Although there are signs of an improving economy and the U.S. economy appears to be in better shape than much of the world, we still have not shaken the doldrums left over after the Great Recession. The U.S. economy has only grown at two percent per year since the recession ended. The Congressional Budget Office projects productivity gains of only 2.2% for years to come. Median household income in 2014 was $4,000 LESS than in 2000. We live in difficult times, and the economic policies and results of recent years have not helped middle Americans.
When I consider these economic statistics, I think about how the economy impacts people I know. Many are just fine. But some friends have been left without jobs. Others scrimp where before they were comfortable. People work longer hours than they want, or wish they could work longer hours to make more money.
Many years ago, before the past decade of economic woes, I managed a department in a business facing hard times. The macro economy was doing well at the time, though our business was in trouble. We used the same management tools that many companies use today—reductions in staff, tight merit increase pools, and less training that we really needed. We were thankful that we had a safety valve in the good economy on the outside. We lost some good employees, but they had places to go.
One of the more difficult decisions I faced as a manager was dividing up a small merit increase pool among my staff of very good performers. Obviously, some employees performed better than others, as is always true. But there was only one person in my group of thirty or so who was not performing at least to the standards the company set.
Should I divide the two percent merit pool evenly, or should I try to reward the higher performers? Senior management in the company told me to differentiate among my staff based on performance. So I did.
But that meant that some very good performers only received a two percent raise. At the time, that’s about what inflation was. They might not be losing ground, but they certainly weren’t making headway. Those were difficult conversations.
In today’s macroeconomic trends, many managers are working their way through difficult times in their businesses. Because of the uncertain economy, there is less of an escape valve than there was when my company had to tighten its belt. The macro and micro trends are headed in the same direction.
Often, leaders have no good choices in managing their businesses. They can give larger increases to their staffs, they can even raise costs faster than revenue. But that reduces profit and disappoints investors.
Or they can limit wage increases and negotiate tough deals with suppliers. These measures control costs at the expense of the employees and suppliers who rely on them for income.
It’s a balancing act, and managers make decisions in one direction or the other every day.
No one said managing would be easy. But the best managers recognize the human impact of the choices they make. They still make the hard choices, some of which hurt people they respect and value. And they stand ready to explain the decisions they made, even when the conversations are difficult.
As a manager, when have you had to make a tough decision that hurt your employees?