Don’t Wait for the Rebound to Invest in Staff Loyalty

If recession has a silver lining, maybe it’s that we can all relax a little about our employees, staff turnover and professional development. After all, in tough times people are happy they’ve got a job of any kind, and workplace frills and fringes are probably a safe place to cut first and restore last.

Few agencies, perhaps, would openly admit to this kind of thinking. But whether through intention or inadvertence, leaders rarely in hard times bring the focus and energy to employee programs that they do when business is robust. This is a serious mistake. Let me explain why.

Jon Katzenbach, a noted consultant, has written extensively about the power of employee pride. He argues that employee pride is the distinguishing trait of enterprises that consistently outperform their competition. So central is pride that Katzenbach believes it is a more important motivational force than money.

Recession, then, erodes value in two ways. We all know about the effect on the balance sheet and income statement. But less noted is the impact it can have on the set of values that Katzenbach cites. Managers, by virtue of what they do or don’t do, are revealed to employees as either steadfast leaders or summer soldiers. The resulting disillusionment can destroy the dynamic motivational force of employee pride and hamper a firm’s ability to grow when good time reemerge.


With the onset of the recession, my agency, Makovsky + Company, made the decision to avoid layoffs and focus on building employee loyalty, recognizing that the firm’s profit margins would decline. A number of factors went into this decision.

We know that layoffs are disruptive to client service and relationships. Also, morale suffers greatly as the remaining employees become anxious about their futures with the organization. However, the chief deciding factor is that we need to have our best and brightest employees in place and motivated for when the business cycle improves and, when it does improve, the competition for high-quality talent will intensify.

Further, rather than curtail our employee development programs, we viewed them as an opportunity to reaffirm our workplace culture, and particularly our values. And strengthening those bonds is what helped the agency through these troubled times.


The firm’s workplace values center on four themes: transparency (the commitment to full disclosure of the agency’s business to all employees); education (the belief that agencies owe employees the tools they need to succeed); equality (a respect for the input and insight of employees at all levels); and social responsibility (the conviction that the agency and its employees should pay back to society).

To reinforce our commitment to our employees and their development, we moved forward on various employee efforts. These included:

• Empowering employees to reward peers that best embody the firm’s core values through our “We Achieve” recognition program.

• Charging “young leaders” to create new client programs, and providing cash awards to the best of them through our “Young Leadership Award,” a competition for junior staff based on best original thinking for current clients.

• “Mak University,” which provides a full slate of educational programs designed to hone and advance the skills of our employees. We also added a series of advanced training offerings for the firm’s rising stars, taught by outside “professors.” [Editor’s Note: See 12/13/2010 issue, “Employee Training,” for more on Mak University.]

In addition, we believe that our employees should have an awareness of the issues that shape our daily lives. Toward that end, staff meetings feature guest speakers on business, environmental, financial, political and cultural topics.

There is a clear cause-and-effect relationship between loyal employees and a loyal customer base. Research show that companies that manage people right outperform companies that don’t by as much as 40%. We believe our staff retention rate of 85% has contributed directly to our excellent client retention rate (80%).

Thomas Paine wrote: “What we obtain too cheap we esteem too lightly; it is dearness only that gives everything its value.” The real test of how dearly an agency esteems its workplace values—and ultimately reaps the substantial benefits from them—is how hard it is willing to fight in order to preserve them in times that try men’s souls. PRN


Kenneth D. Makovsky is president and CEO of Makovsky + Company, a New York-based PR agency. He can be reached at [email protected].