About three years ago, one of the largest pharmaceutical companies in Bulgaria was in dire straits – in September 2006, all GlaxoSmithKline medicaments were removed from the list of drugs subsidised by state health care insurance.

Hundreds of thousands of patients could not afford the full cost of the medications, which caused the company heavy financial losses. Naturally, employees began fearing for their jobs and salaries. But instead of making cutbacks and reduce wages until the problem was solved, it continued to invest in programmes that made the drugs more affordable.

Not one employee was made redundant and that clearly made an impression because only a year later, GlaxoSmithKline’s finished top among large companies in the Best Employers in Bulgaria survey, carried out by Hewitt Associates and Monday Insight based on employee opinions.

The Glaxo story is not unique, but not always is the outcome equally positive. Not many companies can manage to keep motivation and morale high in difficult times. Employers seldom contemplate the austere reality that by making budget cuts, slicing wages or making redundancies, they generate a negative backlash that often lasts long after the immediate crisis is over.

Changing workforce
Over the past months, redundancies became part of the background on the labour market, along with shorter shifts, reduced wages and disappearing bonuses. Whatever measures a company undertakes, the end result is always a heightened sense of uncertainly among its employees, which immediate reflects on their efficiency and the motivation.

Individuals are, understandably, more vulnerable when the job market is experiencing turbulence. "Change comes easier to the companies, who have a system in place, as well as consultants to call on and data for comparative analysis," Svetla Simidchieva, managing partner of Monday Insight, said.

"Employers need to be aware that if they deprive employees of even a short-term vision about what is happening to the company, there is no way the employees will give their best on the job."

Monday Insight is the Bulgarian partner of Hewitt Associates, which has been conducting employee research around the world for more than 10 years. Engaged employees give their best every day, rarely think of quitting and are always positive about the organisation. But in recent months, these indicators have been on a downward trend across the world.

Irena Boyadjieva, who oversees the Best Employers in Bulgaria survey, is currently aggregating the domestic data and the final result is unlikely to be very different from the global trends, she says.

TePro Metal, the subsidiary of Greek heavy industry group Viohalco, already has such data and it shows how perceptions have changed since the onset of the economic downturn. A year ago, workers cared the most about getting a fair wage, the potential for career development and then the size of the wage itself. Now people are most concerned with job safety.

"That’s going back in time 10 years," TePro Metal HR manager Tomcho Tomov said. Although the company’s employees are yet to show signs of being less engaged, the uncertainty is taking root.

Bad decisions
When austere times arrive, redundancies must be the last and not the first resort, United Nations Development Programme resident representative Henry Jackelen said, pointing out the example of Japan, where despite the heavy recession, unemployment is only 4.4 per cent.

Optimisation gurus will say that the healthy optimisation starts with standard operating procedures, supply chains and only when all other avenues have been exhausted should managers contemplate redundancies. In Bulgaria, however, it usually happens the other way round – because its simpler and easier, even if not necessarily the best.

Simidchieva offers the example of one unnamed big company, whose management decided in December 2008 to reduce wages as a precautionary measure – cuts ranged from five per cent for the lowest-earning employees to 20 per cent for the highest, with bonuses equally affected.

Not only will that have a bad impact on worker motivation, since employees are more concerned with their own financial well-being during a crisis, but "the other certainty is that 25 per cent of the talented people are ready to quit," she said.

Even if they do not, their commitment has been undermined and, additionally, their efficiency is affected by all the time and energy spent on discussions about the situation, which is only a small step away from "black PR", whose consequences are unpredictable.

The gurus will not give you a ready scenario to manage the situation, neither can they categorically pinpoint which is the lesser of two evils – reducing wages or redundancies, because the answer lies in the details of each case.