SOURCE: Kerge Consulting

December 02, 2008 10:30 ET

Expert Available: Recession's Hidden Challenge for Smaller Businesses

During Good Times, Entrepreneurial and 'Non-Corporate' Leadership Feeds Smaller Businesses; In a Recession, Small Business Leaders Must Become More Process-Focused

Maintaining Morale and Productivity in the Face of Potential Cutbacks and Layoffs Requires a New Level of Process and Professionalism -- a Tall Order for Many Small Business General Managers, According to Kathryn Kerge of Kerge Consulting

NEW YORK CITY, NY--(Marketwire - December 2, 2008) - Small companies can thrive on an entrepreneurial culture and a somewhat ad hoc approach to process and people management during good times. A recession adds a major, new burden beyond the obvious woes of retrenching clients and investors: the need to quickly and seamlessly become a bit more "corporate" and adopt "HR 101" practices.

"In rough waters, it's really hard for a small business leader to maintain stature as 'John the cool founder.' While it may be OK to give up some of that personality, what's really important is maintaining equanimity and adopting corporate practices that reinforce leadership credibility," said Kathryn Kerge, founder and president of Kerge Consulting, which provides human capital strategies to small businesses.

"Being honest, available, empathetic -- and also being systematic and organized if there are cutbacks and job changes -- prevent unnecessary erosion of morale, which is key in a small company. Remember, in this environment, especially during tense times, the leader is under a microscope," she added.

Ms. Kerge is available to discuss the mindset and steps that may help small businesses weather rocky times with the least amount of negative HR fallout. For instance...

  • Put standard HR policies in place now -- even if they seem too "corporate." If a company may be on the cusp of cutbacks, now is not the time to neglect HR policies: It's the time to put them in place. Standard attendance, vacation, performance review and benefits structures, for instance, will actually make employees feel more secure in a rocky environment. And, if a cutback is necessary, there's a procedure in place for it.

  • Know who's performing and who's not: Establish a formal employee evaluation process -- to serve management in the near- and long-term. "Many small businesses are now faced for the first time with having to make downsizing decisions. Prepare to do this intelligently by getting a handle on true performance -- and ensuring regular performance management reviews take place going forward. That way, decisions can be based on performance rather than relationships or tenure," Ms. Kerge says.

  • Don't hide: Stay in touch with the staff, and be visible. In tough times, leaders tend to retreat, act secretive and "change their tune" in communications. This kind of behavior switch can be especially negative in a small-company environment: Key employees might be prompted to "check out" mentally or look for jobs elsewhere.

  • Be a "real" person -- honest and inclusive. If there are business concerns, such as a client loss, communicate about them in an honest, non-panicky way. "Most important, make sure you make employees feel they are -- and actually make them -- a part of finding a solution. A good way to begin to do that is to step up one-on-one interactions with staff members," Ms. Kerge says.

  • Don't throw the baby out with the bath water: Take advantage of the company's smaller size and flexibility to cut back with a scalpel rather than a hatchet. Hiring freelancers instead of full-timers -- and even changing some employees' status to freelance -- can add flexibility and save money, including payroll taxes. "Being creative may help companies retain good talent in lean times, and avoid unwanted layoffs," Ms. Kerge says.

  • When downsizing is inevitable, take the time to do it right. "Layoffs are uncharted territory for many small companies. It's always difficult and usually sad, but thinking in advance about logistics, intelligent severance packages and how management will implement the action will mitigate the pain -- and pay off. If handled correctly, hard feelings and fallout from those who have to be discharged will be minimized, and the effect on remaining employees can be managed and minimized. It's a hard, unpleasant action, but it deserves extra time and attention," she says.

For more information or to schedule an interview, contact Katarina Wenk-Bodenmiller of Sommerfield Communications at (212) 255-8386 or katarina@sommerfield.com

About Kerge Consulting

Kerge Consulting provides human capital strategies to companies seeking innovative and effective ways to optimize the performance of both their people and business. Our unique understanding of human resources and its impact on business performance allows us to provide our clients with solutions that are created specifically for them with this objective in mind. Our services are designed to provide leadership and consultation across specialized human capital areas including Talent Acquisition and Recruitment, Performance Management, Organizational Development, Management Practices and HR Infrastructure. www.kergeconsulting.com

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