While much has been said about the likely impact that South Africa’s recent downgrade​ to ‘junk’ status may have on SMEs‘ already constrained budgets, including interest hikes, increased pressure on the rand and rising inflation; Kay Vittee, CEO of Quest Staffing Solutions says many SME owners may not have stopped to consider the impact of the downgrade on staff and morale.
“The latest downgrades pose a challenge for the Small and Medium Enterprises (SMEs) sector, from both a recruitment and staffing perspective,” says Vittee.
Many employees’ fears may stem from a fear of losing their jobs as a result of increased financial restraints, while employers may struggle to retain top talent, says Vittee.
“Small businesses may struggle to attract and retain employees due to their inability to keep wages at a competitive rate. This comes as a direct result of the financial constraints related to the current state of the economy.”
To find out more about how the downgrade may affect your employees, SME South Africa speaks to Vittee about the need for transparency, the questions your employees may be wrestling with, and how to maintain a motivated team.Â
Why should SME owners speak to their employees about the downgrade?
Employers should communicate how the downgrade is likely to affect both the business as a whole as well as the personal impact on employees. This should be done in a diplomatic manner whereby the employer ensures that the communication eases any anxieties and concerns.
Bear in mind that during times like this, a business may lose good employees who could decide to look for other opportunities with the intention of generating a better income and sustain their families. So, businesses need to manage their top talent well and assure them that the value they add to the organisation is recognised.
Small business owners also need to address personal financial management issues with employees. It may be a good idea to bring in a financial adviser who can talk to your employees about the best way to ensure their financial security.
What kind of questions can business leaders expect to get from their teams?
Employees are most likely to ask the following questions:
- Is my job safe?
- Is our company doing well? Or, will our company survive these tough times?
- Are we going to be retrenched?
- Will we still receive our incentives and bonuses?
- Am I still going to be up for an annual salary increase?
- What can we do to make sure that our business survives this tough economic climate?
What is your advice for how to deal with the confusion and fear that surrounds the topic?
Communication is key,. Make sure that you do not scare your employees, but rather assure them that you understand the kind of anxieties that they might be experiencing.
Educate staff about finances and what junk status means for the country, the business and their wallets. The aim here is to arm them with financial literacy, give them insight into how the business is managing risk in current circumstances.
See also: Here’s How the Downgrade is Going to Affect Consumers
How much are business leaders expected to share with employees, particularly how well or badly the company is expected to perform?Â
While not necessarily required from a legal point of view, it is important for employees to know how the business is managing financially. Sharing company profit statistics with employees can motivate them to do more in growing the business. This is also vital during times when buying power will be limited due to increased interest rates, high food prices, and hiked petrol price.
As a business leader, one is required to motivate staff to go beyond the call of duty in order for the business to thrive. This will in-turn benefit them personally in the long run.
How can business leaders help their employees regain a sense of control over what seems to be something out of their hands?Â
Employees need to be made aware that it is people like themselves, who continue to work hard within a SME, who help grow the country’s Gross Domestic Product (GDP) – which is a primary indicator used to gauge the health of our country’s economy.
They are still in control of their business’Â output, including ensuring that their employers remain competitive and continually attract new customers.
What kind of support do you think SMEs need to be afforded during what could be a tough time economically?
SMEs are productive drivers of inclusive economic growth and development in South Africa and around the world. They are also a major provider of employment in the country.
In times like these, they need to be sustained and supported by the public sector – or many jobs will be on the line. Business leaders can also find mentors who can guide them on how to manage in a tough economy.
