How to improve employee morale during a recession

The stress of a recession can impact your employees’ mental health and job satisfaction. Try these 10 strategies to boost employee morale and engagement.

Ashley Evans

Senior Content Strategist

July 21, 2022

In recent months we’ve seen rising inflation, a stagnant stock market, and a wave of layoffs at high-profile companies. Many experts believe this to be the warning sign of an impending recession. So what does a potential recession mean for employee retention?

The U.S. Department of Labor reports that the number of job openings is still high. In order to retain employees, companies need to focus on strengthening employee morale to keep them engaged, happy, and fulfilled. During times of economic downturn, employees may be worried about their finances and job security, overwhelmed by their daily tasks, or disappointed about raises and perks being put on hold. All of these concerns will need to be taken into account to maintain a positive workplace culture where employees feel they can thrive.

The best methods for how to improve employee morale at your company will depend on the culture, current policies, and your employees’ individual needs. However, the strategies below can guide you as you look for opportunities to ensure employee satisfaction.

1. Communicate honestly and often

Transparency is key during times of uncertainty. Have frequent all-staff meetings to inform employees how the company is doing financially and explain any organizational changes that may be in the works. Don’t try to hide issues and hope they get resolved before anyone notices—employees will always notice.

Many employees will fear for their job security during this time. Allow them to submit questions anonymously before all team meetings and make sure there’s enough time to address their concerns, even if you don’t have concrete answers and solutions yet. Ensuring employees are heard and taken seriously is important and a good way to improve employee morale. Transparency helps build trust, which is critical to keeping employees engaged.

2. Lead with empathy

Between concerns at work and at home, employees are dealing with a lot during an economic downturn. The past few years have thrown us many obstacles and a lot of people are experiencing burnout in one facet of their life. Managers should be empathetic to these nuances and help employees juggle the projects on their plates. You should be available to listen to your employees’ concerns and answer questions honestly. You’ll also need to recognize signs of stress in employees who may not bring up problems independently. Creating a culture of psychological safety is critical and can strengthen employee morale during uncertain times.

3. Make use of employee engagement data

Hopefully, your company conducts regular employee engagement surveys, especially if you’re a remote-first company. If not, now is a good time to start checking the pulse on your organization. Send surveys and analyze the data to see where morale or engagement is dropping and why. Look across the company and across individual teams to find where you may need to focus engagement efforts.

It’s crucial to understand how your employees feel—and plan to act on their feedback. Demonstrate your commitment to listening, caring, and making things better. It’s a surefire way to increase employee morale when times are tough.

4. Continue and refine DEIB initiatives

It’s easy for companies to make a public promise to incorporate DEIB practices, but it's not as simple to build and maintain them. Employees want to see follow-through, especially if the company’s DEIB stance was a factor in them accepting the job. Review your initiatives and see what is or isn’t working.

Have you been recruiting from diverse talent pools? Are you building a culture of inclusivity? Is everyone receiving equitable feedback? Your employee engagement surveys and retention rate may provide some answers. Proving to your employees that you deliver more than just talk is crucial to elevating employee morale.

5. Give more autonomy

If you don’t already allow asynchronous work, let employees have a say in structuring their day-to-day. This could include letting them choose to work from the office or at home and allowing them the flexibility to set their work hours. Of course, there will need to be guidelines such as attending mandatory meetings, but the more power you can give employees to define their work life, the happier and more productive they will be.

6. Offer consistent, high-quality feedback

Your company may have good intentions and a commitment to DEIB, but even well-meaning managers can provide biased performance feedback. Reflect on the language you used in your past performance reviews and look for opportunities to do better. When employee morale is low, you could make it worse by giving non-actionable or biased feedback. Remember that opinions about their personality are not helpful. Providing specific behavioral examples and actionable suggestions for improvement can help employees grow and feel motivated to improve.

7. Provide growth opportunities

Recessions often mean lower budgets and fewer raises and promotions, resulting in employees feeling disheartened about their career growth. Help motivate your team by developing a plan that addresses each teammate's goals and career aspirations. If your company typically reserves growth planning for the annual review, add mid-year or quarterly reviews to provide feedback and a plan for what employees can do to advance in their careers now.

The budget may be tight, but try to offer resources like training or certification programs so they still feel like they’re progressing towards their goals. Showing an investment in their future will help keep your team motivated and inspired.

8. Give recognition

Your employees need to know that they’re valued, appreciated, and essential to the team. Amplify their achievements enthusiastically in public channels on your internal messaging platform and during company and team meetings. Invest in a peer-to-peer recognition system so employees can publicly recognize their colleagues in a meaningful way. And, of course, sincerely thank employees one-on-one to boost employee morale and build relationships with your team.

9. Schedule team-building activities

Take a break to reconnect as a team. Scheduling regular team-building activities helps employees form meaningful connections with their colleagues. Games like Name that Tune or Charades are easy to organize, and a quick internet search will help you find other options or companies that specialize in team-building events. Make sure that whatever you choose is inclusive of all employees’ abilities. You can also poll your employees for suggestions on what kind of activities they would enjoy.

10. Make health and wellness a priority

Stress has a significant effect on employee morale. Encourage your employees to maintain a healthy work-life balance by:

Insisting they take their vacation days and daily breaks.
Helping them manage their workloads so they don’t feel overwhelmed.
Including wellness subsidies in your benefits packages that employees can use to improve their physical and mental health.
Offering online meditation or physical therapy classes.
Setting boundaries and expectations to not disturb employees on their off hours so they can fully unplug.
A recession is inherently stressful, so taking measures to help employees manage their health and wellness is necessary in order to boost morale.

Thoughtful leadership during challenging times builds the kind of loyalty that retains employees. While these suggestions can’t recession-proof your business, they will help keep your employees engaged, productive, and invested in the company’s success.