • Management makes comments that the team is lazy, unproductive or unresponsive.
  • Employee resentment builds up.
  • Accountability slides and becomes more difficult to enforce.
  • Team appreciation, recognition and rewards are discontinued or are not consistent.
  • Emotional intelligence declines and there is little empathy.

Fortunately, not all businesses are cutting culture budgets. Our own informal request on a popular listserv for comments about the importance of culture during the pandemic produced 56 responses from companies whose average size was 300 employees. One company had more than 7,000 employees, and a few had fewer than 50. All of the companies have increased spending on training, communication and employee engagement by 25 percent, and some said they had increased their budget by 300 percent.

Companies responding said they were increasing their attention and budget on employees to support the mental wellbeing and health of their team members and to help them balance their personal lives. They expressed a desire to get everyone involved in shared leadership through seeking their teams’ ideas and input on workplace changes, training and communication. The reasons for their increased emphasis were retention, deeper employee engagement and solidifying their culture or making intentional shifts to improve it.

If you are not among the companies that have maintained or increased your spending to improve your company culture, watch out for these indicators that employee engagement is dropping. It is time to take charge of your company’s stability, profitability and growth by intervening with a well-designed and expertly implemented program to correct deficiencies.

7 Shelley Smith 2017 (9)

Shelley Smith

Social Science Officer